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Will online gambling be legalized this year?

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Neon Rider

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Online gambling: legal soon?

Fans of Internet-based casino and card games
could be in for a big win in 2011.

Ever since a 2006 law effectively outlawed
online gambling, they've been marginalized, either turning to pretend-money
alternatives, quitting altogether, or relying on dicey workarounds to avoid the
long arm of the law. But rumors of an upcoming bipartisan effort to legalize
the industry -- and bring it under the watchful eye of the federal government
-- have given online gamblers new hope.

Strictly speaking, online gambling isn't
actually illegal under federal law, although several states (such as New York,
Washington, and Nevada) have banned it for their residents. Instead, the 2006
federal law (bizarrely shoehorned into a bill focusing on tightening security
at U.S. seaports) prevents businesses from accepting credit cards, wire
transfers, checks, and other transactions if they were to be used in "unlawful
Internet gambling."

If you recall much about the 1920s chapter
of your history book, you won't be surprised to hear that such a prohibition
didn't stop online gambling. Some of the more legitimate sites did shut down,
and others stopped accepting payments from inside the U.S., but gamblers
quickly found alternatives. Like, say, passing funds through fly-by-night,
overseas e-payment companies -- a hazardous solution.

Broken and ineffective, the law hasn't entirely escaped the attention of
politicians -- notably Barney Frank, Democratic House Representative for
Massachusetts, who's repeatedly tried to legalize (and, naturally, tax) online
gambling over the last few years. Senate Majority Leader Harry Reid was
working to slip a bill through in December's lame-duck session, too, but to no
avail.

It's easy to see why they keep trying.
Federal and state governments, battered by recession and beset by public
demands for simultaneous cuts in taxes and budget deficits, are looking
desperately for new sources of revenue that don't involve the expenditure of
significant political capital. What could be softer than slipping a few percent
onto online poker winnings?

Cash-strapped or not, past attempts have
fizzled in the face of stiff opposition from socially conservative lawmakers.
Alabama Republican Spencer Bachus has been a key opponent, calling the
legalization of Internet casinos a "gamble that simply is not worth taking" in
a 2009 article
and alleging it would lead to addiction, bankruptcy, and
crime. And after last November's election handed control of the House to the
Republican party, getting any legislation passed will take some serious cross-party
cooperation.

All that has online gambling fans looking to
the GOP for help -- and they're finding it at the door of California
representative John Campbell, a Republican of a rather more libertarian bent than
Bachus. Campbell is reportedly
preparing to introduce a new bill later this year along the lines of Frank's
most recent effort, which successfully passed the House Financial Services
Committee in July. Campbell is said to have Frank on board as a co-sponsor.
Could online gambling's fans -- and the businesses that are ready to serve them
-- finally be staring at a winning hand?

Their first hurdle's going to be a high one.
Frank's last bill indeed cleared the Finance Committee without undue hardship,
but the aftershocks of November's elections included some changes in that
committee's makeup. One major change, in fact: it has a new chairman.

As of last month, out went gambling-friendly
Barney Frank -- and in came none other than Spencer Bachus. Bipartisan or not,
any bill that relaxes restrictions on Internet gambling is likely to have a
harder time getting past the committee stage this year.

Even if it does, there's still a long road
between there and a vote. But above all else, the new Congress has a clear
mandate from voters: reduce the deficit. Anything that produces extra revenue
-- and has the potential to create jobs for out-of-work Americans -- is likely
to be on the table. Campbell is expected to show his hand in the next few weeks;
time will tell whether he'll come up trumps for online gambling's many fans.

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Places
to play

Feeling lucky? We'd suggest waiting for the
Capitol Hill soap opera to play out before staking any real money on an online
game, but plenty of pretend-money alternatives exist. We like Yahoo! Games Hold 'Em Poker
(of course), but the good folks at King.com, Zynga, and even TV hit World Poker Tour will all give you a good, safe game, too.

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