07/29/2010 10:27AM

Internet gambling bill advances


A bill that would legalize Internet gambling passed out of the House Financial Services Committee on Wednesday by a 41-22 vote.

The bill, which was introduced by Rep. Barney Frank, a Democrat from Massachusetts who has supported the legalization of Internet gambling for several years, would give the federal government the power to issue licenses to the operators of Internet gambling sites. The bill does not provide specifics on what types of gambling operations would be legal other than to prohibit gambling on sporting events.

Currently, Internet gambling is illegal, with one exception: betting on horse races. The racing industry’s exemption was contained explicitly in legislation passed four years ago banning financial transactions with any Internet gambling site other than a horseracing site. Steve Adamske, a spokesman for Rep. Frank on the House Financial Services Committee, said that the bill retains the exemption for horseracing.

The bill was first introduced more than a year ago, but support for the liberalization of Internet gambling has been hard to muster just four years after Congress passed a bill prohibiting the practice. Supporters of the legislation have said that taxation of Internet gambling could yield $42 billion over the next 10 years. The bill has been sent to the floor of the House, but a vote has not yet been scheduled. The House is not expected to vote on the legislation prior to the August recess, Adamske said.

“It would happen sometime in the fall, and the bill would lapse at the end of the year if there is no vote,” Adamske said.

Under the bill, operators of betting exchanges would be eligible to apply for a license, although betting on sports, a major component of betting exchanges, would be restricted. Betting exchanges allow their customers to bet against each other, and they have become extremely popular in the United Kingdom. One-third of the bets made on betting exchanges are on horse races. Betfair, the largest betting-exchange operator in the world, owns the second-largest account-wagering company in the U.S., Television Games Network. A bill supported by Betfair and New Jersey racing interests that would legalize betting exchanges in New Jersey has passed the Assembly and is awaiting a vote in the Senate.