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Emily D. Swoboda

Opposing Forces

12 November 2007

According to the Congressional Record, certain members of Congress, including a few Democrats, have submitted letters of opposition to Rep. Barney Frank's, D-Mass., H.R. 2046, the Internet Gambling Regulation and Enforcement Act. The following are highlights from two of the most recent letters addressing the core of the bill: the opt-outs.

Rep. John Sarbanes, D-Md., on Oct. 18 submitted to Congress a letter co-written by the attorneys general of Maryland, Douglas Gansler, and Florida, Bill McCollum, who "have grave concerns about H.R. 2046."

While Sarbanes' did not necessarily take a position on the matter, he did ask Congress to consider the issue.

In the letter dated Sept. 27, 2007, the two attorneys general said the bill undermines states' inherent rights to make their own gambling laws as it would for the first time empower the federal government to issue gambling licenses.

H.R. 2046 provides states with the choice to opt out of regulating Internet gambling, but Gansler and McCollum said the opt-out does not "clearly preserve the right of states to place conditions on legal types of gambling." It may also present more conflicts with the World Trade Organization (WTO), they said.

On the other hand, according to the attorneys general, the Unlawful Internet Gambling Enforcement Act (UIGEA), passed in Sept. 2006, has done much to protect the United States from illicit gambling operators, which were driven away from the market upon the enactment of the bill. H.R. 2046, they said, looks to reverse the work done by the UIGEA by welcoming back offshore operators.

Another Democrat, Rep. Edolphus Towns of New York, on Sept. 27 submitted a letter written by Stuart Eizenstat, trade expert and former ambassador to the European Union and under secretary of Commerce and International Trade.

Towns stated before presenting the letter that he is greatly opposed to sports gambling as it threatens the integrity of American athletics. He also announced his opposition to Frank's bill.

Eizenstat had written to Towns on behalf of the National Football League informing him that Frank's legislation, which includes an opt-out for sports leagues, could do more harm than good by leaving them vulnerable to offshore interests, including the WTO.

"Although the bill allows sports leagues and states to opt out of this gambling legalization scheme, these exceptions may be successfully challenged at the WTO under existing trade rules," Eizenstat said in the letter. "While the WTO General Agreement on Trade in Services (GATS) permits a complete gambling prohibition that is 'necessary to protect public morals,' a patchwork approach that legalizes most gambling and includes limited opt-outs may be difficult to defend."

Ultimately, Eizenstat proclaimed his support for the United States' withdrawal of gambling services from GATS and said that Frank's bill and any pro-Internet gambling legislation would greatly complicate the government's effort to do so.

Towns said the best decision for the United States is the GATS withdrawal, which the U.S. Trade Representative is negotiating. And the compensation cost, which could reach $100 billion, is small for removing an activity that is already illegal, he said.

Click here to read the full submission from Rep. Sarbanes.

Click here to read the full submission from Rep. Towns.

Opposing Forces is republished from
Emily D. Swoboda
Emily D. Swoboda