The House Committee on Financial Services voted to approve Internet gambling legislation, a critical step in making online gambling legal in the U.S.

The committee voted to approve on Wednesday the Internet Gambling Regulation and Consumer Protection and Enforcement Act (H.R. 2267), legislation introduced by Committee Chairman Barney Frank, D-Mass., by a 41-22 margin. The bill would regulate Internet gambling activity in the U.S. and require licensed operators to put in place safeguards to protect against underage and problem gambling.

“The committee’s bipartisan vote to approve Chairman Frank’s legislation is nothing short of historic,” said Michael Waxman, a spokesperson for the Safe and Secure Internet Gambling Initiative. “With Congress bitterly divided and only a handful of bipartisan bills coming out of the Financial Services Committee, we’re pleased committee members from both sides of the aisle were able to come together to advance this important legislation.”

During Wednesday’s markup of the bill, there were several amendments introduced from both sides of the aisle. Rep. John Campbell, R-Calif., offered, and the committee approved, an amendment that would further strengthen the legislation’s already strict consumer protections, including a requirement for licensed operators to have each customer choose their loss limits before being able to play online. Campbell’s amendment also requires licensees to protect customers by ensuring customer privacy and security, and protecting against fraud and money laundering. 

Chairman Frank’s legislation, introduced in May 2009, would establish a regulatory and enforcement framework for licensed gambling operators to accept bets and wagers from individuals in the U.S. Beyond an array of required consumer protections, the legislation reinforces the rights of each state to determine whether or not to allow Internet gambling activity for people accessing the Internet within the state and to apply other restrictions on the activity as determined necessary. 

As a companion to Frank’s bill, the Internet Gambling Regulation and Tax Enforcement Act of 2010 (H.R. 4976) introduced by Jim McDermott, D-Wash., in March 2010, would ensure the collection of license fees and taxes on regulated Internet gambling activities. 

According to a Joint Committee on Taxation tax revenue analysis, regulated Internet gambling is expected to generate as much as $42 billion in federal government revenue over its first 10 years. In addition, a recent analysis by H2 Gambling Capital predicts that Internet gambling regulation would create as many as 32,000 jobs over its first five years.

The legislation has drawn the support of 69 bipartisan co-sponsors. Support for the legislation was also announced last week by the U.S. Chamber of Commerce, the Financial Services Roundtable and the National Association of Federal Credit Unions.

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