Wednesday, May 13, 2009

The Tribes In The Media: Internet Gambling Could Further Cut Into Indian Casino Revenues

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This installment of the Tribes In The Media is a Los Angeles Times article on the chances of Internet gambling being approved by Congress. Internet gambling, which is currently illegal in the United States, except for betting on horses, could further cut into casino revenues.

A push to legalize Internet gambling
By Ben Meyerson
Los Angeles Times
May 13, 2009

Reporting from Washington — The online gambling industry is waging a campaign in Congress to legalize Internet betting, arguing that it is here to stay and can be regulated and taxed. But opponents are raising moral objections.

Rep. Barney Frank (D-Mass.), head of the House Financial Services Committee, is leading the fight for gamblers. A previous effort by Frank failed to get out of committee, but the combination of grass-roots and corporate support -- as well as the weakening of the Republican Party -- might improve the odds, advocates said.

"The poker players and other online gamblers have gotten organized," Frank said, adding that he supported the legislation as a matter of personal freedom.

I. Nelson Rose, a professor at Whittier Law School in Costa Mesa and coauthor of the book "Internet Gaming Law," thinks Frank will have the power to push legislation through the House this time around. "It will pass, although there will be changes," Rose said. "Very few people in Congress really care at all about Internet gambling."

The legislation's prospects in the Senate, where Majority Leader Harry Reid (D-Nev.) has opposed it in the past, are not clear. Many Las Vegas casinos object to Internet gambling. Reid spokesman Jim Manley said that although gambling was "a very important industry to the state," the senator had concerns about whether online gaming could be regulated.

The Poker Players Alliance, which claims more than 1 million members, has enlisted former Sen. Alfonse M. D'Amato (R-N.Y.) in its campaign.

In the past, the biggest opponents have been socially conservative organizations and professional sports leagues.

Chad Hills, an analyst for gambling research and policy at Focus on the Family, said the group was gearing up for a fight. "There's something to be said for people having to get in their car and actually go to a casino," Hills said. "If you have this available in your living room and it's accessible 24/7 . . . this is like the perfect storm for addiction."

John Pappas, executive director of the Poker Players Alliance, acknowledged the social ills linked to gambling, but said the best way to help addicts was to legitimize online poker.

"As with anything, people abuse it -- online shopping, eating, drinking, smoking," Pappas said. "Playing poker is not immune to vice, but we truly believe that the best way of addressing problem gaming is to license and regulate the industry, not drive it underground."

Experts said sites such as Party Poker and Poker Stars that advertised in the U.S. operated questionably with regard to the law. Each has two sites -- one with an Internet address that ends in ".net," where players play with fake money and cannot bet, and one that ends in ".com," which instructs players in the U.S. how they can transfer money to and from their accounts.

The Justice Department has long maintained that such transactions are illegal under a 1961 law aimed at bookies, but at least one federal judge has ruled the law does not apply to online transactions.

Congress in 2006 passed a law banning U.S. banks, credit card and financial companies from processing online gambling transactions. Regulations governing enforcement of the law were adopted by the Bush administration in January and will take effect Dec. 1 if Frank's legislation does not succeed.

A 2007 study for the gambling industry claimed another benefit for legalization: tax revenue. The study predicted that Frank's 2007 bill, which was similar to the current version, would have brought in between $8.7 billion and $17.6 billion from 2008 to 2017.