Analysis: Sports leagues the key to UIGEA puzzle

[StarnetGypsy]

The fact that H.R. 6870 passed is definitely good news. But how it passed, and what it means for the future of the industry is more intriguing. Let's start with how it passed.

One of the most interesting revelations that emerged over the past couple of years is how the Unlawful Internet Gambling Enforcement Act (UIGEA) bus has been driven by the major sports leagues in the U.S. Yes, the conservative wing of the Republican Party has been trying for years to get online gambling banned. But its efforts never gained any significant traction until the professional sports leagues in America threw their weight behind the effort.

Prior to July, the significance of the influence of the professional sports leagues was known, but rarely discussed. That changed when the pro leagues leaned hard on House Financial Services Committee members in late June to vote down an earlier version of the bill that passed yesterday. After that vote, legislators and lobbyists alike openly blamed sports leagues, including the NFL.

In fact, the version of Frank's bill clearly reveals the intervention of the sports leagues. Frank's testimony indicates that he worked with the league in crafting this bill that would allow the Treasury and Fed to begin drafting and implementing regulations that would immediately block sports betting transactions while delaying the implementation of all other UIGEA regulations until a determination of what was illegal was made. Frank told the committee that he did this to get a bill that would pass, but he's not happy that the sports leagues are basically telling the American people how to spend their leisure time and money.

Rep. William Clay also voiced his frustration with the pro leagues as well, who opposed the bill despite getting the language they wanted. "If that (blocking internet transactions) doesn't satisfy major league sports, nothing else will," Clay said.

The other interesting development Tuesday was the actual vote. Frank's first bill failed to leave committee on a 32-32 vote. Tuesday's vote was 30-19. That indicates that 13 votes against disappeared, as did two votes for. So what happened?

Here are the changes in the two votes:

(Rep., First vote, Second vote)

DEMOCRATS
Waters, No, Yes
Hinojosa, Yes, Absent
Clay, Yes, Absent
Miller, No, Absent
Hodes, Yes, Absent
Donnelly, Yes, Absent
Carson, Yes, Absent
Childers, Yes, Absent

REPUBLICANS
Pryce, No, Yes
Paul, Yes, Absent
Manzullo, No, Absent
Biggert No, Yes
Shays No, Yes
Miller No, Absent
Feeney, No, Absent
Gerlach No, Yes
Neugebauer, No, Absent
Price, No, Absent
McHenry, No, Absent
Putnam, Absent, No
Marchant, No, Absent
McCarthy, No, Yes

The first thing worth noting here is that Frank's bill did indeed pick up support in the last two months. One Democrat and five Republicans changed their votes from "No" to "Yes."

The second thing to look at is the number of people who did not vote on the bill. In June, six committee members did not vote. Yesterday, 21 members did not vote. Part of that was a result of Hurricane Ike. Many of the members who represent districts affected by the storm were dealing with other issues. And there were some scheduling conflicts as well. Clay, for example, was part of the voice vote that passed the bill Tuesday morning. But he was unable to make the recorded vote that Rep. Spencer Bachus asked for.

And more than likely, there was also a set of voters that thought the bill was good policy, but not good politics. Those members were able to show their support by simply not being there.

All of these are considerations that a committee chairman takes into account when scheduling a vote. And given the brevity of the debate yesterday, and Bachus' own admission during the hearing that he was going to lose the vote, the outcome of Tuesday's vote was never in doubt.

Where this bill goes from here is uncertain. The bill is now in the hands of the Rules Committee. That committee will determine when the bill will be submitted to the full House for debate and how long the debate will last. Generally speaking, the Rules Committee won't report a bill out unless they want to -- and the votes are there for passage.

Since the House is scheduled to adjourn on Sept. 26 to allow members campaigning time for reelection, and because there are generally very few legislative days after an election, there is a good chance that this bill will not be voted on this year. If the bill is not acted upon by the end of this year, it will die and have to be reintroduced in the next session of Congress.

[JC]

6870 is not goodnews for sports bettors. In fact, it's very bad news.

[Total Square]

Originally Posted by JC

6870 is not goodnews for sports bettors. In fact, it's very bad news.

its good news for the groups that lobbied and organized themselves to get something done. they did a great job moving something forward, though it does us dg's no good.

maybe if the books had organized and hired lobbyists like the poker rooms something might have come of it, but they chose other routes.

[StarnetGypsy]

Originally Posted by Total Square

maybe if the books had organized and hired lobbyists like the poker rooms something might have come of it, but they chose other routes.

i think that's true of some books TS, but not all. i know talking w/my friends in mgmt at one of the bigger books, they and their sister books lobbied heavily.

eventho, like you & JC, i'd also like to see the books making headway with this bill, i'm of the mindset that getting one's foot in the door is a good start?

the ball-breaker tho is that this bill could very well die by years end, and depending who's in the Whitehouse next year may change the complexion of who votes on which side?

