Congress in a race with states to pass online gambling law

LOS ANGELES Fri Mar 8, 2013 8:21pm EST

A dealer shuffles a deck of cards during a poker game at a casino in Budapest September 15, 2009. In Hungary, ravaged by the recent economic crisis, poker has become something of a national pastime, and for some people, a source of income. REUTERS/Katoly Arvai

A dealer shuffles a deck of cards during a poker game at a casino in Budapest September 15, 2009. In Hungary, ravaged by the recent economic crisis, poker has become something of a national pastime, and for some people, a source of income.

Credit: Reuters/Katoly Arvai

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LOS ANGELES (Reuters) - States racing to legalize online gambling may soon be overtaken by the federal government, as efforts to pass a national bill begin to come together.

Legislation in the House is likely to be introduced this spring. Senate Majority Leader Harry Reid (D-Nevada), whose long-advocated federal legislation never got introduced last year, is working behind the scenes to form a coalition to support the measure.

"I think the states' passage gives some incentive to the federal government to act," said Representative Joe Barton (R-Texas), who introduced an online poker bill in 2011 that failed. He plans to introduce a bill this spring.

"Whether you're for or against Internet gambling," said Barton, "you don't want 50 sets of state laws. You want uniformity."

Similar efforts by Senate Majority Leader Harry Reid and former Senator Jon Kyl (R-Arizona), backed by the casino industry, fizzled last year. The Reid-Kyl bill faced stiff opposition from Republicans and several states' governors and others who felt it unfairly favored Nevada by giving it too much regulatory clout and a cut of the regulatory fees.

Congressional efforts have picked up as more states move forward with their own bills. New Jersey Governor Chris Christie signed legislation on February 27 authorizing online gambling in an attempt to help the state's struggling casino industry and generate casino tax revenues.

New Jersey is the most populous state to approve online gaming, following Delaware and Nevada. Many others are considering it. An Illinois senate committee filed a bill earlier this week that could authorize online gambling there.

Several states are also trying to figure out how to band together to attract more gamblers.

Proponents of a federal law say it would create uniformity and impose safeguards against fraud, while opponents say it would usurp states' power and siphon off badly needed revenues.

Prior federal efforts have also drawn steadfast opposition from religious groups such as the National Association of Evangelicals and the Southern Baptist Convention, which blasted the draft legislation circulated last year.

That effort was sidetracked as both parties concentrated on the election, gambling executives and political officials said. Reid and Senator Dean Heller (R-Nevada) say they intend to try it again.

"We should have done it on a federal level ... we are going to try to figure out a way forward," said Reid at a recent press conference.

"Senator Heller believes federal legislation for online poker is crucial, and will continue to work with Senator Reid and like-minded colleagues to get a bill passed," said Chandler Smith, Heller's communications director.

To date, proposed federal legislation has sought only to regulate Internet poker and prohibit other forms of online gambling.

New Jersey's legislation allows for a broad array of games, including online slots, blackjack and other table games. The state plans to take 15 percent of the amount won by online casinos from players within its borders. Nevada intends to keep 6.7 percent.

Nevada is expected to be the first state to go live with online gaming, likely by summer, according to regulatory and industry experts. The state will only allow poker.

Draft federal legislation over the past few years would divide tax revenue between the federal government and states where the bettors reside and the state where the legal website is located. Some proposals allow the federal government to take 5 percent to 10 percent of the tax revenue.

According to the American Gaming Association, about 85 countries have legalized online gambling and an estimated $35 billion is being bet worldwide online each year, including by millions of people in the United States.

AGA projects the U.S. market to reach $10 billion a year by 2017 from about $4 billion in unauthorized gambling in 2011.

Caesars and other large casino operators like MGM Resorts International Ltd have long promoted federal legislation, as it would offer a larger, more uniform and liquid market.

"We will be prepared with our offerings for Nevada and hopefully New Jersey," said Seth Palansky, a spokesperson for Caesars Interactive Entertainment. "But there is still time for Congress to step in and provide a federal solution."

(Reporting by Susan Zeidler; editing by Prudence Crowther)

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Comments (3)
victor672 wrote:
This is America’s only future, until the money is gone. Then we become the Chinese States of America.

Mar 09, 2013 11:09am EST  --  Report as abuse
Ex-Fed wrote:
Not so, victor672, but rather this is something already very long overdue. Not only that but, (wait for it), it is already legal for Americans, has always been legal, and never was illegal to begin with, except for a few states or so. So everyone is scrambling now to “legalize” something which has already always been legal all along, despite the misleading and misinformed headlines we have seen since 2006. There never should have been a hastily imposed “by darkness of night” pseudo-”prohibition” of 2006 to begin with, with all its many harmful consequences to American principles of liberty, industry and so many American citizens involved in the gaming industry in one form or another. Moreover, it’s not nearly enough if any federal legislation merely avoids unduly favoring the interests of the state of Nevada, for example, but rather it should favor all Americans and avoid favoring the big money special interests as well, rather than become another of case of merely “politics as usual.” That means all Americans should be favored, both the big and the small interests and entrepreneurs, not merely the regional or large commercial interests. Isn’t that the American way, or what it is really supposed to be? It has been well said by another commentator on what has occurred in this country since 2006, that the apparent pattern for this matter since then has tended to resemble something more like “[1] villainize, [2] criminalize, [3] monopolize” instead. There is also nothing wrong with gambling per se, it is not intrinsically evil, not inherently sin, or even a “vice” as some might say. Just as with many other of the not intrinsically evil pursuits that Americans spend their money on every day, even large sums of money, whether sports or music or arts or whatever, it is merely that for some it can become an occasion within a specific context for non-intrinsic evil or wrongdoing or trouble, i.e., of having such things added or appended to it rather than the thing itself being inherently evil or wrong to begin with. “Prohibition” has no place in American society for something of this kind, is clearly futile, and gambling has its place in this world and this life – and many responsible law abiding Americans like it.

Mar 09, 2013 2:30pm EST  --  Report as abuse
idun215 wrote:
Too Late for a federal Bill. Any federal that gets passed right now would only delay things. Feds had their chance and failed leave it to the states some of them will be up and running by the end of this year a Federal bill would only delay things at least 2yrs.

Mar 10, 2013 12:47pm EDT  --  Report as abuse
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