Reid pursuing backdoor route for online poker legislation

According to several media reports, staffers for Senate Majority Leader Harry Reid (D-Nev.) are trying to build support for a bill that would license and regulate Internet poker in the United States. The goal, according to the reports, is to pass the legislation during this month's lame duck session of Congress.

The Wall Street Journal reports that the bill is backed by large casino interests, and would allow only "existing casinos, horse tracks and slot-machine makers to operate online poker websites for the first two years after the bill passes."

That language gives Caesars Entertainment (formerly Harrah's Entertainment), which owns the World Series of Poker brand, an early advantage in the U.S. market. Caesars currently operates a free-money online poker site for Americans and real-money online gambling sites in the U.K.

Nevada's land-based casino companies, including Caesars, were among the top financial contributors to Reid's bruising re-election campaign this year.

Reid is expected to try to attach the bill to "must-pass" legislation, as there will not be time to bring the bill through both the House and the Senate before the end of the lame duck session.

Three prominent Republican opponents of regulated Internet gambling sent a letter to Reid and Senate Minority Leader Mitch McConnell (R-Ky.) condemning the idea of regulating online poker by attaching the bill to unrelated legislation.

"We have heard reports that certain interests might be pushing the Senate to attach such a bill to a 'must pass' measure because they have calculated that a secretive, closed-door, undemocratic process represents their best opportunity to regain access to the U.S. market," reads the letter by Reps. Spencer Bachus (R-Ala.), Dave Camp (R-Mich.) and Lamar Smith (R-Texas). "Creating a federal right to gamble that has never existed in our country's history and imposing an unprecedented new tax regime on such activity require careful deliberation, not back-room deals or earmarks for special interests."

Ironically, the same argument was used by those who opposed the passage of the Unlawful Internet Gambling Enforcement Act (UIGEA) four years ago, just prior to the 2006 mid-term elections, when the UIGEA was attached to the Safe Ports Act, which was considered "must-pass" legislation. And while the letter asserts that that the bill would create a "federal right to gamble," there is currently no federal law that stops Americans from betting on offshore sites. The UIGEA makes it illegal for banks to transfer money online poker rooms and casinos, but the sites that choose to operate in the United States have managed, for the most part, to get around that ban.

The letter also notes that a similar effort by Chairman of the House Financial Services Committee Barney Frank (D-Mass.) passed in committee earlier this year, though the letter says it was in spite of "bipartisan opposition." The bill passed the committee vote 41-22-1, with four Democrats and 18 Republicans voting against the measure. Seven Republicans were in favor of the bill.