Good News on Online Gambling

Good News on Online Gambling November 23, 2006

The passage of the Unlawful Internet Gambling Enforcement Act has, I think, brought about some positive things. It seems to have spurred serious action from both gambling companies and gamblers to get serious about protecting their interests. The AP reports that a powerful casino management company is lobbying to have the bill reversed. MGM Mirage CEI Terry Lanni said:

‘We’re looking even in the lame-duck session to reintroduce this bill with some of our compatriots in the House and Senate to study (Internet) gaming,’ said Lanni, who directs the world’s second-largest casino company.

‘We think it can be taxed, we think it can be regulated, we think it can be licensed,’ Lanni said. ‘With the new leadership, with the Democrats winning the House and the Senate, we think we’re going to have a much better opportunity to do that.’

Whether it’s successful or not, I think it’s motivated the gaming companies to make sure that their interests are protected. I really think they were caught off guard by this bill being shoved through. No one seriously thought the Senate would do that. The other thing that has happened is that poker players have joined together as well. The Poker Players Alliance literally doubled its membership after the House passed the bill and has nearly doubled again since the Senate passed it.

The attention and anger that followed from the bill also seems to have had direct electoral consequences as well. Jim Leach, the chief House sponsor of the bill, lost what was thought to be a safe seat and the polls clearly showed that this bill was the chief reason:

The online poker lobby group, Poker Players Alliance, claimed Wednesday that anger over the ban helped sink the re-election bid of 30-year House legislator Rep. Jim Leach, the Iowa Republican who helped write the bill.

The alliance released the results of an automated telephone survey of 1,033 voters in Leach’s congressional district conducted Monday and Tuesday by RT Strategies.

While one in 10 cited Leach’s stand against Internet gambling as a strong influence in their vote for him, a greater proportion, nearly one in seven, cited it as a strong reason to vote for his opponent, Democrat Dave Loebsack, a political science professor.

‘This was an awful close race,’ said pollster Thomas Riehle of RT Strategies. ‘It looks like on balance, Leach’s position on Internet gambling hurt him more than it helped him.’

The Poker Players Alliance is pushing the idea of having a new bill passed that explicitly exempts poker from the new law. It’s already exempted, in reality, but the passage of that bill would make it much more likely that the banks won’t overreact to the bill and block any transfers from online poker companies. Even if that bill were to pass at some point, in the short run it looks likely that the courts will have to hash out the meaning of the bill:

Legal experts at the expo harshly criticized the Internet gambling law, saying it was confusing and contradictory, particularly a section that appeared to sanction Internet betting conducted within a state.

‘It’s a public embarrassment. … it’s a mess,’ said professor I. Nelson Rose of the Whittier Law School. ‘Eventually I think they’ll get Congress to change the law to do for Internet poker exactly what they did for Internet horse racing. It’s an exemption but (based on) states’ rights.’

David Stewart, a lawyer with Washington-based Ropes & Gray LLP, predicted lawmakers would let the courts work out the law’s weak points.

‘Whenever they legislate on something, they don’t come back to it for a while,’ he said. ‘They want to see, did they really screw it up or can people work their way around it?’

The courts, as I’ve explained before , have already ruled that the only form of online gambling that is currently illegal is sports betting.

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