Barney Frank, the Democratic chairman of the powerful House financial services committee, is working on legislation to repeal the sweeping ban that was passed in Congress last year against online gaming, he told the Financial Times in an interview.

Mr Frank called the ban, formally known as the Unlawful Enforcement Gambling Act, one of the “stupidest laws” ever passed and said he wanted to “repeal” the law.

“I am working on legislation to cut back on this internet gambling thing. I think it’s preposterous,” he said, adding that he was considering some “innovative ideas”.

“I’m looking for ways, maybe we can make some money off of it,” he said, signalling that he could be considering a proposal that would make online gaming legal by both regulating – and taxing – the industry.

Mr Frank declined to comment further on his proposal. A spokesman for the lawmaker said he had not yet drafted any legislation and was still at a “thinking stage”.

“I am not ready to get into specifics yet. People have come to me with some ideas. Not Al D’Amato. ..and I’m looking at it,” Mr Frank told the FT at an event at the US Chamber of Commerce.

Mr D’Amato, the former New York senator, was recently named chairman of the Poker Players Alliance, a lobby group that is fighting to legalise online poker.

Hopes that the US ban might be overturned helped lift shares in UK-listed online gaming groups on Wednesday, with PartyGaming up nearly 10 per cent in a falling London market. Shares in 888 Holdings and Sportingbet were also higher.

The Democratic victory in the Congress last year was an important victory for pro-gaming interests because Mr Frank, along with John Conyers, chairman of the House judiciary committee, are both considered sympathetic to the industry.

They are understood to believe that the legislation passed last year went too far by putting restrictions on a hobby – gambling – that millions of Americans enjoy.

However, while both Mr Frank and Mr Conyers represent powerful potential allies in the fight to roll back last year’s ban, which hit non-US gaming interests, particularly in the UK, it is far from clear that the lawmakers would have enough support to pass any meaningful legislation.

One industry lobbyist yesterday expressed deep reservations about the possibility that the ban would be repealed.

“Though the Democrats are in charge it is not clear that the votes would be there for a regulatory bill. Having Mr Frank and [John] Conyers [chairing congressional committees] is a positive development, but it doesn’t make it a slam dunk,” this person said.

Mr D’Amato said in a recent interview with the FT that he believed Congress should create a regulatory structure to police the industry that would be funded by licensing fees.

Separately, the industry is keeping a close eye on the US Treasury, which is currently drafting the regulations that will, in effect, implement last year’s ban. One lobbyist said that Treasury’s deadline to present the rules for public comment period had slipped and is not now expected until April or May.

[Financial Times]

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