Washington Warning

Jon Porter (l.), a former congressman from Nevada and now a lobbyist for online gaming, told an iGaming conference in Atlantic City last week that the effort to ban online gaming in the U.S. is real and dangerous. Meanwhile, the forces supporting and opposing the measures ramped up their campaigns.

The showdown between Sheldon Adelson and other major operators in the gaming industry over the issue of iGaming was ratcheted up again last week with opponents getting personal against the operation of Adelson’s Las Vegas Sands’ casinos. Observers who expected the effort to ban iGaming to fade away have been disappointed, and last week a former congressman said the industry better wake up and begin to work together.

“Pay attention to this,” warned former Nevada Rep. Jon Porter, now a lobbyist representing iGaming companies. “This could be tacked onto a bill and pass quickly. Remember what happened with UIGEA!”

The Unlawful Internet Gambling Enforcement Act was added as a rider to another, more important bill in 2006, with little or no warning.

“It’s very easy for Congress to stop something,” Porter told the US Forum on Online Gaming, held last week at the Borgata in Atlantic City. “It’s much harder to start something.”

While there currently are no plans to hold hearings on the bill, some suspect the bill’s sponsors plan to do just want Porter warns.

The bill, sponsored by Senator Lindsey Graham (R-South Carolina) and Rep. Jason Chaffetz (R-Utah) to toughen the 1961 federal Wire Act and ban online gambling in the U.S., carried the expected support of many GOP politicians.

But when Democratic Senator Dianne Feinstein signed on as a co-sponsor, it caught many in her home state of California by surprise. Though Feinstein has been opposed to online gambling in the past, few thought she would lend her name to a bill for a federal ban while the state is in the middle of considering legislation to legalize online poker.

“We’re concerned that there appears to have been no consultation before she decided to support this bill, which would have direct impacts on California tribes,” California Tribal Business Alliance Chairwoman Leslie Lohse told the website casino.org.

The proposed federal bill came from Adelson’s Coalition to Stop Online Gambling. Adelson has launched a campaign to outlaw online gambling saying it will hurt land-based casinos and does not provide adequate protections to prevent underage gambling or to help problem gamblers.

Adelson, however, is a major financial supporter of GOP candidates around the country. Adding a prominent Democrat’s name to the bill was a bit of a coup.

Pro-gaming attorney Keith Sharp—who represents three card rooms in the Los Angeles area—told the website that while Feinstein had been “consistent” when it came to opposing online gambling, there’s hope she can be convinced that a federal ban isn’t the answer.

“I would hope that at some point we’ll be able to have dialogue with her and perhaps persuade her that leaving this to the state is the preferred course of action,” Sharp said.

Those thoughts were echoed by other online gambling proponents.

“Seeing Feinstein’s support of the bill is interesting given the clear desire for her state to move forward on regulating internet poker, which this bill would deny them the ability to do,” said John Pappas, executive director of the Poker Players Alliance, which has been a major lobbying group supporting online gambling in a statement.

Meanwhile, the National Conference of State Legislatures has come out against a proposed federal ban on online gaming in a letter sent to Congress.

In a letter sent to congressional leadership and copied to all members of Congress, the organization opposed the Restoration of America’s Wire Act.

Signed by state Senator. Bruce Starr of Oregon—the organization’s current president—and Nevada state Senator Debbie Smith of Reno—the current president-elect—the letter states that Congress should “respect the sovereignty of states” to make their own decisions on online gambling.

“States have proven that they are effective regulators of the gambling industry, and the proponents of this legislation fail to make a case that we have been negligent in our responsibilities to the industry and consumers,” the letter said. “This attempt to enact a wholesale prohibition of online gambling with the Restoration of America’s Wire Act is merely a solution seeking a problem.”

The bill would toughen the Wire Act to prohibit all forms of Internet gambling.

