Menendez Poker Bill: Details, Analysis and Reactions

The full text of Senator Robert Menendez’s (D-NJ) bill that seeks to regulate online skill games (the Internet Poker and Games of Skill Regulation, Consumer Protection, and Enforcement Act) is now public, and the reaction from the poker community at this point has been largely positive.



The basic gist of Menendez’s bill: the US Federal Government would establish a regulatory body for the licensing and taxation of the online skill game industry. The system would not override current state laws that it might contradict. The primary avenue for government revenue would be a 10% tax on all deposits made to sites. This revenue would be split evenly between the states and the federal government.

The primary difference between Menendez’s bill and a similar bill that seeks to establish a national regulatory framework written by Barney Frank: Menendez’s bill is limited in scope to cover only skill games, while Frank’s bill looks to cover all online games, as well as sports betting.

Menendez offers the following bright line for what constitutes a skill game and what does not in his bill: “Bets and wagers made with respect to games in which success is predominantly determined by the skill of the players and in which the bets and wagers are between the participants can and should be treated as distinct from other bets and wagers made with respect to games in which success is not predominantly determined by the skill of the players […]”

Supporters are apparently hoping that the tighter focus will moot some criticism from powerful opponents of Frank’s bill such as the NFL. Menendez makes a nod to such concerns later in the bill: “Longstanding Federal policy against gambling on professional, scholastic, or amateur sporting events, and all criminal laws prohibiting such gambling, should remain in full force and effect.”

Menendez also provides a direct revenue path for State governments (unlike Frank), an apparent attempt to motivate them to support the bill (or at least to not opt-out of participation should the bill pass).

Which bill does a better job of beating back the UIGEA? Gaming legal expert I. Nelson Rose had this to say about the two bills in an article published on Compatible Poker: “Interestingly, Menendez does a better job than Frank, who is, after all, Chair of the House Financial Services Committee, in trying to fix up the mess caused by the UIGEA. He would require the Director of the Financial Crimes Enforcement Network (”FinCEN”) to make up a list of every website that takes bets from the U.S. that is not licensed. Anyone, including law enforcement agents, sports organizations and players can ask for this list, and get detailed information about owners and operators. But the real kicker is that all payment processors, or at least those within reach of the U.S. federal government, will then be on notice that they cannot transmit any money to these website operators. All of the other regulations issued under the UIGEA will be redone.”

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

There’s also an interesting bit in Menendez’s bill that might be designed to get fuller cooperation from current online poker giants such as PokerStars and Full Tilt Poker, who no doubt have concerns that their current operations might threaten their ability to gain a license down the road: “The Secretary of the Treasury may not deny an application for a license under subchapter V of such title, as so added, that is submitted by an applicant during the 90-day period beginning on the date that the Secretary begins accepting applications under such subchapter because the applicant operated an Internet game-of-skill facility, in interstate or foreign commerce,in which bets or wagers were knowingly initiated, received, or otherwise made by individuals located in the United States, without a license issued to such person by the Secretary under such subchapter.”

In english: You can’t be denied a license simply because you ran a room in the past that accepted US wagers.

Other interesting bits: the legal age for participation would be 21, and taxes on player’s winnings would be on net winnings (winnings minus losses) for the year, not on a session-by-session basis. As for unlicensed sites, the tax on deposits (which would be the responsibility of the player) would be a whopping 50%.

PPA board member Rich Muny had this to say about the bill in a thread on 2+2: “We’re also seeing a lot of state and federal action against us. It’s quite clear to me that this will not stop. While I’m pretty sure we’ll always be able to play, it’s not obvious that the status quo going forward (i.e., if we fail to pass any legislation) will be any better than the status within an opt-out state. I recommend we all continue to fully endorse, support, and fight for these bills while working for the changes we’d like to have. After all, that’s the best way to get the bill we want. We also need to keep momentum to pass the UIGEA delay bill. If the final bill is unsupportable, poker players can at that time pull support.”

In short: this bill has some advantages over the Barney Frank bill, but will still be a seriously uphill battle legislatively. Visit the PPA to learn more about how you can communicate your support for this bill to your Representatives.

Read the full bill here.

Article by Chris Grove.