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Does Online Gambling Bill Favor U.S. Companies?

May 29, 2009 (CAP Newswire) — Blogger Jacob Sullum is concerned that, if passed in its present form, Barney Frank’s anti-UIGEA legislation will make it much harder for European companies to compete in the U.S. market.

That’s because of the way the legislation proposes regulation of the industry, Sullum argues. “Although the American Gaming Association is staying neutral on Frank's bill (as it did with the prohibitionist Unlawful Internet Gambling Enforcement Act [UIGEA]) … the legislation favors domestic gambling businesses because it denies licenses to anyone who ‘is delinquent in filing any applicable Federal or State tax returns or in the payment of any taxes, penalties, additions to tax, or interest owed to a State or the United States,’” Sullum writes, citing recent comments by gambling law expert I. Nelson Rose in support of his ideas.

“Rose warns that ‘every Internet gaming site that ever took bets from the U.S., whether or not they stopped when the UIGEA was passed,’ could be considered delinquent if the Treasury Department claims ‘an operator that had American players was doing business here’ and therefore should have paid federal and/or state taxes,” Sullum continues. This framework could benefit a company like Harrah's, he argues, which is making a big push to enter the online market, and, since it’s never had a revenue from online gaming, would presumably have no trouble with the new regulations.

Sullum concludes that Frank’s bill “discriminates against foreign-based websites and has given rise to several trade complaints.”

It’s to be expected, perhaps, that U.S. legislation would favor U.S. companies, even allowing for a well-meaning, trade-oriented attitude. But if Sullurn is correct with this theory, it can add more fuel to the theories that Harrah’s decision to entre the online gaming market at this precise moment in time seems more than just a case of lucky timing.

Click here to read “Would Frank's Gambling Bill Favor U.S. Companies?” by Jacob Sullum.