American Gaming Association Disscets UIGEA

Frank Fahrenkoph, AGA’s (American Gaming Association) president is set to keep close tabs on how matters are progressing in congress with regard to the UIGEA, he said:  “AGA is open to any suggestions with members of congress, at this point in time it’s best to keep a low profile”.

The AGA president since his election as president 15 years ago has made some ground breaking changes in the US Casino industry.  After the release of the famed movie “Casino” which had a negative impact since it stereotyped the industry causing the general public to lose interest in it.

It’s imperative we ensure the industry has a positive image. In turn the casino industry in the US has undergone a downward spiral especially among operators who have no Macau interests to offset tumbling revenues.  “That would always be our main concern, and very important to ensure that the federal government does not tarnish the casino industry as a whole.

“Assuming online gambling is legalised again and we do involve ourselves, only time will tell and I can predict anything what the future may hold,” he explains cautiously. 

A Change in Outlook

While Fahrenkopf denies any form of proposals in favour of US regulation reached during the course of the last year, he concludes that in comparison to three or four years ago the AGA’s board was still opposed to egaming, since then their stance has changed with regard internet gambling”.

Fahrenkopf stipulated that revenues could be generated from internet gambling is a key issue in pushing the US federal government for the legalization of internet gambling, as a result of the current recession in the US. Although he does not agree with some of the financial figures like egaming can potentially produced US$40bn over the next 10 years mentioned at Capitol Hill.

AGA’s general perspective with regard to internet gaming “is changing dramatically” after its inception, the board were rather conservative at the time since they felt that the technology was not efficient enough to regulate the Industry. However, that all has changed since March this year when the board issued a statement stating “it is ready to partake in discussions for the legalization of internet gambling”.

Fahrenkopf said AGA made its assessment of the Internet gambling industry based on three very important issues:

1. Is the proper technology available to effectively regulate the egaming industry?
2. What would the ramifications/impact be on land-based casinos?
3. Should it be governed and regulated at federal or state level?

Fahrenkopf stated: “AGA is of the opinion that the technology now exists and is readily available, they would push a bill on condition proper control mechanisms are in place and the industry’s reputation is safeguarded from any form of exploitation to its customers”.

Division on the Frank Bill

AGA’s is in support of the casino giant referring to issues pertaining to legalizing internet gambling to accommodate the casino giant (Las Vegas Sands). “He goes further and stated the financial and lobbying power of the AGA means its support was pivotal in determining the success or failure of the Frank Bill. “Majority people would think that AGA’s support is crucial and others might not think so. The Barney Frank Bill has been drafted and has been primarily pushed a large number overseas operators and many international payment processors and did not come from the US.”

Its lack of transparency with regard to the Unlawful Internet Gambling Enforcement Act (UIGEA) referring to payments could be seen as pivotal in creating favourable conditions for the multi-million dollar lobbying to enforce and support the Frank Bill, he says: “UIGEA failed to outline exactly what illegal internet gambling was. The Bush administration forced the Treasury and the Federal Reserve to impose restrictions and to ultimately ban internet gambling in the US. “

“Poker may be more acceptable to members of Congress in many ways and board-members of AGA are more than happy with such a proposal as well.  In short; if internet poker is legalised again the board would be more than happy.”

Fahrenkopf is of the opinion that US land-based casinos in the current market may have a massive disadvantage in comparison to sites that have continued to take US bets since UIGEA. He declared that lawmakers are not only refusing to issue these sites a licence, but they will not be able to impose financial structures to regulate it, explaining that the gist of the matter is that no existing licensee would be able to sell their player database, purchase their brand or license their software”.

He stipulated: “I have interviewed legislators and heard them say: ‘That someone is denied a licence since they have been operating in contravention of US law and is penaliseable.  However, should they be granted permission to sell their assets and generate millions of dollars, they have benefitted from violating the law and that should be prohibited.

One Key Figure

Fahrenkopf is of the opinion and the principal figure remains the game changer as far as federal legislation is concerned. “The Senate has the ultimate say and the prominent person there is Senator Harry Reid of Nevada. He’s the majority leader and has an influence on the Senate.  Go back a couple of years ago and remember Bill Frist and the manner on how UIGEA got passed.”

In the past Harry Reid previous Nevada Gaming commissioner has been against internet gambling as a whole more or less along the same lines as that of the AGA. Fahrenkopf, has issued a warning not to assume that Reid, who has yet to declare his position on the Frank Bill, has reached similar conclusions.

“This is a tough nut to crack since the issue here is about the Congress of the United States; an election year ends with a close contested election in November. On the other side of the coin is Nancy Pelosi (Speaker of House of Representatives) and would she be in favour of bringing a gaming bill to the table of the house before and the election, where the votes could swing any way to control the House of Representatives,” mentioned Fahrenkopf. As the intelligent head of the AGA echoes, it’s a Herculean battle and one should never take matters such as this one for granted since anything can happen”.