Tuesday, June 2, 2009

Aided by Poker Devotees, Lawmaker Pushes to End the Ban on Online Gambling

LM Comment: More on the building momentum surrounding the legalization of online gambling in the U.S. It's no surprise that the opinions of major casino operators runs the gamut. Some are for online gambling in any form, while others prefer a system run by individual states. Opponents worry that Internet gambling will take customers away from their casinos and that it cannot be properly regulated.

May 25, 2009: summarized from the New York Times -- After coming up short in a first effort, a Democratic lawmaker has again introduced legislation that would roll back a ban on Internet gambling enacted when Republicans led Congress.

The legislation, introduced this month by Representative Barney Frank of Massachusetts, would allow the Treasury Department to license and regulate online gambling companies that serve American customers. Under the current law, approved by Congress in September 2006, financial institutions are banned from handling transactions made to and from Internet gambling sites.

At a news conference announcing the legislation, Mr. Frank, who is chairman of the House Financial Services Committee, pointed out that the federal government could collect increased tax revenues if Internet gambling was regulated. But he said online gambling should be legal as a matter of personal liberty, calling it an activity the government should neither encourage nor prohibit.

"Most actions the government should stay out of," Mr. Frank said.

Mr. Frank's bill has roughly two dozen co-sponsors, most of them Democrats. He did not seek the backing of the Obama administration or the leadership in either the House or the Senate.

The legislation does have the backing of those who enjoy poker. The Poker Players Alliance, one of the groups lobbying for the bill's passage, says it has more than a million members and, in former Senator Alfonse M. D'Amato, Republican of New York, a well-known chairman to press its case on Capitol Hill.

Opponents are mobilizing to defeat the bill. They include social conservatives and professional and amateur sports organizations, which say more gambling opportunities could threaten the integrity of their competition.

"Illegal offshore Internet gambling sites are a criminal enterprise, and allowing them to operate unfettered in the United States would present a clear danger to our youth, who are subject to becoming addicted to gambling at an early age," Representative Spencer Bachus, Republican of Alabama and the ranking member on the House Financial Services Committee, said in a statement.

The legislation differs somewhat from a bill Mr. Frank introduced in 2007, which never made it out of committee. For example, this bill forbids betting on sports events, while the earlier one let sports organizations decide themselves whether to prohibit online betting on their games.

Like the previous version, the bill allows states and Indian tribal lands to opt out if they do not want their residents using licensed Web sites. It also requires companies seeking a license to employ safeguards that supporters say would do a great deal to prevent minors from gaining access to gambling sites and help combat compulsive gambling.

"The technology is out there," said John Pappas, executive director of the Poker Players Alliance. "It's been tested regularly. And those who fail to use it will lose their license."

Not everyone has been convinced.

The American Gaming Association, which lobbies for the casino industry, says it will remain neutral on Mr. Frank's bill, as it did when the ban was enacted.

Frank J. Fahrenkopf Jr., the association's president, said opinions within the group on Internet gambling ran the gamut. Some members are for online gambling in any form, while others prefer a system run by individual states. Opponents worry that Internet gambling will take customers away from their casinos and that it cannot be properly regulated.

Despite the language banning sports betting, the four major professional sports leagues and the National Collegiate Athletic Association believe the bill could in fact encourage gambling on games. In a strongly worded letter to the House Financial Services Committee, the groups said the legislation "reverses nearly 50 years of clear federal policy against sports betting and it opens the door wide to sports gambling on the Internet."

Mr. Bachus remains skeptical about age verification technology and other safeguards, citing 2007 testimony from an Internet security expert before his committee asserting that such "security measures are inherently unreliable, can be trivially circumvented and will fail at high rates."

Mr. Frank said he believed lobbying by poker players and other fans of online gambling could help reverse the ban. He said he intended to move the bill through his committee before Congress began its break in August.

"Congress kind of sneaked up on the American people," Mr. Frank said of the online gambling ban. "The people woke up."

But there could be at least one powerful roadblock. The Senate majority leader, Harry Reid, Democrat of Nevada, has opposed lifting the ban in the past, questioning whether the government could effectively regulate Internet gambling. And a statement released from his office recently suggested that he had other concerns, as well.

"Gaming is an important industry to the state, and anything that affects it will be reviewed carefully," said Jim Manley, Mr. Reid's spokesman.

Read more at: http://tinyurl.com/kvmgcf

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