Gambling battle lines drawn in 2009 Congress

The Bush administration’s final tilt at online gambling – the last minute “midnight drop” style publication of the regulations supporting the Unlawful Internet Gambling Enforcement Act – has drawn the battle lines for next year’s Congress, according to a report in the the Birmingham News this week. And the industry’s wannabe arch enemy, Alabama Representative Spencer Bachus, appears to relish the prospect of frustrating any attempt in the 2009 Congress to overturn or modify the legislation.
The publication of the regulations in the dying days of the Bush government has been widely criticised, and has been almost as controversial as the Act itself, passed in a late night session of Congress attached to a must-pass security bill that left most politicians ignorant of its content.
The Act seeks to outlaw financial transactions with online gambling operators, placing the burden of enforcement on a protesting financial services industry critical of the lack of precision in its definition of what constitutes an illegal gambling transaction. Vested interest carve-outs for Internet betting on state lotteries, horse-racing and fantasy sports have complicated the drafters’ task, whilst politicians with an opposing view have mounted a spirited defence of the right of Americans to choose how they spend their disposal income.
One politician who is unequivocally against Internet gambling despite the skewed nature of existing legislation is Spencer Bachus, who has made a name for himself in some interesting pronouncements on the industry and provocative one-liners beloved of the media.
The Birmingham News says that Bachus approves of the manner in which both the Act and the regulations were pushed through, and he intends to support their retention in the 2009 Congress if the incoming Democratic administration of Barak Obama seeks to overturn or modify same.
Bachus is quoted as saying of the UIGEA regulations midnight drop in November: “No longer will the offshore gambling interests benefit from turning any computer into a casino that is available every minute of the day.”
His main political opponent is likely to be the Democrat Representative from Massachusetts and chairman of the House Financial Services Committee, Barney Frank who has been highly critical of the UIGEA and its impact on the banking industry, and favours a tightly regulated and taxed online gambling regime in the USA.
Frank said of the midnight drop: “This midnight rulemaking will tie the hands of the new administration, (and) burden the financial services industry at a time of economic crisis.”
The Birmingham News reports that at stake is a big part of the $16 billion global online gaming industry. Bachus was an active supporter of the actions of Senators Bill Frist and Jon Kyl who pushed the original bill through Congress in a controversial process that saw it attached to the must-pass Safe Ports Act. Bachus argues that the easy-access of Internet wagering encourages gambling addictions, especially among young people.
“I keep saying to everyone involved, if people want to go to a casino, that’s one thing, but putting a computer in the bedroom of every teenager has addicted a whole generation,” Bachus asserted rather broadly in a recent interview.
Ever since the night UIGEA was passed in 2006, Congress has debated – sometimes passionately – whether the government should be in the business of telling law-abiding adults that they can’t make certain financial decisions at home that would otherwise be legal in a casino, the Birmingham News explains. Bachus’ side won the initial argument to get the ban enacted into law, but it’s been under attack ever since as an overreach.
Democrat Representative from Nevada Shelley Berkely told the newspaper: “The clock is ticking on President Bush’s prohibitionist crusade against Internet gaming and that is clearly why these flawed regulations are being forced on the financial services industry at the very last minute.”
Bachus, on the other hand has been critical of how long it took Treasury officials to draft the new rules, which take effect in 2009. Federal officials struggled with the drafting, admitting to Congressional hearings that it was proving a more difficult and protracted 2 year task than Congress had anticipated.
Some foreign computer gambling operators already have stopped accepting bets from American computer-users, said Michael Waxman, a spokesman for the Safe and Secure Internet Gambling Initiative, which supports the industry. But US gamblers are not criminalised in the Act and can avoid the UIGEA ban by setting up accounts with non-U.S. banks. The online industry in general supports US legislation to legalise, regulate and tax online gaming.
“We think not only is Congress going to have the incentive to move on legislation … because of the flawed rules attempting to ban the activity, but Congress is going to realise it’s much better to look to protect consumers and collect billions in tax revenue,” Waxman said.
Bachus, who has been derided by online gaming advocates, is gearing up for the next battle when Congress reconvenes in January. With his trade-mark penchant for exaggeration, he told the Birmingham News: “These offshore gambling sites earned hundreds of billions of dollars, and the people that have opposed me on this have hundreds of billions to spend.”

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