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Internet Gambling Bill May Get a Sporting Chance

5/10/09 - CQ Politics - View Source

By Kathryn A. Wolfe

Rep. Barney Frank might have come up snake eyes in his previous efforts to legalize Internet gambling but he’s stepping up to the table again with a bill that would authorize the Treasury Department to regulate online wagering.

And there’s another shooter in his corner: Jim McDermott , D-Wash., who sits on the Ways and Means Committee, introduced a bill (HR 2268) that would provide for the collection of associated tax revenues.

Both bills were introduced May 6.

Frank, a Massachusetts Democrat and chairman of the Financial Services Committee, took pains to suggest that his prime motive for introducing his bill was to ensure Americans’ freedom to spend their money as they please.

“The government should not interfere with people’s liberty unless there’s a good reason,” Frank said. But he also acknowledged that, in a time of economic turmoil, the additional revenue wouldn’t hurt.

McDermott’s chief of staff, Mike DeCesare, said that over 10 years, the revenue bill could put $43 billion in federal coffers and even more in states’. It would establish a 2 percent tax on deposits made into Internet wagering accounts.

Undoing Earlier Laws

Frank’s bill would establish a regulatory procedure through which online gambling outfits would have to be licensed in order to accept bets from players in the United States, as long as the state in which a gambler lived did not bar the practice.

This would largely do away with a 2006 law (PL 109-347), pushed through by the Republican leadership as part of a larger port security measure, that was aimed at choking off online betting through restrictions on payment processing.

Robert W. Goodlatte , R-Va., who supports those restrictions, said May 6 that Frank’s measure not only guts that 2006 law but makes online gambling explicitly legal.

“Apparently, Rep. Frank believes that [Treasury Secretary] Timothy Geithner can do a better job at enforcing our nation’s criminal laws than the Department of Justice, which is scary considering [Geithner’s] track record on complying with the tax code,” he said.

The executive director of the Poker Players Alliance, John Pappas, says his 1 million members support Frank’s bill. The group, formed mostly as a grass-roots backlash against the 2006 law, has come into its own; last year it set up a political action committee that contributed $43,553 to congressional campaigns, including $4,950 to Frank’s.

And Pappas’ side now has even greater clout: In a reversal from past battles, Harrah’s Entertainment, one of the largest brick-and-mortar gaming companies in the world, has thrown its weight — and its money — behind such legislation. Harrah’s ramped up its lobbying last year, spending more than $405,000 — a large chunk of which was in support of a measure, similar to the one announced May 6, that also was introduced by Frank.

Support for Internet gambling from a company that operates traditional casinos significantly alters the landscape, as such businesses have usually been silent on — or actively opposed to — online wagering, believing it cuts into their bottom line.

“There was some concern from some of the people that are in the offline gaming community. There’s still some,” Frank said. But he pointed to the fact that Shelley Berkley , D-Nev., has signed on as a cosponsor of his bill as evidence of their support.

In the past, Frank’s bills supporting online gambling have been stymied in part by lingering concerns that loosening restrictions on Internet wagering would open the floodgate to a host of social ills. Conservative Christian groups, like Focus on the Family, argue that the 24-hour availability of Internet gambling makes it particularly easy to develop an addiction. Moreover, the groups contend, online sites make gambling too easy for underage youths.

Frank said he has yet to speak with congressional leaders or the Obama administration about the measure, but he plans to do so soon. The White House did not return calls seeking comment.

At the behest of professional sports leagues, Frank said his legislation would exempt online wagering on sports matches, even though they have long been a favorite of bookies and gamblers alike.

“The expression by the professional leagues of shock at the notion that people would actually bet on games was one of the least persuasive emotional outbursts I have encountered, but we acknowledged the reality of it,” he said. “No one will be betting on professional sports games.”

Protecting Children
Compulsive Gambling Safeguards
Secure Financial Transactions
New Government Revenues
Regulated and Licensed Environment
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