When the New Jersey legislature passed a bill last year that would have legalized online gaming within the state, Governor Chris Christie vetoed the measure, claiming that the bill should face a statewide referendum, steer no money to state racetracks and prevent the spread of online gaming parlors in towns within the state. Insiders understood, however, that it was the opposition of Caesars Entertainment, the largest casino operator in Atlantic City, which really doomed the bill.

Most casino executives preferred a federal bill that would have made the implementation of online gaming across the country more straightforward and uncomplicated. Land-based casino companies formed FairPlay USA, a political action committee aimed at legalizing online poker and separate from the Poker Players Alliance, which was tainted by the involvement of PokerStars and Full Tilt Poker, two of the companies charged in the now-infamous Black Friday indictments. Millions were poured into lobbying efforts designed to present a bill that would be acceptable to Congress. 

Several bills had been introduced, but none was acceptable to either the land-based gaming industry or the federal government, particularly the Department of Justice.

But two Congressional hearings in mid-November showed that Congress is not ready to consider legalization of online gaming.

At a hearing of the Senate Indian Affairs Committee, the divisions in Indian Country over internet gambling became apparent, as tribal officials testified for and against online gaming. And demands that any tribal participation be tax free and no threat to tribal sovereignty was not received well by all members of the committee.

Later that week, a meeting of the Commerce, Manufacturing and Trade subcommittee, part of the House Energy and Commerce committee focused on how the activity could be controlled from the standpoint of technology, regulation and problem gambling. Again, conflicting views caused panel members to comment that much more work needed to be done before legalization could be considered.

Rep. Mary Bono-Mack (R-California), the committee chairwoman, said the issue is complex.

“For anything to continue to move it would take more hearings, but at this point I have not said yes or no,” said Bono Mack, who told the audience she was taking a “careful approach.”

But the final straw may have been the failure of the Congressional “super-committee” to reach agreement on more than a trillion dollars in cuts from the federal government, or raising new revenue to satisfy the mandate that was issued when Congress approved the plan of the Obama administration to raise the country’s debt ceiling.

Supporters pointed to online gaming, which some estimate could have raised as much as $10 billion over the next decade in new revenue, helping the super-committee meet its obligations. But those benefits began to unravel in October when committee member Senator Jon Kyl (R-Arizona) said he would not support the inclusion of online poker into the committee’s final report. The pronouncement contracted a seemingly softer view of the idea by they usually hotly anti-gaming Kyl. Later that month, Rep. Tom Cole (R-Oklahoma) said he would not support online gaming without carve-outs for tribes. A letter of opposition from Maryland Governor Martin O’Malley was submitted as well as others from the internet industry and tribal interests.

Even without an internet gaming proposal, the super-committee was controversial. Most believe that politics was to blame, as the Democrats refused to consider meaningful cuts to entitlement programs like Social Security and Medicare, while Republicans eliminated discussions on any tax increase. So when the committee reported last week that it had failed to compromise on budget cuts and tax revenues, the opportunity to include any internet poker legalization died.

While it seems to put an end to the effort to legalize online gaming in Congress, some observers expect another bill to be introduced before the end of the session in late December.

For online gaming proponents, the emphasis will shift to state-by-state legalization. The apparent failure of online gaming in this Congressional session means that the issue will not likely to be taken up again until at least 2013. Such a controversial subject would be avoided next year during an election season in which all members of the House, one-third of the Senate and the president will be up for bids. And depending on who controls the Congress and the White House, it could be years before the topic is revisited.

So the problems with state-by-state legalization (50 different bills, 50 different regulatory schemes and 50 different legislative sessions) don’t seem so daunting after all. At G2E in October, Caesars Entertainment VP Jan Jones said her company would drop its opposition to the state-by-state method. Many believe that legalization in a few states would push Congress to act.

And then there is the issue of whether the Department of Justice would challenge legalization in the states, citing the Wire Act and other federal bans on gambling over telephone lines. Supporters say, however, that the government has already given tacit approval to such schemes by not challenging the online sale of lottery tickets or online race books in some states.

Bono Mack says this is still something that needs to be considered at the federal level.

“In many respects, the genie is already out of the bottle, and now it’s up to Congress to decide whether internet gambling across state lines is legal or illegal,” she said.

By Staff

Please login to post your comments.