In 2011, the U.S. Department of Justice issued an opinion that the 1961 act only applied to sports betting and that states could permit online gambling within their borders. New Jersey, Nevada and Delaware have since approved online gambling and several more are said to be considering legislation.

The letter, however, points out that states such as Utah and Maine have also moved to ban online gaming.

“This is the way it should work, each state making the decision that is best suited to the desires of its residents and not through a congressional mandate,” the letter said.

Opponents have attacked Adelson for being inconsistent in highlighting the dangers of online gaming to minors. He has been coming under fire from several web writers who point to more than $200,000 in fines paid by Adelson’s Sands Bethlehem casino in Pennsylvania for underage gambling incidents.

One of Adelson’s key arguments—other than online gambling will hurt land-based casinos—is that online gambling will lead to underage and problem gambling.

In recent weeks, however, opponents have pointed to $220,000 in fines at Sands Bethlehem since 2010.

The fines, outlined by ralstonreports.com, include:

September 2013 – Four instances of underage gambling – $56,000

March 2013 – Six instances of underage individuals were permitted on gaming floor and proceeded to either and/or consume alcohol – $68,000

May 2012 – Four instances of underage gambling – $48,000

June 2010   – Six instances of underage individuals were permitted on gaming floor and proceeded to either and/or consume alcohol   $48,000

Adelson’s Singapore property has also paid $35,000 in fines for underage gambling since 2012, according to the website.

But a spokesman for Adelson told the website that the fines only prove Adelson’s point.

“It actually strongly reinforces Mr. Adelson’s point about the dangers of bringing a casino into every home and dorm room,” Adelson spokesman Ron Reese said. “If a live casino, with millions of dollars of surveillance equipment, trained staff, and policies and procedures in place to prevent underage gambling, can unfortunately still have a handful of young people beat the system, think what they could do online without any of those protections?”

Reese added that Sands Bethlehem “hosts millions of visitors a year and while even 20 cases of underage gambling or drinking is too many, the property stops, turns away or nabs a far greater amount than that because of the policies and procedures in place to prevent it.”

Meanwhile Adelson’s supporters scored their own points in the debate when they disclosed through a released e-mail that former Congresswoman Mary Bono—now head of the Coalition for Consumer and Online Protection, formed to oppose Adelson’s Coalition to Stop Internet Gambling—sought to lobby for Adelson’s campaign before joining in the fight against him.

Bono has denied, however, that she solicited both sides of the fight and then simply took the side of the highest bidder.

“As a member of Congress who has been heavily involved in online gaming issues for many years, I have worked with people from all aspects of the industry, including Las Vegas Sands,” Bono said in a statement. “But they are wrong on this. I made a decision to chair the Coalition for Consumer and Online Protection because I believe that an online gaming ban is bad public policy.”

Adelson fired back at opponents with a clever ad that demonstrated the power of iGaming by using the popular social game, Angry Birds.

The Coalition to Stop Internet Gambling released a video spot about a teenager playing the game, finding his way onto online gambling sites and losing his family’s money, alleging that Angry Birds is a “gateway” to illegal gambling.

 The new web spot is titled “Don’t Bet on It.”

It shows a teenager who says, “I was playing Angry Birds and then, you know, I just found it.” As he narrates, online blackjack and poker tables flash on screen.

“It’s a lot cooler knowing that I’m playing a real game, not just, like, Candy Crush or Fruit Ninja,” he says.

The teen then hacks into his father’s credit-card account to log into various gambling sites and quickly starts losing.

The online ad is being targeted at “opinion leaders” in Washington D.C.; Sacramento, Calif.; and Las Vegas.

Speaking at the Clark County Republican Party convention in Las Vegas, LVS President and COO Michael Leven claimed that the federal government would attempt to legalize online poker in order to acquire more tax revenue.

“It’s all about finding more money,” Leven told the audience in a wide ranging attack on government spending. He pointed out that the IRS is planning to tax the winnings of online gamblers in the three states where the wagering is legal. “

We just want to get more taxes from it,” he says.