"Since the House is scheduled to adjourn on Sept. 26 to allow members campaigning time for reelection, and because there are generally very few legislative days after an election, there is a good chance that this bill will not be voted on this year. If the bill is not acted upon by the end of this year, it will die and have to be reintroduced in the next session of Congress."

[JC]

Do you know that this bill specificaly says, "Start going after sports hard within 60 days?"

[stevo]

J.C.

Can you please explain to a simpleton like me what "going after sports hard" would entail.

Can't get money in?
Can't get money out?

Any further comment would be appreciated.

[robin]

Originally Posted by JC

Do you know that this bill specificaly says, "Start going after sports hard within 60 days?"

getting legal regulated online sports betting anytime soon just isnt gonna happen.

getting legal regulated poker will happen. us gamblers must choose their battles wisely.

what if they do go after sports betting hard? havent they been already and this doesnt make it any illegal under current statute?

[stevo]

I just dont understand how if a book has poker along with sportsbetting how they will differentiate.

[StarnetGypsy]

Originally Posted by JC

Do you know that this bill specificaly says, "Start going after sports hard within 60 days?"

no, i didn't.

what has stopped books from going P2P like BetFair?

[JC]

This was in the final version that was marked up, as opposed to the initial version that had been passed around.

It says if this bill passes, while you do economic studies and try to figure out whether poker and casino are covered, fully implement the UIGEA regs with respect to sports gambling, something that has been on hold for some time.

Will things get worse if this passes? Maybe.


(b) INTERIMFINAL REGULATIONS ONUNLAWFUL INTERNETSPORTSGAMBLING.—Before the end of the 60 day period beginning on the date of the enactment of this Act, the Secretary and the Board of Governors of the Federal Reserve System, in consultation with the Attorney General, shall jointly prescribe interim final regulations as required by subchapter IV of chapter 53 of title 31, United States Code, to the extent that such regulations pertain to unlawful Internet sports gambling.

[JC]

Originally Posted by stevo

I just dont understand how if a book has poker along with sportsbetting how they will differentiate.

They assume it is all sports and not allow them to accept any money. They are idiots, but they are not stupid.

[Total Square]

Originally Posted by JC

They assume it is all sports and not allow them to accept any money. They are idiots, but they are not stupid.

the way i see it as possibly happening is for a poker site to apply for certification from the 'sanctioning body' and show no connection to a sports site and then be approved. the poker site would probably have to offer the 'regulators' the ability to view the books at any time to make sure they are not only getting their cut, but also make sure there isnt a portion of the funds leaking out to a sports betting site.

you know the minute that happens is the minute the regulated us casino industry appears on the scene.

[Mr Memory]

There's a big, big difference between:

(a) "getting your foot in the door"

and

(b) selling your soul for something that's not worth having

[StarnetGypsy]

Originally Posted by Mr Memory

(b) selling your soul for something that's not worth having

i don't know Mr.M. i don't see where poker having similar carve-outs to horseracing and fantasy sports is not worth having?

poker doesn't have the organizations against them that sportsbetting does. the NFL, MLB, and NBA lobbied heavily to make UIGEA happen, not to mention Vegas contributed heavily as well. did i mention the wire act?

regardless, i don't see 6870 passing in an election year, which means Frank & Co have to start over again next congress.

[skilled27]

I'm just really hoping this bill doesn't pass. I can't imagine with how hard its been lately getting payouts and funding books, what it will be like if the UIGEA sports betting focused regulations are passed.

To start, if 6870 does pass, there could be a mass run on the bank at all offshore sportsbooks.

As for differentiating between poker and sports, this will be easy for the feds to do. The feds simply won't allow the poker shops that have sportsbooks to exist. To make sure of this, you know the feds will have accounts at all the poker rooms just to make sure you can't move money to a sportsbook. And with the banks now on their side (if 6870 passes), it will be easier than ever to quickly notice whether a payment coming in or going out is for gambling.

Only sites like Poker Stars and Full Tilt will be able to move money to and from the US and that will probably only be until the "study" is done and US based poker rooms emerge and taxation is introduced.

Think about how hard its been lately with the processing issues of even the top books. Multiply that many times if 6870 passes. I don't see how any US facing books would survive. I think thats how critical it is that 6870 does not pass.

The way I see it, if 6870 does pass we are headed towards US based and regulated poker rooms where only people from the 38 "skill states" can play and of course taxation of these online poker rooms. Offshore sportsbetting will slowly (or quickly) die off and there will only be locals left for you to get action.

But I am not an insider so maybe I have things backwards.

[Myron]

what if there is no "transfer of funds" at all? you deposit to the poker room. someone makes a bet at a sportsbook it gets credited from their poker account.

[Juice]

Dont look now, but the sky is falling.