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Wednesday, May 25, 2011

Legal Internet gambling gaining favor

Support is growing around the country for Internet gambling. In 2011, five states either have considered or are considering allowing Internet gambling. Congress has already passed legislation authorizing Internet gambling.

Congress in 2006 banned all credit card, check and electronic funds transfer transactions on "illegal Internet gambling" sites. In 2010, Congress failed to pass legislation to reinstate Internet gambling in the United States. Critics believe all the 2006 law did was drive Internet gambling sites offshore.

Congress is considering new legislation, H.R. 1174 (see The Green Sheet's Legislative Roundup at www.greensheet.com/legislation.php ), that allows and regulates Internet gambling sites. The legislation would continue to ban credit card transactions on U.S. gambling sites. Its language is identical to legislation that made its way through the House Committee of Financial Services last year before it was discarded.

A potential revenue source

Industry research organizations estimate legal online gambling in the United States could earn as much as $67 billion in five years while creating more than 25,000 new jobs. And the states of Florida, Hawaii, Iowa, New Jersey and Nevada as well as the District of Columbia looked this year at gaming revenues as a way to help budgets.

Washington, D.C., became the first place in the nation to authorize Internet gambling in April. The bill sponsor, Council Member Michael Brown, said after gambling went into effect, "There really was no clear law that said we could not do this." The District of Columbia estimates [its] revenues from gambling will exceed $14 million by 2014.

It is interesting to note two things about the passage of this gambling initiative. The first is in order for the gambling legislation to pass in the District of Columbia, it had to stand up to a 30-day congressional review period. Nobody in Congress objected to the legislation, and it was included as part of the 2011 District of Columbia budget. The gambling will be run by the D.C. Lottery Council.

N.Y. clamps down

The second item of note is that three days after Congress allowed Internet gambling to go into effect in the nation's capitol, the U.S. Attorney for the Southern District of New York indicted three of the largest Internet poker sites on charges of fraud, illegal gambling and money laundering. The FBI then moved to shut down the three sites.

Michael Waxman, spokesman for the Safe and Secure Internet Gambling initiative, recently responded to the federal actions against online gambling. "As the federal indictments have illustrated, the freedom of the Internet has allowed millions of Americans to find a way to gamble online," he said. "With more than a thousand operators targeting the U.S. market, government attempts to shut them down one at a time is futile. The common-sense solution is for Congress to heed the increasing calls for legislation to control the activity and capture the significant economic benefits."

States weigh the issues

Legislation to legalize online gambling was brought before legislatures in Iowa, New Jersey, Hawaii and Florida this year but all of these bills appeared to be exhausted in their run to passage. New Jersey Gov. Chris Christie vetoed online gambling legislation March 3.

"I wholeheartedly support the intentions of the legislature to make New Jersey a more competitive gaming jurisdiction," the governor said in his veto message. "However, I do not believe that Internet gambling … is a viable option for continuing the progress that we have made so far in reversing the fortunes of the casino industry in New Jersey."

The governor said in his veto message he also had concerns about whether the legislation violated federal law. He additionally expressed the belief that the gambling legislation violated the New Jersey constitution. He feels the constitution requires a voter referendum for passage of a new gambling law.

In Hawaii gambling legislation was allowed to die reportedly because legislative leaders believed there was not enough public interest in the bill to merit more consideration. Gambling legislation is expected to return next year.

Gambling legislation was introduced in Iowa where riverboat gambling is already allowed. The legislation is reportedly not moving. In Florida, an Internet gambling bill failed to get out of the Criminal Justice Committee in April and, so, died.

Nevada forges ahead

Nevada, however, seems to have better prospects for Internet gambling. A legalization bill unanimously passed the Assembly in April and is now being considered by the Senate. Nevada Gov. Brian Sandoval opposes the legislation preferring online gambling regulation at the federal level.

"I do believe that online gaming is the [wave] of the future," Sandoval said. "If, indeed, the federal government legalizes online poker, the state of Nevada should be the one that sets up regulatory structure and the investigatory structure for those who seek licensing in that area." end of article

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