Senator Menendez Introduces Bill to Regulate Online Poker

Senator Robert Menendez (D-NJ) introduced a bill in the Senate on Thursday that seeks to regulate and tax online poker in the United States.

The bill would garner both federal and local revenue, while instituting consumer protection safeguards and age-verification procedures to ensure that citizens under the age of 21 are not able to participate.

The Poker Players Alliance applauded the introduction of the bill in a statement released earlier today.

“The PPA is pleased that Senator Menendez chose to introduce his bill to license and regulate Internet poker and include additional consumer protections,” said Alfonse D’Amato, the PPA chairman and former New York senator. “His continued support for protecting the Internet freedoms of poker players specifically, and Americans generally, is greatly appreciated.”

The 91-page bill, entitled the “Internet Poker and Games of Skill Regulation, Consumer Protection, and Enforcement Act of 2009,” is much more specific than the poker bills that Rep. Barney Frank (D-MA) introduced in the House of Representatives earlier this year.

While Frank’s bill applies to online casinos, lotteries, and bingo, Menendez’s proposed legislation only deals with games of skill, such as poker. Both bills continue to explicitly prohibit sports betting.

It is common procedure on Capitol Hill to introduce companion bills in both the House and the Senate to speed up discussion on an issue.

One of the most noteworthy aspects of the Menendez bill is that it specifically defines just how much of a cut the government would get from the poker industry. Each approved and licensed poker site would be responsible to pay a monthly tax equal to 10 percent of all of its American players’ deposits — 5 percent of which is allotted to the federal government, and 5 percent of which is allotted locally (either to the corresponding state or Indian territory).

In the bill, Menendez says that the government has a responsibility to regulate online poker “to prevent underage wagering and otherwise to protect vulnerable individuals; to ensure that games are fair; to address the concerns of law enforcement; and to enforce limitations on the activity established by the States and Indian tribes.”

He also briefly touches upon the historical nature of poker in this country — referencing that presidents and statesmen alike have played the game — and identifying poker as a game of skill, similar to games like “chess, bridge, mah-jong, [and] backgammon.”

While the bill would explicitly legalize online poker, it does outline how specific states and territories can opt out of the bill’s provisions. A governor of a state — as opposed to a state legislature — can choose to opt out of the bill as long as he or she “informs the Secretary [of the Treasury] of such limitation before the end of the 90-day period beginning on the date of the enactment of the [bill].”

The Menendez bill would also establish a self-exclusion list that people can voluntarily put themselves on, “acknowledging in a manner to be established the Secretary that the person wishes to be denied gaming privileges and agreeing that, during any period of voluntary exclusion, the person may not collect any winnings or recover any losses resulting from any gaming activity at any licensee site.”

The bill allocates funds for a national campaign on problem gambling, as well as research on the topic, and indicates that poker sites may be responsible for promoting the self-exclusion list on their own sites. However, the bill makes it clear that neither the government nor the poker sites are “liable to any self-excluded person … for any harm, monetary or otherwise,” even if a person on the list is inadvertently given gaming privileges.

Applicants for a license to operate what the bill refers to as “an Internet game-of-skill facility” will be responsible for providing to the Secretary of the Treasury “complete financial information about the applicant; documentation, showing the corporate structure of the applicant and all related business and affiliates; the criminal and credit history of the applicant, each of the senior executives and directors of the applicant, and any other person who is in control of the applicant.”

This information will not be made available to the public “in light of business competition, competition, confidentiality, and privacy concerns.”

Licenses have a five-year term, but can be revoked by the Secretary if the licensee fails to comply with certain provisions — such as ensuring the age and location of its players, collecting and reporting both its own and customer taxes, safeguarding against financial crimes and compulsive play, and failing to protect the privacy and security of its customers.

The entire bill can be read on the Poker Players Alliance website.

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