The Reid-Kyl bill prevents online gambling except for Internet poker and off-track horse racing.

The Reid-Kyl bill prevents online gambling except for Internet poker and off-track horse racing.

First Federal Online Poker Bill Revealed

The newly unveiled draft federal Internet poker bill sponsored by senators Jon Kyl (R-Arizona) and Harry Reid (D-Nevada) allows only online poker and off-track betting on horse races, excluding all other types of online gambling, reported Poker News Report. Although it would permit online lottery sales by individual states, the bill also prohibits international player pools.

The legislation is formally known as the Internet Gambling Prohibition, Poker Consumer Protection and Strengthening UIGEA Act of 2012. It seeks to reinforce current laws, including the Illegal Gambling Business Act of 1970 and the 1961 Wire Act—which, the Justice Department noted last December, only prevents sports betting.

The bill provides each state the choice to opt-in through a voluntary election plan that requires approval of each state’s legislature. Inaction would be considered opting out. Federally regulated Indian tribes would have the chance to opt-in only if the state in which they reside does so as well; otherwise, the tribe can apply as a qualified body.

Under the proposal, commercial online poker site operators would be taxed 16 percent, with states and tribes receiving 14 percent, and the federal government two percent. Of the state and tribal shares of the online poker activity fee, 70 percent will be allocated based on the location of the customers from whom the licensee’s online poker receipts are generated, and 30 percent would be approportioned based on the location of the licensee’s qualified body.

For the first two years, rights to obtain a license to operate Internet poker sites would be relegated to brick-and-mortar casino operators. And for the initial five years, companies that violated the Unlawful Internet Gambing Enforcement Act (UIEGA) of 2006 would be blocked from entering the U.S. marketplace—unless they can prove in court that they did not violate state or federal laws post-UIGEA.

The draft bill requires that the federal Office of Online Poker Oversight, under the jurisdiction of the Commerce Department, monitor online poker. It also mandates that operators be licensed and adhere to regulations, and that illegal operators be fined or face imprisonment of up to five years, or both.

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First Federal Online Poker Bill Revealed

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