online gambling now in the u.s. danger zone

The “lame duck” period in the US Congress – that between the presidential election and the end of the 114th Congress in December – is regarded by many industry observers as a dangerous timeframe in which anti-online gambling legislation could be rammed through a busy and tired political establishment – a possibility raised recently in the Huffington Post.

Certainly retiring Senate minority leader Harry Reid could try something, although he is on record as saying he has no intentions of doing so this year.

His view of online gambling is somewhat ambivalent; in the past he attempted unsuccessfully to achieve federal legalisation of online poker, but more recently appears to have switched to supporting efforts by land casino mogul Sheldon Adelson to resurrect the Wire Act and impose a ban on almost all internet gambling, ignoring the right of individual states to make their own gambling law decisions (see previous reports).

Adelson is a major Republican Party donor, and is not shy to wield the influence of millions of dollars in achieving his ambitions, one of which is the banning of online gambling.

The land casino tycoon and his large retinue of lobbyists and presumably grateful politicians have repeatedly but unsuccessfully tried to push the Restoration of America’s Wire Act through Congress in recent years, and it is widely believed that his team actually drafted the proposed legislation.

If a lame duck session attempt is to be made, it will likely centre on a bill introduced recently by Sen. Tom Cotton, a fairly junior Republican member of the Senate from Arkansas with big ambitions.

The bill contains much of the RAWA language and interestingly is co-sponsored by two of Adelson’s reportedly more supportive lawmakers, Sens. Lindsay Graham and Mike Lee. Our readers may recall that Graham was the main driver of the failed RAWA bill last year.

Also of interest in the Huffington Post report is the information that in late September Adelson donated $20 million to the Super Political Action Committee for Senate Leadership, a Republican-leaning body, and that was followed a day later by the introduction of Cotton’s bill.

Adelson is believed to have spent big money over the past three years on lobbyists, frontmen and PR firms attempting to promote his RAWA proposal, thus far fruitlessly.

Cotton may find stiffer opposition than expected. Federal bills like RAWA are always going to be perceived as trampling all over states’ rights and therefore setting a dangerous precedent. Certainly many politicians have shied away from the prospect or actively opposed it, and a number of civil and tax liberty action groups have spoken out against such attempts.

One such group is the Taxpayers Protection Alliance, which is a member of a coalition of groups alarmed by the possibilities of RAWA.

President David Williams told the publication Watchdog.org this week he has no brief for or against online gambling, but is focused on keeping out federal interference in states that have traditionally guarded their right to make gambling legislative decisions.

Three states – Nevada, New Jersey and Delaware – have already legalised forms of online gambling .

“Basically, the federal government should stay out of it and it should be left up to the states. If a state wants online gambling, they should be allowed to do it. If a state doesn’t want to do it, that’s also their choice,” Williams opined.

He was also critical of Adelson attempts to influence events, saying:

“He’s trying to stop online gambling because he wants people to go to Vegas and his hotel and gamble down with him. I don’t begrudge him that, but just don’t use the federal government to try to get legislation passed to protect your own interests.”

RAWA became necessary for the Adelson-led faction after the U.S. Department of Justice issued a legal opinion that “interstate transmissions of wire communications that do not relate to a ‘sporting event or contest’ fall outside the reach of the Wire Act” in In September 2011.

Before then the 1961 Wire Act, regardless of its irrelevance in terms of modern day technology which created the Internet, had been used by the US authorities to pursue any online gaming transaction.

The opinion that the Act applies only to sports betting to some extent liberalised the market and triggered enquiries by individual states looking at online possibilities for their lottery operations.

The U.S Court of Appeals for the Fifth Circuit had earlier ruled that the Wire Act applied only to sports bets and not to other types of online gambling.

Williams described the possibility of RAWA passing as “a huge blow to states’ rights.”

“It establishes a really bad precedent, because now we’re saying what states can and can’t do, and this should be left up to the states,” he said.

There is now also the empirical evidence from states like New Jersey, Delaware and Nevada that geo-location and efficient state-administered regulation can work, benefitting and protecting the consumer and successfully generating revenues.

A lame duck RAWA attempt could also be discouraged by political developments which have seen progressive-thinking lawmakers like New Jersey’s Frank Pallone push successfully for a Congressional review of federal gambling by the House Energy and Commerce Committee.

Pallone hopes that such a study will include sports betting, daily fantasy sports and other forms of online gambling, and has expressed the view that federal legislation such as the Wire Act, the 2006 Unlawful Internet Gambling Enforcement Act (UIGEA) and the 1992 Professional and Amateur Sports Protection Act (PASPA) are “obsolete” and in need of change.

Certainly in regard to the PASPA, which bans sports betting from all but four states, there have been representations for change at state level and more recently a drive for liberalisation by the American Gaming Association.

Pallone said recently in an interview with ESPN:

“The laws need a wholesale review to see how they can actually work together and create a fairer playing field for all types of gambling, both online and offline, including sports betting and daily fantasy sports. At the same time, we must ensure the laws are actually creating an environment of integrity and accountability, and include strong consumer protections. I plan to continue discussions with the key stakeholders and then will introduce comprehensive legislation to finally update these outdated laws.”

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