Online gambling advocates bet on legal future in U.S. - East Valley Tribune: Nation / World

Online gambling advocates bet on legal future in U.S.

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Posted: Monday, June 27, 2011 8:48 pm | Updated: 2:06 am, Sat Aug 6, 2011.

WASHINGTON - There's a growing consensus that online gambling on U.S. websites will eventually be legalized by individual states or by federal law.

That's despite a Department of Justice crackdown April 15 on the three largest online poker sites used by Americans for allegedly violating the 2006 Unlawful Internet Gambling Enforcement Act. All are offshore providers.

Since 2006, it has been illegal to process payments for winnings through U.S. banks.

Earlier, law enforcement hadn't really tried to stop access to offshore providers. The DOJ has filed a civil complaint alleging money laundering; it seeks $3 billion held by the three companies.

Though online gambling is illegal, an estimated 16 million Americans engage in it. The business is worth more than $6 billion a year.

Eyeing potential tax revenues, New Jersey's state legislature passed an Internet bill this year but Gov. Chris Christie vetoed it. Washington, D.C., is scheduled to take up a legalization proposal this week.

In Congress, a bill that would legalize online gambling -- sponsored by U.S. Reps. John B.T. Campbell, R-Calif., and Barney Frank, D-Mass. -- is pending but appears a long shot. A similar bill passed with bipartisan support out of the Financial Services Committee last year but never got a floor vote.

Last Friday, U.S. Rep. Joe Barton, R-Texas, introduced a poker-only legalization effort in front of the U.S. Capitol, surrounded by co-sponsors, including Campbell, Frank, and U.S. Reps. Steve Cohen, D-Tenn., and Shelley Berkley, D-Nevada. They indicated the poker-only approach probably had a better chance of prevailing this year. Frank noted that poker accounts for more than 90 percent of online gambling.

David G. Schwartz, who directs the University of Nevada-Las Vegas' Center for Gaming Research, said passage of any Internet bill by this Congress "is such a crap shoot -- pun intended, I guess -- with everything being held captive to partisan politics."

At a hearing in May, Cohen asked Atty. Gen. Eric H. Holder Jr. about the federal effort in New York to take down PokerStars, FullTilt Poker and Absolute Poker, to block domain names associated with poker websites and freeze bank accounts.

"Do you think we really ought to be spending a lot of time in trying to deal with Internet poker?" Cohen asked him.

Holder said he had to enforce "the law as it exists."

Internet gambling opponents -- such as Focus on the Family, the Christian Coalition and other socially conservative groups -- continue to point to the social fallout from all forms of gambling. But the National Football League, which had long opposed Internet gambling, gave its support after the bill that got through the financial services committee was amended to explicitly prohibit sports betting.

Online poker advocates such as the Poker Players Alliance say casinos had better establish an online presence or risk the fate of the music and book industries when those entertainment forms migrated to the Web.

But gambling and tourism industries that now rely on casino revenues in places like Tunica, Miss., have not reached a consensus on whether they support Internet gambling.

"Any additional competition, to me, just makes it much harder for us to succeed as a gaming destination," said Webster C. Franklin, president and CEO of the Tunica Convention and Visitors Bureau.

More competition might not be best for the Mississippi market, agreed Allen Godfrey, deputy director of the Mississippi Gaming Commission, which regulates the state's casinos and charitable bingo.

"People would maybe sit at home in their pajamas instead of coming to a place like Tunica or Biloxi or any other bricks-and-mortar hotel-casinos," Godfrey said. He added that he could not predict the loss in gross revenue.

Some argue online poker, specifically, might actually spur interest in the table game.

"I think it would end up helping a lot of those smaller jurisdictions because you'd probably see what we are see already (in Las Vegas), which is people would play online and then go to live tournaments and live cash games at the casinos every now and then," said Schwartz of the University of Nevada-Las Vegas.

"If you look at the growth of online poker from around 2001 and 2002, that exactly correlates with growth in Nevada poker revenue," he said.

John A. Pappas, the Poker Players Alliance's executive director, makes a similar point: "Before the Internet poker boom, there were a few hundred playing in the World Series of Poker. Last year, they had over 7,000 people playing in the main event."

Pappas said the status quo -- in which the Justice Department crackdown left hundreds of millions of players' dollars inaccessible -- was untenable.

"We'd all be better off if players could play in a licensed and regulated environment," Pappas said. "There needs to be some legislative clarity here. ... We believe that players would be better served under U.S. oversight rather than relying on overseas companies."

Serious money is being spent to influence congressional action on gambling issues -- including Internet gambling.

The alliance, with 1.2 million members, paid nine lobbying firms $1.8 million last year and $420,000 in this year's first quarter to support Internet gambling. The American Gaming Association spent just short of $1.6 million last year and $574,988 already this year, though only a portion of lobbyists' filings deal with Internet gambling. The National Indian Gaming Association and various tribes are ponying up money for lobbyists, too.

One company hoping to see the legalization bill passed is Caesars Entertainment, which operates 38 casinos in 12 states and Ontario. It spent $3.9 million last year and $784,821 so far this year on this and other issues.

Caesars spokeswoman Jan L. Jones said the company would "absolutely" get into the market if online gambling were legal and regulated. She said it doesn't make sense that the 16 million Americans who play legally can only play with "foreign companies. You have a product Americans want but American companies can't provide."

Legal Internet gambling "is inevitable," said Catherine T. Price, who chairs the University of Southern Mississippi's Department of Casinos, Hospitality and Tourism Management. "... You can't survive technology unless you compete right along with it and I think that's what the casinos will do -- the big ones."

"The key is the regulatory process so that it's not increasing the social problems which we always worry about with gaming," Price said.

Price said that, as an economic issue, Internet gambling "takes the tourist out of the market," since players at home don't need a hotel room or to dine out. She said it also may break along age lines, with baby boomers liking casino resorts and younger players more comfortable online.

In Nevada, there's talk of catching both demographics by permitting online gambling inside casino-hotel rooms.

For Cohen, the Tennessee Democrat, Internet gambling is "a freedom issue."

"I think we ought to take advantage of an activity that the public embraces and is willing to pay taxes on," Cohen said. "It seems like a win-win."

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