Caesars Interactive chief speaks on state-by-state legalisation

The Offshore Gaming Association conducted interesting interviews with online gambling experts and businessmen this week in an article on legalisation written by Hartley Henderson.

In rsearching his article, Henderson spoke to Caesars Interactive Entertainment chief executive Mitch Garber, a widely experienced business leader who is due to debate the desirability of a federal online gambling ban soon with Las Vegas Sands executive Andrew Abboud .

Henderson asked Garber whether it is not too late to introduce federal law legalising interstate online poker, and Garber’s thoughtful response was that whilst it’s not yet too late for a federal solution, US online gambling regulation has thus far evolved in a state-by-state environment similar to that which controls the land gambling side of the industry.

Garber noted that the online gambling industry has embraced this solution in Nevada, Delaware and New Jersey, where operators are succeeding at growing a meaningful business and “…see momentum toward a rollout of future state by state legalization, and compacting between states which will address the issue of scalability.

“So, we are very happy with the rollout of the first states and we are actively working to get the same result in a number of additional states. That is our focus.”

Asked for his thoughts on the drive by Las Vegas Sands owner Sheldon Adelson to impose a federal ban on online gambling, Garber did not mince his words:

“We believe that Sheldon Adelson has taken a polarizing and hypocritical position on legalized online gaming. His arguments against legalization have no basis in fact, and we believe that we will successfully counter those arguments in whatever forum is appropriate, and ensure that we continue along the path of legalized, taxed, and fully regulated online gaming in the United States, and greater enforcement against illegal sites.”

Garber elaborated, saying that Adelson’s arguments are centred around the availability of online gaming 24 hours a day at home.

“This argument ignores a number of important facts, including the sophistication of the prevailing technology; the generally low stakes nature of online gaming; and most importantly, the fact that we are living in a new paradigm, where you can shop or trade stocks from your sofa 24 hours a day on the internet.

“Online gaming, properly licensed, with the appropriate focus on responsible gaming, is simply another good and service available online.”

Henderson additionally interviewed legal expert Larry Walters on the problems associated with re-writing the Wire Act to impose a ban on internet gambling, and Walters’ comments were informative.

He said that whilst Congress had wide powers of enactment within the framework of the constitution, and that politicians could in theory impose a ban by amending the ‘carve outs’ allowed in the Unlawful Internet Gaming Enforcement Act (UIGEA) or expanding the Wire Act to encompass more than sports betting, such a course faced a number of complexities.

The legal expert surmised that a statutory move would have to be very broad in order to include exemptions for state lotteries, possibly Indian tribes, and other interested parties, .

“There are other carve outs in the UIGEA besides intra-state gambling, such as the one for fantasy sports, so that type of gaming may have to be addressed too, in order to enact a broad prohibition,” Walters said.

“Then the lawmakers would need to think about what to do with things like skill games, online sweepstakes, and penny auctions – which are not traditional gambling, but which might provide a similar recreational feel.

“The hurdles and political resistance would be substantial from the stakeholders affected by these sweeping changes. Americans have become accepting of the concept of ‘gaming,’ in a way that we’ve never seen in this country.

People ‘wager’ with virtual, in-game currency on a regular basis, without a second thought,” Walters said, adding that an entire generation of children have been raised on games where you can win or lose ‘credits’ through elements of chance, and openly laugh at adults who think that ‘gambling’ is a vice activity on par with drugs or prostitution.

Walters came to a conclusion similar to that expressed recently by other experts on the issue, saying:

“Anything is possible in Congress, but the likelihood of a broad, controversial, online gambling prohibition bill making its way through a divided Congress during an election year is remote.”

Walters also considered the issue of states’ rights in terms of any federal ban, and particularly in view of the state-by-state legalisation that has been a feature of the US industry in recent times.

He noted that “grandfathering” such states into a new regime was a far more complex process than may appear, with constitutional and comparative issues that have the potential to be complicated and difficult.

“There are constitutional issues created by both grandfathering and not grandfathering, which could get complicated,” he said.

“If grandfathered, New Jersey would be placed in the unenviable position of arguing that grandfathering under the Professional and Amateur Sports Protection Act (PASPA) is unconstitutional, while grandfathering under some new statute is just fine. If it was not grandfathered, it would have the mirror image problem.”

Walters suggested that possibly the best solution is for the federal courts once and for all to clarify the issue of online gambling at the federal level.

“I have no doubt that when the facts are put on the table and when the courts look at the benefits of a uniform set of laws they’ll agree that there is no reason to criminalize an activity that both states and citizens want and that is perfectly legal nationwide at land-based establishments,” Walters said.

“The lack of problems with the sites that are currently operating will alleviate many fears and in the end the government will almost certainly amend the Wire Act and UIGEA to specifically include interstate wagering. When that happens Americans will once again enjoy the benefits of full online poker tables and poker rooms and in the end it will benefit all tax paying Americans.”

http://www.osga.com/artman/publish/article_10716.shtml