Internet casinos receive reprieve in House

Benjamin Grove

Tuesday, July 18, 2000 | 11:09 a.m.

WASHINGTON -- Cyber casino operators are gleeful after the House on Monday night failed to ban Internet gambling. The vote threw into question whether Congress will ever effectively regulate the online gaming industry.

"It's a relief -- we'll say that," said Sue Schneider, a leading Internet gambling advocate. "I know that the (ban's) proponents won't roll over and play dead. It's a matter of gearing up for next year."

The number of Internet gambling websites has now exploded to more than 850, offered by 250 providers, said Schneider, chairwoman of trade group Interactive Gaming Council and CEO of Missouri-based River City Group, which also acts on behalf of the industry.

Internet gambling companies will reap an estimated $2.2 billion in 2000 and $6.6 billion in 2006 if allowed to flourish, Schneider said.

Schneider said Congress should now turn to devising a bill to regulate Internet gambling, not ban it.

"Hopefully cooler heads will prevail, and we'll be able to come up with something more workable," she said.

But Nevada's four-member delegation strongly supports the Internet gambling ban. They criticize the industry for being unregulated and are wary of its threat to "brick and mortar" casinos.

"The fly-by-night operators in Antigua are celebrating tonight," Rep. Jim Gibbons, R-Nev., said in a statement. "Today, Congress essentially gave the green light to a new wave of unscrupulous and unregulated Internet gambling sites."

The Senate approved the Internet gambling ban in November. Since then House members have scrutinized the issue. Some said it seemed to trample on state's rights to regulate themselves and curb personal freedom of Americans to gamble in their living rooms. Some said it simply would be impossible to regulate websites based off-shore.

President Clinton opposed the bill in part because it included exemptions for online betting on horse and dog races and jai alai. Clinton's opposition made the bill a tougher sell, Gibbons said today.

Others argued that Internet gambling is now too established to outlaw. Sen. Jon Kyl, R-Ariz., has said Congress had to act this year if it hoped to thwart the fast-growing industry.

Kyl introduced the Senate version of the bill with Sen. Richard Bryan, D-Nev., who said the House missed a "golden opportunity."

"This legislation could have permanently removed the possibility of turning millions of family rooms across America into betting parlors," Bryan said in a statement.

The bill was brought to a vote under House rules that required a two-thirds majority, so it failed with a 245-159 vote, 25 votes shy of passage.

The bill's sponsor, Rep. Bob Goodlatte, R-Va., vowed to bring the bill up again this year under rules that require a simple majority for passage. He blasted Internet gambling for increasing personal bankruptcy, crime and gambling addiction.

The House legislative calendar is full, and there may not be time -- or desire among GOP leaders -- for another vote on the issue this year. But Gibbons and Rep. Shelley Berkley, D-Nev., also pledged to fight on.

"This legislation would have protected the gaming industry as we know it today against the unregulated, unlicensed, untaxed, off-shore Internet gambling industry," Berkley said.

The casino industry generally opposes online-gambling.

"History has taught us that strict law enforcement and regulation are essential to preserving the integrity of this entertainment option," Frank Fahrenkopf, the gambling industry's chief lobbyist, wrote in a letter to House members last week.

Fahrenkopf and other gaming officials have downplayed the likelihood that casinos would someday launch gambling websites of their own.

State laws prevent that for now, said American Gaming Association lobbyist John Shelk. Shelk also downplayed the danger cyber casinos pose to Strip casinos.

"We don't see somebody sitting at home in their shorts in their den taking away from Las Vegas," Shelk said.

Behind-the-scenes lobbying from Internet gambling officials, parimutuel betting representatives, casino officials and religious groups helped shape the bill.

Nevada casino-industry officials had unlikely allies, including four leading anti-gambling groups, who lobbied lawmakers in support of the ban. Pat Robertson of the Christian Coalition; Jerry Falwell of Falwell Ministries; James Dobson, president of Focus on the Family; and Charles Donovan, executive vice president of Family Research Council, fought for the bill.

The bill would have simply made it unlawful for anyone to place or receive a wager on the Internet. Businesses that offer Internet gambling could face up to $20,000 in fines or four years in jail. Bettors faced no penalties in the bill.

The bill made it clear that Internet gambling is illegal, even though gambling over telephone wires, which would include most Internet connections, has been illegal since 1961.