Rep. Frank Pallone Introduces Discussion Draft on Comprehensive Federal iGaming Legislation

The debate over federal regulation of online gambling intensified on May 25, when Representative Frank Pallone Jr. (D-NJ) introduced a discussion draft outlining his plans for a comprehensive iGaming legislation package.

Officially known as the Gaming Accountability and Modernization Enhancement (GAME) Act of 2017, the legislative framework was released through the House Energy and Commerce Committee.

As currently constructed, the GAME Act would ease federal restrictions on iGaming for states which choose to enact consumer protection measures and other regulations. Rather than creating a framework for federal legalization of online gambling, the GAME Act would instead allow any state to implement their own measures regarding online poker, casino games, daily fantasy sports (DFS), and sports betting.

In Pallone’s appraisal, the current federal policy prohibiting online sports betting – the Professional and Amateur Sports Protection Act (PAPSA) of 1992 – has proven to be particularly problematic, given the recognized rate of illicit wagering:

“Despite the federal gaming laws in place today, Americans are betting up to $400 billion a year on sporting events alone.

It’s time to recognize that the laws are outdated, and the GAME Act will modernize them by increasing transparency, integrity, and consumer protections.”

As ranking member, Pallone directed that committee to hold a hearing in May of 2016 to examine (DFS) and other forms of online gambling.

Per a statement issued through Pallone’s congressional website, the 30-year veteran of the House reveals that he’s been studying iGaming issues throughout the intervening period.

Pallone’s home state of New Jersey is one of three American jurisdictions where iGaming has been legalized, along with Nevada and Delaware. Since 2013, the Garden State’s thriving collection of online casinos and poker rooms has generated millions of dollars in tax revenue and licensing fees – a feat Pallone hopes other states will emulate through the GAME Act’s passage.

Pallone’s office also released a detailed section-by-section breakdown of the GAME Act.

Under Section 2(b), only states that have enacted strict consumer protections – including licensing qualifications for operators, geolocation technology to prevent out-of-state play, and problem gambling prevention measures – would be eligible for exemption from federal law.

Section 3 offers additional consumer protection by banning the use of credit cards to fund iGaming accounts.

The term “bet or wager” is defined under Section 6 as follows:

“The risking of something of value, including virtual currency or virtual items, upon the outcome of a contest of others, a sporting event, or a game of skill or a game of chance, on the expectation that the person will receive something of value in the event of a certain outcome.”

Crucially, the language found within Section 6 covers games of chance, along with games of skill – a provision which should help to avoid the usual debate between poker, blackjack, and other skill games versus roulette, craps, and the chance-based alternative.

And in a continuation of New Jersey’s longstanding stalemate with the federal government over sports betting legalization, Pallone included a simply worded Section 8 to repeal PAPSA altogether.

Earlier this month, Pallone sent a letter to Acting Solicitor General Jeff Wall, requesting that he petition the U.S. Supreme Court to hear New Jersey’s pending appeal in a PAPSA challenge case.

In the letter, Pallone reiterated his long-held stance that all states should share in the right to set their own sports betting law:

“New Jersey should have the same opportunity to proceed with sports betting that has been allowed in other states. The Third Circuit’s decisions have usurped the power of New Jerseyans and the state of New Jersey to share in the considerable profits from sports betting.”