Yesterday, shortly after Rep. Robert Wexler (D – Fla.) introduced the Skill Game Protection Act, which intends to exempt games of skill such as poker and chess from the current restrictions on internet gambling, another bill was introduced by Rep. Jim McDermott (D – Wash.). 

This one, the Internet Gambling Regulation and Taxation Enforcement Act is actually a companion bill to the Internet Gambling Regulation and Enforcement Act (IGREA), introduced by Rep. Barney Frank (D – Mass.).  The IGREA, if eventually signed into law, would legalize and regulate online gambling in the United States.  McDermott’s bill establishes tax structure for the IGREA. 

Under the IGREA, online gambling operators would be required to be licensed by the Financial Crimes Enforcement Network.  Those operators would be taxed 2% of all funds deposited by any customer who places a bet.  This expense would not be passed through to the players.  The operators would also be required to collect federal and state taxes from any licensees they might have, as well as from individual customers.   

The Safe and Secure Internet Gambling Initiative has said that this bill could produce up to $25 billion for the U.S. government.

The Interactive Media Entertainment and Gaming Association (iMEGA), an online gaming lobbying group, has filed a lawsuit against the United States Attorney General, the Federal Trade Commission, and the Federal Reserve System in an attempt to stop the enforcement of the UIGEA. 

The complaint states that the UIGEA tramples on the constitutional rights of U.S. citizens to freely do what they would like in the privacy of their own homes.  As part of its argument, iMEGA is referencing the recent World Trade Organization ruling against the U.S. in the Antigua case.   

Edward Leyden, president of iMEGA, said what most online gaming supporters have said over and over again, “Two major benefits come immediately from US recognition and regulation of internet gaming; transparency and tax revenues. Taxation of internet gaming could generate more than $20 billion during the next several years.”

Representative Robert Wexler (D – Fla.) introduced legislation Thursday that, if eventually signed into law, would exempt poker and other “skill” games such as chess and bridge from the UIGEA.  Wexler actually used to be against internet gambling and voted for HR 4411, which basically became the UIGEA.  He has obviously made an about-face. 

Wexler serves on the House Judiciary Committee and the financial services panel.  He is a co-sponsor of Rep. Barney Frank’s bill to legalize and regulate online gambling.  

Josh Rogin, a spokesman for Wexler, said that in skill games like poker, “You win and lose based on your ability,” and they should thus be treated differently than other games like roulette and craps. 

There is still a long way to go before the online poker opposition is defeated, as neither Frank nor Wexler has enough votes yet to get their bills passed, but the groundswell in support of poker players lately is encouraging.  Slowly (and hopefully surely), legislators are beginning to see the mistake they made in allowing the UIGEA to piggyback onto the SAFE Port Act.  If poker players around the country continue to work hard to make their voices heard, we might come out on top in the end.

Citadel Commerce, a once popular online payment processor for online poker enthusiasts, announced this week that the United States Department of Justice has seized $9.25 million of its funds.  Very few details were divulged by either Citadel Commerce or its parent company, ESI Entertainment systems. 

The announcement is a follow-up to an April 27 statement by the company, which said that the funds were frozen by one of its U.S. processors.  The bulk of the funds belong to internet gaming merchants.  $941,000 belong to Citadel Commerce, itself. 

The following is the press release from Citadel Commerce: 

“ESI Entertainment Systems Inc. (“ESI”) (TSX: ESY) and Citadel Commerce Corp, a wholly owned subsidiary of ESI, today announced that further to the press release dated April 27, 2007 concerning the US$ 9.25 million Merchant Reserve Funds frozen by its processor in the USA, these funds have now been seized by the U.S. Department of Justice (DoJ).

All of these funds are Merchants’ Reserves related to internet gaming except for approximately US$ 941,000 of Citadel’s own capital. 

The company is continuing to work with the DoJ through its legal counsel to resolve the situation.”