Article II of the United States Constitution, clauses 1 through 5, authorizes Congress and each of its sovereign branches to regulate interstate gambling. The framers intended that the power to tax had not given situs poker online the federal government the authority to restrict the rights of individuals to engage in gambling. Article II states that all taxes levied by the United States must be collected from those legally resident in the United States and must be accounted for at the end of the year. Article II does not confer the power on the federal government to ban gambling but it does allow regulation of its local enforcement.
The U.S. House and Senate have passed bills establishing a commission to be headed by current U.S. Senator Ben Cardin of Maryland, to develop recommendations on appropriate regulatory procedures for online casino gambling. Although Cardin is expected to bring together a large group of members to support his efforts, there are some major sticking points in his plans to overhaul the U.S. gaming laws. His efforts are being stymied by a powerful lobby group that opposes any serious attempt to legalized casino gambling in the U.S.
One issue that Cardin is having difficulty with is whether the bill would establish a centralized revenue source to replace the revenue lost to the states as a result of the lack of structured gaming fees. According to supporters of the bill, the commission will collect fees from all online casino betting outlets, thereby ensuring that there is a stable revenue stream. Opponents argue that the revenue sharing mechanism will not work because the amount of money generated through online poker betting will far surpass the fees paid to the commissions. Similarly, they claim that the lack of a centralized revenue source leaves states with no means to collect extra money from online casinos.
Another major issue facing Cardin’s plan to reform the U.S. gaming laws is the proposal to eliminate the commission fees and start charging fees to states for commission benefits received from licensed sports betting online facilities. Online card rooms currently enjoy an advantage over brick and mortar casinos in collecting revenues since they do not charge fees to players. On the other hand, licensed sports betting facilities are enjoying a major advantage over the online card rooms in collecting revenues. The U.S. House of Representatives approved a bill last March which proposes to scrap the commission fees and start charging fees to players only after a year has passed. The European Commission has been offering support to the U.S. House’s efforts in hopes that the U.S. House can come to an agreement with the European Commission on the matter.
In addition to a lack of revenue, many politicians worry about the effect of the proposed legislation on online casino betting. Rep. Barney Frank (D-PA) spoke out against the Rhode Island legislation claiming it will eliminate the free market and destroy traditional American culture. Furthermore, some state politicians such as Republican Congressman John Spencer (RI-2) criticized the online sports betting industry for taking their income for granted. Spencer said, “I am disappointed that the federal government, which I believe to be the cause of the current economic crisis, is cutting funding for these things because it seems that somehow the government doesn’t feel that we need it anymore.” Although Rhode Island’s representatives were not directly involved in crafting the Cardin/Rosenberg bill, their opinions carry significant weight considering the two representatives are widely considered to be among the most outspoken opponents to the Cardin/Rosenberg plans.
Online casino game play is growing and reaching a wider audience. However, it is important for online gambling and betting sites to follow strict rules and regulation to avoid legal issues in the future. Drafting and implementing strict guidelines and policies will help ensure the integrity of online gambling and sports betting industry by guaranteeing fair play and protecting honest businesses from being exploited by rogue elements. Such initiatives will go a long way in ensuring the long term sustainability of Draftkings and other independent suppliers of proprietary online software applications and services in the highly competitive online gambling and sports betting industries.