New bill to prohibit Internet gambling, including where already legal
27 March 2014
By Steve Tetreault
WASHINGTON, D.C. -- A bill to restore a ban on online gaming was introduced Wednesday in Congress, adding another layer to the big-money battle over whether gambling should be allowed on the Internet.
The bill by Sen. Lindsey Graham, R-S.C., and Rep. Jason Chaffetz, R-Utah., seeks to reinstate federal law to prohibit “all forms of Internet gambling.” It comes in the wake of a December 2011 Department of Justice ruling that the relevant law, the Interstate Wire Act of 1961, covers only sports betting.
That opinion dramatically changed the landscape, sparking moves by states, casino interests and technology vendors to explore new online markets. Nevada and two other states have legalized forms of in-state Web gaming, and 10 other states are considering the same.
The issue also has split the American Gaming Association and provoked a backlash from attorneys general in 16 states focused on worries about crime and money laundering, and potential harmful effects on youngsters and problem gamblers.
Bill sponsors at a news conference said there needs to be a pause, and that lawmakers need to have a voice in what forms of Internet gambling are allowed, if any, and where, if anywhere.
“If there is a case that people want to make for online gambling they should come to Congress,” said Chaffetz, who is from one of only two states with no forms of legalized betting. Hawaii is the other.
By reinterpreting the Wire Act, “The attorney general’s office in my view made a huge legal misstep, and those of us in Congress who are worried about the effect of online gambling are going to push back,” Graham said. “Those who think it’s a good idea will have their say.”
The legislation does not contain a grandfather clause that would permit Nevada, New Jersey and Delaware to continue offering online gaming, and would bring to a halt the recent Nevada-Delaware agreement to pool online poker.
Rather, those states and any others would be required to get Congress to sign off.
Nevada Gov. Brian Sandoval said the bill was unwelcome.
“Gaming regulation is the responsibility of state government,” Sandoval said in a statement. “Nevada has performed this function for decades and maintains an experienced, sophisticated and respected regulatory structure. This legislation would infringe upon states’ rights and attempt to undermine existing state law.”
EXCEPTION SOUGHT FOR POKER
Nevada U.S. Sens. Harry Reid and Dean Heller were low-key in their reaction. They agree that the Wire Act should be reinstated. But they want an exception made for online poker, consistent with what has been legalized in Nevada.
“We’re going to take it one step at a time and see what happens,” Reid said. “The best solution for Nevada is to allow Internet poker,” and if other states want online poker that’s fine too, he said.
But, Reid said, “a significant expansion of gambling that would bring slot machines to every computer at home in America is bad for Nevada and bad for the country.”
One strategy that has been floated in the Nevada delegation would be to see how far Graham can push his bill, and to try to append a poker carve-out at an opportune time, said an official familiar with that thinking.
The Graham-Chaffetz legislation tracks the goals of billionaire Las Vegas casino owner Sheldon Adelson, who has financed lobbying campaigns in Washington and in various states to stem the growth of online gaming and roll it back wherever possible.
An early draft of a proposed online gambling ban that circulated on Capitol Hill was discovered to have been written by a registered lobbyist for the Las Vegas Sands Corp., Adelson’s company.
Graham, who is up for re-election and who has received contributions of $15,600 from Adelson and his wife, Miriam, pushed back on a question whether he was doing Adelson’s bidding.
“I’m on solid footing in South Carolina with the people I represent,” said Graham, who noted his state has banned video poker machines. “The fact that Sheldon is on board is a good thing, but I am doing this because this is what my governor and my attorney general have suggested I do and what I feel I should do,”
“If you pigeonhole this that you are helping one person versus another group, you are missing what we are trying to say here,” Graham said. His aides also argue Adelson’s contributions are a drop compared to the $8 million Graham raised so far for his re-election.
SANDS SUPPORTS BILL
Las Vegas Sands Corp. President Michael Leven said the company supports the bill. Besides declaring that online gambling is corrosive to society, Adelson has argued eventually it will pull gamblers away from brick-and-mortar casinos.
“Sheldon’s position is a moral position,” Leven said. “We really don’t think Internet gaming will affect Las Vegas. But it will have a bad effect on land-based casinos in other places.”
Leven, a member of the American Gaming Association board, said his own personal opinion is that Internet gaming could hurt gaming’s image overall.
“We have worked very hard for gaming to be an entertainment activity,” Leven said. “If we’re making it as simple as going to your corner store, then we’re putting it in the same view as lotteries, which is a regressive tax.”
Chaffetz said he will make a case that President Barack Obama overstepped his powers to change the Wire Act. That “is a winning argument,” he said, for House Republicans who believe Obama has done the same thing to change the Affordable Care Act and to loosen federal deportation policies.
House co-sponsors include a mix of conservatives and representatives from non-gaming states including Reps. Tulsi Gabbard, D-Hawaii, Jim Matheson, D-Utah, Lamar Smith, R-Texas, Jim Jordan, R-Ohio, Trent Franks, R-Ariz., George Holding, R-N.C., Frank Wolf, R-Va., James Lankford, R-Okla., and Emanuel Cleaver, D-Mo.
Sen. Dianne Feinstein, D-Calif., is co-sponsoring the Graham bill. “For most Americans, including children, gambling sites are only a few clicks away, and I believe Congress has a responsibility to prevent abuses from occurring,” she said in a statement.
Graham said he believed Feinstein is an effective ally because California is among those who are considering legalizing in-state online gaming.
The bill sparked immediate pushback by the lobbying coalition funded by the MGM Resorts International, one of the casino companies that advocate for online gambling that is legal but regulated to protect consumers.
“It’s really simple. This ban on all Internet gaming would make American families and consumers less safe online,” said Mary Bono, a Republican former House member from California who is chairwoman of the Coalition for Consumer and Online Protection.
“There isn’t any question whether Americans are gaming online. They are,” Bono said. “Congress should be focused on keeping them safe, not shutting down existing consumer protections.”