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Franks’ Bill Surprises Online Casino Industry

The entire online casino industry was all looking for Barney Franks’ proposal regarding online gambling legislation. Many people believed that Franks’ bill will challenge the Unlawful Internet Gambling Enforcement Act that basically chased the online casino industry off the United States. However, during a press conference in Washington, Franks elaborated on his “Internet Gambling Regulation and Enforcement Act, and left many people in the industry quiet disappointed. By its name alone, one could realize that the bill was not what the online casino industry is looking for.

The Franks bill does not address the Unlawful Internet Gambling Enforcement Act, but yet aims at working alongside the anti online casino bill. Franks is looking at a licensing and regulating authority that will supervise the United States online casino market. Firms that would like to offer online casino gambling to American citizens will have to get a permit and will be regarded as “legal”. With a few adjustments, the new bill protects such firms from the Unlawful Internet Gambling Enforcement Act and makes it legal for financial transactions to be made. Although this all might seem very nice, Franks’ authority will also tax the online casino industry.

That’s right; international firms will have to setup a US corporate that will pay the United States’ government taxes for the privilege of offering online casino gambling to American citizens. This was somewhat expected as the taxation notion will serve as a sweetener for politicians to support the bill. Each online casino firm will have to pay 1 percent of its revenue to the government as well as 1 percent of each deposit for every 30-day of operations. Franks is estimating a total of about $20 billion across five years. Another incentive for politicians is an assurance that only firms that meet strict guidelines will be granted licenses. Online casino sites will have to install safeguards that will prevent teens from playing online, for example. This is not quite what the industry was expecting, but it is too early to pass judgment over the new proposal by Franks.

OCA News Editor

Jenny McKinnley is OCA’s financial correspondent. After spending years on the trading floor in both NY and London, she offers insight from the inside out on world financial news and events.

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