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UIGEA on the Way Out - Or is It?

Never has a piece of pending gambling legislation been so closely monitored as the new law foreshadowed by Representative Barney Frank of Massachusetts.

It seems every day a major newspaper reports that Frank's much anticipated new online gambling law is about to be introduced to the house. 'Any time now', 'before the end of the month', 'in the next House session'. The calls have come thick and fast since the start of the year, and now with mid-year fast approaching the UIGEA busting bill has yet to be put up for consideration.

Amid rising disquiet regarding the ineffectiveness of the Unlawful Internet Gambling Enforcement Act, and speculation that repealing legislation and a move toward a regulatory approach could receive bi-partisan support, stakeholders around the world are keeping a very close eye on developments in Washington.

And it's not just the large European based online gambling operators like Party Gaming, Ladbrokes and Sportingbet, who all withdrew from the US market in 2006 when UIGEA was passed, who are interested in whether a new law is put in place by US lawmakers. The European Commission is also watching very closely. The EC has made no secret of the fact that it believes that UIGEA and older US laws that have been leveraged to push an anti-online gambling line against offshore operators are protectionist in nature and a breach of US free trade commitments.

The World Trade Organization, for their part have also adjudicated the US laws to be inconsistent with free trade principles in a case brought before them by the Government of Antigua Barbuda. And following an EC report that formalized their opposition to UIGEA, it is possible that they too could bring a case before the WTO should the US stance not change soon.

In 2007 Frank introduced legislation to repeal UIGEA and offer a regulatory framework for online gambling instead. That Bill was defeated. But many commentators and stakeholders sweating on Frank's new piece of legislation believe the outcome could well be different this time around. The case for a new approach has strengthened considerably since 2007 for a number of reasons.

Foremost, is the fact that UIGEA has had a further two years to prove that its effective operation is practically impossible. The US government agencies charged with its implementation, the United States Treasury and Federal Reserve Board have put it in the 'too hard basket' from regulatory perspective and offshore operators choosing to continue to take American residents bets are having little problem doing so.

Another big tick in favor of a new licensing and regulatory regime is the estimated $50 billion in gaming tax revenues that will flow into government coffers over the next 10 years. This has to be an attractive proposition for the Obama administration that must find ways to start making inroads into the trillions of dollars of debt that the government is racking up in stimulus packages and bank bailouts. And of course there is also the not so subtle pressure coming from across the Atlantic.

For these reasons, it is believed that Frank's legislation might just get up.

Milton Shaw is a staff writer for popular online gambling portal 4 Online Gambling.

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