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Support Grows for Gambling Law Change

6/22/09 - Politico - View Source

By Patrick O’Connor

Rep. Barney Frank sees the odds improving for repealing a long-sought Internet gambling ban.

The chairman of the House Financial Services Committee believes the recent seizure of millions of dollars in online poker receipts only strengthens his hand because it reminds voters and politicians how sweeping — and potentially unclear — the existing law is.

“It helps,” Frank said after the U.S. attorney for the Southern District of New York seized, or froze, $34 million in bank accounts belonging to 27,000 online poker players.

The eloquently acerbic Massachusetts Democrat will spend the bulk of this year helping the Obama administration reregulate Wall Street in response to last fall’s financial collapse. But he also wants another crack at rewriting the ban on Internet gambling.

Even his Republican counterpart, who led a charge last year to defeat legislation gutting the law, believes Frank is holding much better cards in the current Congress than he had in the last one.

“It’s going to be an uphill battle to stop it this time,” said Alabama Rep. Spencer Bachus, the ranking Republican on the Financial Services Committee and a longtime gambling opponent who calls the pastime the nation’s “fastest-growing addiction.”

“We caught them off guard last time,” he said. “This time, they won’t be off guard.”

The question is how far Frank wants to go in rewriting the current law. Banks, credit card companies and other financial institutions he oversees are asking Congress for more clarity in how to police the current ban, since they bear the onus for blocking payments to gambling websites overseas.

Frank, though, introduced legislation last month that goes much further. It would create a licensing and regulatory framework that would allow Americans to play poker and place other bets on government-approved websites — an ambitious proposal that could eventually generate billions of dollars in much-needed revenues for states or the federal government.

Whatever path he pursues, any rewrite faces stiff resistance in the Senate from Jon Kyl, the Arizona Republican who worked for years to enact the current law.

It has a long, sordid past on Capitol Hill. An Army of well-funded lobbyists — led, in part, by Jack Abramoff — overcame the pleas of Christian conservatives to repeatedly block it. Authors made a string of critical concessions over the years, and Congress approved the Unlawful Internet Gambling Enforcement Act in 2006 after then-Senate Majority Leader Bill Frist (R-Tenn.), in a nod to the Christian conservative voters he was courting for a potential White House bid, quietly attached the legislation to a must-pass port security bill right before leaving office.

Last summer, Frank tried to pass a bill requiring the Treasury Department and the Federal Reserve to define explicitly what types of gambling are not sanctioned under the ban, after financial firms argued that the current law remains too vague and difficult for them to enforce. But a late surge of opposition resulted in a deadlock that forced Frank to abandon his bill.

As the fight intensifies, Internet gambling has become a major boon for lobbyists and public relations firms in Washington, as poker players and overseas websites continue to spend freely in what has been an uphill climb to legalize gambling.

In the first three months of the year, the Poker Players Alliance, a coalition with more than 1 million members, spent $430,000 lobbying to change the law, according to disclosures filed with the House clerk.

During the same period, the Interactive Gaming Council spent $768,500 among 14 different firms to lobby the issue, including $150,000 to Abramoff’s old shop, Greenberg Traurig. Most of the council’s members are overseas gambling websites based in safe havens, like Curacao, Gibraltar and the Isle of Man, according to links on its website.

Internet gambling has become big business for countries that sanction it, with the bulk of their players living in countries that don’t. Since Congress approved the current enforcement mechanisms, Antigua and other countries have hired lobbyists and appealed to World Trade Organization to repeal it.

Campaign finance rules forbid foreigners from contributing to politicians here in the United States. But campaign donations from domestic gambling interests have skyrocketed in recent years, with individuals and political action committees contributing nearly $17 million during the last two-year election cycle, according to numbers compiled by the Center for Responsive Politics.

The National Football League, which sees gambling as a major outside threat, remains the biggest obstacle for opponents of the law. Over the years, the league has marshaled Christian conservatives in support of stiffer penalties — or, more recently, opposition to repeal — spending millions of dollars to make its case on Capitol Hill.

In the first three months of this year, the league spent $440,000 lobbying Congress, according to the House disclosure database. On its disclosure, the NFL still lists upholding the current ban on Internet gambling as one of its top priorities.

The NFL helped turn key Democrats against Frank’s bill last year to give the chairman a surprise defeat in a vote on his own panel, Bachus and others said. But now the Alabama congressman and other supporters of the ban fear the league is working with Frank on a compromise that would uphold laws against sports betting.

The recent bank seizures, which targeted accounts managed by two companies that process payments for online poker sites such as Poker Stars and Full Tilt Poker thrust the issue back into the news and renewed old questions about the clarity of the existing law.

“It was terrible idea,” Frank said last week.

Rep. Shelley Berkley (D-Nev.), a gaming advocate whose staff is drafting a formal response to the administration, argues the seizure “shows the inappropriate excess of government power.”

“People have a right to play poker in their homes,” she continued, “and the federal government doesn’t have a right to enforce against that.”

“The law is not clear,” said Virginia Rep. Bobby Scott, a Democrat on the Judiciary Committee who favors cleaner enforcement mechanisms.

A spokesman for the Financial Services Committee said in an e-mail that the panel needs to hold a hearing on the chairman’s bill before lawmakers would ever consider formal legislation. And the committee has its hands full this summer rewriting the regulatory infrastructure for the country’s behemoth financial services industry.

But Frank likes his odds coming out of the flop.

“We’ll get it done,” he said.

Protecting Children
Compulsive Gambling Safeguards
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New Government Revenues
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