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Best of Vin Narayanan

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Top-10 hurdles facing U.S. online gambling legislation

2 August 2010

10. Moralists
The universe of people in the United States who oppose gambling on moral grounds is shrinking. In 2009, 37 states had some form of legalized gambling (excluding lotteries) according to the American Gaming Association's 2010 State of the States report. By comparison, only 13 states had some form of legalized gambling (excluding lotteries) in 1988.

And in legislative hearings this year, moralists have conceded at hearings that they've lost the larger argument on the expansion of gambling. Rep. Spencer Bachus (R-Ala.) indicated he knew he didn't have enough votes to defeat Rep. Barney Frank's bill to regulate online gambling in the House Financial Services Committee. In fact, while the bill had more than a few supporters willing to speak on its behalf, Bachus seemed to be the only person on the committee willing to speak out against it. Several representatives voted against the bill. And a few opponents offered amendments (that were adopted) to make the bill more palatable in their eyes. But only Bachus was willing to stand up and fight the bill. And that is telling.

But it takes only one moralist in a key position to block legislation. So while the clout of gambling foes has waned, it only takes one person against gambling in a key position (see Bill Frist) to gum up the works. And in the case of gambling, moral outrage is bipartisan, so it can come from the Democrats and Republicans.

9. Sports leagues
The NFL is vehemently opposed to any regulated online gambling the U.S. The NFL is even opposed to the licensing and regulation of online gambling when the proposed law specifically says betting on sports is illegal. They seem to be convinced that introducing online gambling to Americans moves them one step closer to betting on the NFL (I'm really trying not to be snarky). And they've convinced other sports leagues to join them in this stance.

8. Nancy Pelosi
As speaker of the House, Nancy Pelosi (D-Calif.) is the most powerful person in the House of Representatives. And she has the power to determine if and when Frank's bill regulating online gambling comes up for a vote.

Pelosi hasn't said publicly whether she supports or opposes Frank's efforts to build a licensing and regulatory framework for online gambling.

In 2008 Pelosi effectively killed a bill crafted by Frank that would have delayed implementation of parts of the UIGEA by not bringing it up for a full floor vote.

In 2006, Pelosi voted for the Internet Gambling Prohibition and Enforcement Act -- a precursor to the UIGEA. Unlike the Senate, the House had a full debate over online gambling in 2006, and Pelosi cast her vote at the end of that process.

Just because Pelosi voted against the online gambling industry in 2006 doesn't mean she'll do so now. Reps. Peter King (R-N.Y.) and Maxine Waters (D-Calif) also voted against online gambling in 2006. But they're now two high-profile supporters in Frank's efforts to regulate the industry in the United States.

7. State's rights
Gambling has traditionally been regulated at the state level in the United States, and many politicians on both sides of the aisle would prefer to keep that way. The thought of expanding the federal government to regulate gambling doesn't sit well with them, even though they get the intellectual argument that Internet-level regulations shouldn't be made on a state-by-state basis.

6. Calendar
With the House of Representatives headed home for its annual August recess, time is running out for the House to take action on online gambling legislation. Due to its contentious nature, it is highly unlikely that the post-election lame-duck Congress will take on Internet gambling. As a result, there is only window for legislators will work on and pass online gambling legislation -- Sept. 13 through Oct. 8 (when the House goes in recess so members can continue their re-election bids). This is a very small window for a House that might find itself in the middle of two high-profile ethics trials (including one involving Waters) in addition to other legislation that needs to be addressed. And as a result, the online gambling bill could very easily be lost in the shuffle.

5. Monopolists
As the state of Massachusetts is finding out, gambling legislation can fail because of friendly fire. In Massachusetts, legislation to bring gambling to the state has either failed or is about to fail (depending on who you ask) because one faction wants slot machines at race tracks in addition to destination casinos, one faction doesn't want slot machines at race tracks -- and neither can agree.

The same problem could rear its head in the online gambling debate. Native American tribes and many American gaming companies want online gambling to come to the United States if they're the only ones that can offer it. They want to protect their monopolies over the entire gambling industry. And they're willing to oppose any legislation that threatens those monopolies.

4. Barney Frank
To most in the online gambling industry, Frank is the hero fighting hard to bring regulated online gambling to the United States. But to many Republican politicians and voters, Frank is the devil, and they will vehemently fight any legislation put forward by him. The Republicans hate it when Frank wins anything, and they'll be able to rally support to fight online gambling legislation for precisely that reason.

3. Taxation
One of the major political arguments for regulating online gambling is it opens up a new revenue stream that government sorely needs. But the House still needs to figure out exactly how it wants to tax online gambling. Yes, Rep. Jim McDermott (D- Wash.) has already introduced a bill to the House that would tax online gambling. But the bottom line is when new revenue streams are introduced, there are ugly fights over who gets what piece of the pie -- and just how big those pieces of the pie are going to be. And those ugly fights can kill well-intentioned legislation. So until the House figures out how to tax online gambling, regulation is not likely to happen.

2. Senate
Even if the House manages to pass online gambling legislation, there is no online gambling champion in the Senate to take up the cause. And because it takes just a handful of senators to keep legislation from passing, the online gambling industry needs a champion with juice -- someone with enough juice to attach online gambling legislation to an unrelated "must pass" bill like former Senate Majority leader Bill Frist did with the UIGEA. In other words, the only person who can deliver online gambling legislation in the Senate is Majority Leader Harry Reid (D-Nev). And the only way he can do that is to Frist it.

Reid's office says its "studying" the Internet gambling issue. And because he's facing a tough re-election race this November, it's tough to tell whether he'd try something this risky. On the plus side, he can say he's trying to bring online gambling jobs and revenue to Nevada. But his opponent, Tea Party angel Sharron Angle, could also try to skewer him for "dirty tricks politics" and betraying his own faith (he's a Mormon) for votes by supporting gambling.

1. November elections
If online gambling legislation fails to become law this year, it will have to start over again next year. And if the Republicans gain control of the House after the November elections, the dream of federally regulated online gambling dies for at least two years. The Republican leadership in the House is against online gambling. And as a result, no vote to license and regulate online gambling will ever be entertained.

Republicans need to gain 39 seats in order to control the House -- a very real target given the economy and the favorability ratings of the Democrats. Even if the Republican fail to gain control and come just close -- within a few seats -- it will be difficult for the House Democrats to push through online gambling legislation. More Democrats will vote against the bill than Republicans for it, and the result could very well be defeat.


Top-10 hurdles facing U.S. online gambling legislation is republished from Online.CasinoCity.com.
Recent Articles
Best of Vin Narayanan
Vin Narayanan

Vin Narayanan is the managing editor at Casino City. When he's not writing or editing stories, he likes to play Chinese Poker, Badugi, Razz and any other "non-traditional" poker game. He also thinks blackjack is his best game and loves game theory.

Before joining Casino City, Vin covered (not all at the same time) sports, politics and elections, wars, technology, celebrities and the Census for USATODAY.com, USA WEEKEND and CNN.

A proud graduate of Michigan State University, Vin can be found on most nights and weekends trying to find a way to watch the Spartans play football or basketball.

Vin Narayanan
Vin Narayanan is the managing editor at Casino City. When he's not writing or editing stories, he likes to play Chinese Poker, Badugi, Razz and any other "non-traditional" poker game. He also thinks blackjack is his best game and loves game theory.

Before joining Casino City, Vin covered (not all at the same time) sports, politics and elections, wars, technology, celebrities and the Census for USATODAY.com, USA WEEKEND and CNN.

A proud graduate of Michigan State University, Vin can be found on most nights and weekends trying to find a way to watch the Spartans play football or basketball.