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Kevin Smith

Online Poker Bill Debated in North Dakota Senate

9 March 2005

Seven representative from the I-gaming industry made their voices heard Tuesday in North Dakota, where the state's Senate Judiciary Committee held a hearing to discuss a bill that would lead to the licensing and regulation of Internet poker sites.

"This is an industry that is here to stay, and we are losing out on the potential for millions of dollars in tax revenue."
-Rep. Ron Iverson

The four hours of testimony didn't culminate in a vote, but those who made the trip to Bismarck to lobby for HB 1509 came away feeling like the session went well.

The group's efforts had an immediate effect on the House of Representatives, which had already passed HB 1509 by the margin of 49-43. House Concurrent Resolution 3035, which creates a constitutional amendment to allow the citizens to decide whether Internet poker legal should be legal, cleared the House Tuesday by a vote of 50-44.

The sponsor of both bills, Rep. Jim Kasper, R-Fargo, said the larger margin in the voting for the second bill was a direct result of the industry advocates spending time in Bismarck to support the bill.

The Senate Judiciary Committee met again Today to discuss three proposed amendments, which Kasper said should go a long way in garnering more support for the bill.

With the advisement of officials from the attorney general's office, the bill was amended to include an operating fund that would be paid by the industry and other "non government" entities as well as a defense fund that would be used if the Department of Justice decides to challenge the legality of the bill. Additionally, the language of the bill was tightened to ensure that online poker operations have a major business presence in the state.

The operation fund would offset initial costs of licensing and regulating the industry, and by requirement, a minimum balance of $1 million would be maintained until June 2007.

The defense fund would be set up to address concerns that the federal Department of Justice would challenge the legality of the bill on the basis that it's not in line with the federal Wire Act, a law that makes it illegal to place interstate wagers on sporting events.

This was a major concern for Rep. Kari Conrad, D-Minot, who argued during Tuesday's hearing that the state shouldn't be moving forward with a bill that it could later have to defend in the courts.

"This, I think, is too big of a gamble," Conrad said.

Legal experts who testified Tuesday say the Department of Justice wouldn't challenge the statute and that it would have a losing case on its hands if it did.

"This bill (HB 1509) is specific to online poker and nothing else," Patrick O'Brien, an attorney for Greenberg Traurig, said. "The Wire Act deals with sports betting, and the courts have proven that fact out."

Rep. Blair Thoreson, R-Fargo, said regulating the industry would reduce problems among those who already play online poker.

"If we don't do something to regulate it," Thoreson asked, "who knows what the downside is?"

In addition to the DOJ threat, opponents of the bill testified that North Dakota should not be focusing on expanding the availability of gambling in the state.

But one of the bill's co-sponsors, Rep. Ron Iverson, R-Fargo, argued that online gambling and poker are already popular in the state.

"This is an industry that is here to stay," Iverson said, "and we are losing out on the potential for millions of dollars in tax revenue."

Another argument against the bill is that it wouldn't do anything to minimize the prevalence of unregulated operations targeting bettors in North Dakota, but Sportingbet CEO Nigel Payne said this simply isn't true.

"Customers will flock to a Web site that's regulated," Payne argued.

He also said that Sportingbet alone would generate $10 million a year in tax revenue for the state if the bill was passed.

Warren DeKrey, chairman of the North Dakota Council on Gambling, meanwhile, argued that the gambling industry still has connections to criminal elements and that the state could get into "a lot of trouble that we don't need."

As to be expected, social issues were a point of discussion as well.

Robert Lynn, a former western North Dakota bishop of the Evangelical Lutheran Church in America, opposes the bill because of the "family problems, broken lives (and) financial crises" caused by gambling.

"Maybe we should accept their tax dollars, and then we could use those tax dollars to help people who are trying to solve (gambling) problems for individual people."
- Sen. Connie Triplett

Sen. Tom Trenbeath, R-Cavalier, doesn't dispute the presence of these problems, however, he suggested that they should be addressed in a regulated environment. The problems exist, he said, regardless of whether gambling is legal.

"How is regulating an uncontrolled bad thing a bad thing?" Trenbeath asked. "We're looking, as we sit here today, at an ongoing industry that is unregulated anywhere in the United States. That can't be a good thing."

Lynn, however, insisted that expanding legalized gambling is not the way to go.

"We've got to start looking more positively at taking care of those around us rather than encouraging them to go on, trying to get something for nothing," explained.

The argument surfaced again following the testimony of Dick Elefson, a Bismarck gambling counselor who used the story of a 19-year-old man he counseled who had lost $60,000 gambling online as an example of why the bill should not be passed.

Sen. Connie Triplett, D-Grand Forks, suggested that Elefson might have inadvertently made a case for regulation.

"Maybe we should accept their tax dollars, and then we could use those tax dollars to help people who are trying to solve (gambling) problems for individual people," Triplett said.

Triplett, who hasn't decided how she'll vote on the bill, acknowledged after the hearing that "the opponents did a better job of pointing out the need for the bill than the proponents"

The Next Step

The Senate Judiciary Committee is expected to vote on HB 1509 when it meets on March 14, and Bismarck insiders are expecting it to pass.

Because the bill has fiscal note, it will go to the Appropriations Committee for a vote if it's passed in the Judiciary Committee.

If the bill is shot down in committee, it could still go to the full Senate for a vote (according to the state's legislative procedures).

Kasper is hopeful the bill will be placed on the Senate calendar by the end of next week, which would mean a vote on the full bill in the Senate could come before the end of the month. If it's passed in the Senate, the amended bill would be referred back to the full House.

With the attorney general's guidance, Kasper is confident that the governor would sign the bill if it makes it to his desk.

If signed by the governor, the legislation would become law in August 2005, but regulated online poker would not be permitted until the state constitution is amended. The next statewide election will be the June 2006 primary.

The witnesses who testified on Tuesday are as follows:

Patrick O'Brien, attorney for Greenberg Traurig
Sue Schneider, CEO of River City Group
Nigel Payne, CEO of Sportingbet plc.
Michael Corfman, CEO of Casino City Inc.
Frank Catania former director of the New Jersey Division of Gaming Enforcement
Allyn Jaffrey Shulman, attorney, poker player and co-owner of Card Player Magazine
Peter Friedman, CPA
Warren DeKrey, chairman of the North Dakota Council on Gambling
Art Link, former governor of North Dakota
Mike Seminary, citizen of Bismarck
Dick Elefson, a Bismarck gambling counselor
Lynn Bergman, citizen of Bismarck
Robert Lynne, former western North Dakota bishop of the Evangelical Lutheran Church in America.

Online Poker Bill Debated in North Dakota Senate is republished from
Kevin Smith
Kevin Smith