Senate Committee Moves Kyl Bill, Minus States' Rights Provision

Yesterday the Kyl Internet gambling bill easily passed the U.S. Senate Banking Committee, but not before the committee's chairman, Rep. Richard C. Shelby, R-Ala., amended it by taking out a carve-out that would let states regulate online gambling that only takes place within their state lines.

The Banking Committee spent about five minutes on the bill Thursday morning and voted 19-0 to pass it on to the full Senate. For the next five weeks Congress will be on break.

S. 627, which was proposed by Sen. Jon Kyl, R-Ariz., would deter Internet gambling by preventing online gambling merchants from taking payments from Americans who want to pay with credit cards.

The bill contains carve-outs for only horse and dog race betting, and both the American Gaming Association and the National Indian Gaming Association oppose it. AGA President Frank Fahrenkopf told the Las Vegas Review-Journal he believes the bill unfairly favors some gambling industries over others. He also said he thinks it would expand Internet gambling instead of doing its intended duty of contracting it.

"In my view, this bill does not limit Internet gambling; it expands Internet gambling," he said.

The National Indian Gaming Association opposes the bill because it may not adequately protect the rights bestowed on tribes by the Indian Gaming Regulatory Act, NIGA spokesman John Harte told the Las Vegas Review-Journal.

In addition to land-based gaming groups, the online gambling industry opposes the Kyl bill strongly. In response to the bill's passage, the Interactive Gaming Council called the elimination of states' ability to regulate their own Internet gambling from the bill's contents a bad precedent.

"State governments, which have historically licensed, regulated and taxed the gaming industry, may eventually forfeit this right as well as vital gaming tax revenues to the Federal government," said IGC Chairwoman Sue Schneider. "State governments and the gaming industry should be concerned about a potential for a federal siphoning of gaming taxes that are often dedicated to important state programs that benefit senior citizens and children."

During the Senate Banking Committee mark-up of the bill, Shelby stated that while gambling has always been the province of the states, he doesn't feel that they have the ability to control Internet gambling.

"There is no way for the states to effectively control the reach of the Internet at this time," he said.

In June, the House of Representatives passed a similar bill. Should the Kyl bill pass the Senate, the two branches of Congress would form a group to decide which body's legislation should move forward.