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Best of Liz Benston

Gaming Guru

Liz Benston

Online gambling a hot potato

20 November 2006

WASHINGTON, D.C. -- While the gaming industry is heralding the appointment of casino-friendly Democrats to key positions of power in Washington, experts warn that it could take many years before Congress will be willing to consider regulating online gambling.

"If it comes up again, they're going to say, 'We've already dealt with that issue,' " said David Stewart, a Washington attorney who advises the American Gaming Association. "They were exhausted by this latest effort."

The American Gaming Association didn't fight or support the Unlawful Internet Gambling Funding Prohibition Act, a bill signed into law last month that further criminalizes Internet gambling - a legally suspect business conducted by non-U.S. companies. The association's two largest members, Harrah's Entertainment and MGM Mirage, want to legalize Internet gambling in this country, but other members have been lukewarm to the idea. The group expects to decide at a board meeting next month whether to push for legislation that would study legalizing Internet gambling. Rep. Jon Porter, R-Nev., introduced such a bill in the last session of Congress that gained support from more than 40 co-sponsors.

Among a slew of Democrats perceived as friendly to the industry is Rep. Barney Frank, D-Mass., an outspoken liberal who will head the Financial Services Committee and who voted against the Internet gambling prohibition bill that originated in his committee under its chairman, Jim Leach, R-Iowa.

Even if more libertarian minds prevail in the online gambling debate, Stewart says it could take at least a decade for Congress to legalize Internet betting - dooming a $12 billion industry that has earned a place in mainstream culture to black-sheep status.

"They don't have the appetite for it," he said of members' desire to pursue a debate.

Opposed by a few religious conservatives in Congress and supported by companies believed to be operating illegally, Internet gambling has been a fringe issue with complex ramifications and little to gain politically for proponents.

Online poker players sent hundreds of e-mails and letters to members of Congress opposing the prohibition bill but were no match for Republican conservatives and their allies. Online gamblers are growing in number but don't yet have the political clout to influence legislation, Stewart said.

Rather than legalizing online wagering nationwide, Internet gambling expert I. Nelson Rose said Congress may eventually pass a law allowing states to opt into a regulatory system enabling Internet betting for in-state residents. A similar system enables gamblers to bet on horse races from remote locations in their home states as well as other states that choose to participate.

Short of that, states will likely seek to regulate Internet betting within their borders.

"I think states will make it a state's rights issue," said Rose, a professor at Whittier Law School in California.

One effort is under way in his home state, where poker rooms are working on legislation that would legalize Internet poker wagering for California residents.

In 2003 the Nevada Legislature passed a bill allowing regulators to study whether Internet gambling could be regulated. The state Gaming Control Board heard testimony from technology companies with software claiming to pinpoint the location and identity of gamblers using satellites, online background checks and account information.

But regulators did not pursue the issue after receiving a letter from the Justice Department restating the feds' position against Internet gambling.

Nevada regulators considered appeals to legalize online gambling for Nevada residents but didn't pursue the matter, saying the Legislature intended for the state to consider the more lucrative prospects of taxing Internet gambling revenue beyond Nevada's borders.

While Nevada casinos don't want to run afoul of the feds, some local companies may seek the right to allow Nevadans to bet online in the years to come, Rose said.

Nevadans already can make sports bets from their home computers after registering at a casino and transmitting bet information over a secure line.

"If at-home sports betting is legal, then Internet gambling should be legal for Nevada residents," he said.

Online gambling a hot potato is republished from