U.K. companies lobby for easing gaming rules

Two U.K.-based companies poised to profit from a loosening of online-gambling regulations in the U.S. are planning a grassroots campaign in favor of legislation to regulate the multi-billion-dollar industry.

UC Group, a payment-services company with technology to verify the age and geographic location of gamblers, has teamed up with international accounting firm Baker Tilly to launch the “Safe and Secure Internet Gambling Initiative.”

The companies, which already work to provide back-office and payments services to Internet businesses in a range of sectors, have hired lobbying firm Alston & Bird LLP to push the legislation, introduced last month by House Financial Services Chairman Rep. Barney Frank (D-Mass.).
Alston & Bird has contracted another lobbying firm, Downey McGrath Group, to aid in the effort.

“The [Safe and Secure Internet Gambling] Initiative is both to educate parts of the public as well as to garner grassroots support from other companies, organizations and individuals for the legislation,” the initiative’s spokesman, Jeff Sandman of Hyde Park Communications, said.

Frank’s legislation would undo a crackdown on online gambling that Congress passed last year. Under his proposal, licensed operators overseen by a unit of the U.S. Treasury would be required to guard against underage and compulsive gambling as well as money laundering. States, professional sports leagues and college athletics organizations could opt out of the regulatory regime.

In addition to systems that pinpoint the age and location of bettors, the UC Group has technology to detect compulsive gambling and money laundering, making it well suited to flourish under the regulatory scheme proposed by Frank. The company currently sells such systems to a number of clients around the world, Sandman said.

The law on online gambling remains murky. A handful of states have banned online betting in any form. In 2002, a federal appeals court ruled that it is illegal to transmit information for sports betting across state lines, but affirmed that federal law does not prohibit placing online bets on “games of chance.” Meanwhile, lower courts have ruled that it is illegal to own a sports-betting operation that caters to U.S. citizens.

In the fall, Congress passed a law barring the use of credit cards for online bets but exempted horse racing and stock trading.

UC Group has been lobbying Congress on Internet gambling since the spring of 2005, filings show. Last year, the company submitted testimony to a House subcommittee on the issue. According to Sandman, it was among several companies that met with Frank and other members of Congress to discuss the various safeguards that could be implemented under regulated online gambling.

A leading international accountancy, Baker Tilly hired Alston & Bird to lobby on the issue in February. The firm has about 7,000 U.K. clients and  boasts more than $2 billion in revenues.

Consumers will be among the primary beneficiaries of regulated online gambling, Sandman argued. They will have systems
“to make sure that their financial transactions are being processed safely and securely,” he said.

UC Group and Baker Tilly envision a “comprehensive grassroots effort” in support of the regulatory regime, according to Sandman. The companies have set up a website at www.safeandsecureig.com .

The Poker Players Alliance also supports Frank’s legislation. A fledgling group of poker enthusiasts, it argues that poker is a game of skill rather than chance and therefore should be exempt from any ban on Internet gambling.

“Part of the game is learning when to fold ’em,” said the group’s chairman, former Sen. Alfonse D’Amato (R-N.Y.), with a nod to the chorus of the Kenny Rogers tune “The Gambler.”

Nearly 400,000 poker fans have signed onto the group’s cause, D’Amato said.

By contrast, the Safe and Secure Internet Gambling Initiative is a company-led effort in favor of a controversial pastime. That would be a novel use of grassroots tactics, according to Jeffrey Oldham, a senior vice president at Direct Impact, a consultancy that specializes in grassroots mobilization.

“This is the first time I’ve heard of grassroots being used for a non-traditional issue,” he said. “I think it will be interesting to see whether members of Congress will listen.”