Well, it took long enough, but it's finally here.

On Wednesday, we finally saw the introduction of some long-promised online gambling legislation... but it just wasn't the legislation we were expecting.

It was actually much, much more, and not necessarily in a good way.

For the last few months, we've been expecting and waiting for Barney Frank's bill to overturn the much-despised UIGEA, and that's what we were waiting for on Wednesday.

Instead, we were treated to two different pieces of legislation from Barney Frank, as well as a companion piece  by Rep. Jim McDermott.

So, let's go through these bills, shall we? I'll even issue my own arbitrary Pass / Fail judgement for each.

Bill: Internet Gambling Regulation, Consumer Protection, and Enforcement Act
Sponsor: Barney Frank

It starts out with a few pages describing how established gambling and online gambling already are in America, and how there is a need for regulation in order to protect customers and children.

OK, good so far.

Then, after some of the usual legalese, we get to the basic outline for a licensing program for operators, which are sufficiently vague enough to probably eliminate most, if not all, current offshore operators.

This is not so good if you are a fan of the offshore companies, but to most Americans, this would probably not be a big issue.

Moving on... hmmmmm... here is a section that outlines...

"(3) COLLECTION OF CUSTOMER TAXES — Appropriate mechanisms to ensure that all taxes relating to Internet gambling from persons engaged in Internet gambling are collected at the time of any payment of any proceeds of Internet gambling."

Does that mean that our winnings will be taxed immediately? That doesn't seem right - unless they plan to issue me a tax credit for my gambling losses too.

I mean, If I lost $100 yesterday and win $50 today, then I shouldn't be taxed on today's winnings, because I'm still below zero.

If I'm reading that correctly, then that is pretty stupid.

Moving on... OK, there is some language to deal with problem gambling, but they seem to be sticking to the brick-and-mortar model, which is missing a big opportunity, in my book.

Whoa! What is this?

‘‘No provision of this subchapter shall be construed as authorizing any licensee to operate an Internet gambling facility that knowingly accepts bets or wagers on sporting events from persons located in the United States in violation of section 3702 of title 28, United States Code, except for fantasy or simulation sports games (as defined in section 5362 of this title).

What? No sports gambling? That is a chickenshit cop-out, as far as I'm concerned.

I'm starting to lose my faith here.

Wait, here is the part where they are suspending the UIGEA buy saying it "shall not apply to any Internet bet or wager occurring pursuant to a license issued by the Secretary under this subchapter."

OK, I'm not sure if this is good or bad.

I guess it's good if they are limiting the UIGEA, but if they expect it now to only be applied to selected companies, then I would think that it would only serve to make the current situation even more convoluted. That's a bad idea if your stated goal is to remove complexity.

Summary: This is a good idea gone very bad. The main benefits of regulation would be to lay a foundation for consumer protection and - yes - taxation.

However, it looks like they are choosing to stick with the horribly outdated land-based model for problem gamblers, which is completely insufficient for the online market and will not appease the anti-gambling crowd. Furthermore, this bill is confusing about it's taxation plan.

Finally, they are still maintaining the longstanding and misguided prohibition of sports gambling.

Bottom line, somebody needs to explain to me how a bill with the two established goals of protecting consumers and eliminating useless prohibition can somehow end up not really effectively protecting consumers while still maintaining a huge measure of prohibition.

Swing. Miss.

Grade: FAIL

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Bill: Reasonable Prudence in Regulation Act
Sponsor: Barney Frank

This one is short and sweet. It requests a delay in the implementation of the UIGEA regulations from December 1, 2009, to December 1, 2010.

Summary: Another cop-out, but at least a minor one. While I think the entire UIGEA should be scrapped, this is the next best thing, I guess.

Grade: PASS

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Bill: Internet Gambling Regulation and Tax Enforcement Act of 2009
Sponsor: Jim McDermott

Right off the bat, this bill gets to the nitty-gritty... the tax.

It looks like Mr. McDermott is asking for two percent of all new monthly deposits, to be paid by the operator. Maybe my math is a bit hazy, but I'm not sure of the difference between a "2% tax on all new monthly deposits", and a simple 2% tax on deposits. Maybe they just want to ensure they get paid each month, rather than yearly. Either way, there it is.

Two percent.

OK, here it gets a bit interesting...

REQUIRED INFORMATION .— For purposes of subsection (a), the information described is set forth below, which information may be modified as appropriate by the Secretary through regulation —

(1) the name, address and TIN of the licensee or other person engaged in the business of accepting any bet or wager,
(2) the name, address and TIN of each person placing a bet or wager with the licensee or other person engaged in the business of accepting any bet or wager during the calendar year,
(3) the gross winnings, gross wagers, and gross losses for the calendar year of each person placing a bet or wager with the licensee or other person engaged in the business of accepting any bet or wager during the year,
(4) the net Internet gambling winnings for each such person for the calendar year,
(5) the amount of tax withheld with respect to each such person for the calendar year,
(6) beginning and end-of-year account balances for each such person for the calendar year, and
(7) amounts deposited and withdrawn by each such person during the calendar year.

So, it looks like the government is going to know exactly how much you gambled last year, as well as how much you won or lost.

Now, a lot of people won't care about that, but some people will definitely find that a bit freaky - especially if they have to list it on their tax forms in front of their spouses. And they WILL have to list it, because it looks like the operators will have to provide the names of their customers as well.

Now, maybe I'm missing something, but I don't see anything specific about what kind of tax will be imposed on winnings.

Either way, that's about it for this legislation.

Summary: Reporting. Reporting. Reporting. The problem seems to stem from the fact that the individual states are each going to be wanting their piece of the pie. This bill is looking for a solution that will allow the state of Iowa to collect revenues when one of its residents bets online anywhere in America.

Therefore, this bill seems to be treating online gambling in the same manner as the purchase of prohibited substances.

I would say that this bill will make it as hard to make a bet online as it is to purchase a gun, but that would be wrong... it'll be much harder to make an online bet.

Another swing and miss. This bill starts with a good idea, but it goes to such extremes that the end result will be that people will end up betting "illegally" simply because it is too much of a hassle to do it online.

Grade: FAIL

There is an old saying, "Be careful of what you wish for, you just might get it."

These pieces of legislation are perfect examples of how a good idea can be corrupted by over-thinking the situation.

The problem is that there is already a working model for online gambling regulation in the UK, and none of the above bills seem to recognize this simple fact.

I also find the exclusion of sports gambling to be, well, a bit shocking in it's short-sighted stupidity.

So, that's it for now. I admit I'm a little disappointed, but I am going to have to evaluate whether these bills still might offer better options than the status quo.

I'll be back with more thoughts later.