Friday, Aug. 31, 2001 | 11:16 a.m.
A bill aimed at outlawing Internet gambling will likely be introduced in the House of Representatives within two weeks, American Gaming Association Chief Executive Frank Fahrenkopf said.
And Nevada's passage of a bill that could lead to legalized Internet gambling is a factor, he said.
"Nevada is sort of an impetus," Fahrenkopf said. "(Proponents of a ban) are using the Nevada legislation as a rallying cry to say, 'We have to do something.' "
Proponents of Nevada's Internet gambling bill, however, are already branding it an intrusion on states' rights, and an effort that would do nothing to control Internet gambling.
"All the action (currently on Internet casinos) is coming from non-U.S. sites, who are taking U.S. bets," said Tony Cabot, Las Vegas attorney and Internet gambling expert. "I'm sure they (overseas Internet casinos) welcome (a ban) because it gives them a virtual monopoly over the market."
If such a bill passed, it would stop Nevada's Internet casino dreams dead in their tracks. But it is unlikely the AGA will change its long-standing opposition to Internet gambling because of Nevada's recently passed Internet gambling bill, Fahrenkopf said.
"The consensus of our board is clearly against Internet gambling," Fahrenkopf said. "Terry Lanni (chairman and CEO of MGM MIRAGE) is the only one who differs from that position."
But that doesn't necessarily mean the AGA will support the bill, as it did previous anti-Internet gambling bills by Sen. Jon Kyl, R-Ariz.
"Where we're going to be is an open question," Fahrenkopf said.
Likewise, the Nevada Resort Association casino lobbying group is taking a wait-and-see position on the bill. Like the AGA, the NRA supported previous attempts to ban Internet gambling at the federal level -- but that was before the Nevada bill passed.
"We haven't formally taken a position," said NRA President Bill Bible. "We haven't discussed (Internet gambling) as an association since we processed the Nevada legislation."
However, Bible noted that Congress previously approved legislation allowing the horse-racing industry to take pari-mutuel bets over the Internet, providing the bets were occurring between two states that permit such wagers.
"You could make the argument that if that form of gambling is available to the horse racing industry, it should be available to other forms of gaming," Bible said.
Nevada's Internet gambling bill, passed this spring, did not immediately legalize Internet casinos in the state. It did, however, give the Nevada Gaming Commission the ability to begin licensing Internet casinos, if that body feels certain requirements can be met. These requirements include the ability to block gamblers from jurisdictions where Internet gambling is illegal, the ability to block underage players, and an answer to the question of whether Internet gambling is legal under U.S. law.
In the past, the Department of Justice has taken the position that the federal Wire Act prohibits interstate Internet gambling. But a New Orleans federal judge ruled earlier this year that the Wire Act's ban applied only to Internet sports betting, not Internet-based casino games. That decision is now on appeal to the Fifth Circuit Court of Appeals, and that court's decision could set a major precedent in the question of Internet gaming's legality in the United States.
Rep. Bob Goodlatte, R-Va., hopes to make that decision moot, by passing legislation that would specifically make Internet gambling illegal in the United States.
The method by which he proposes to do that isn't clear -- and that method will decide the fate of the bill, Cabot said.
"If it says all Internet gambling is illegal, or all use of credit cards (for Internet gambling) is illegal, that's one thing ..." Cabot said. "If what he says is it's illegal to use credit cards for illegal transactions, that's a completely different matter. The latter is very tenable, the former one isn't."
A sweeping ban would probably fail because of states' rights issues, Cabot said. And that's how MGM MIRAGE views the matter.
"This is the power of the federal government getting a little out of control," MGM MIRAGE spokesman Alan Feldman said. "If the states are taking action (to regulate Internet gambling), let the states take action. It needs to be done on a state-by-state basis. This really seems to me to be an attempt (by Goodlatte) to tell Americans what they can or cannot do."
But Jan Jones, Harrah's Entertainment Inc. senior vice president of government affairs, takes a different position.
"Internet gaming, by its very nature, goes beyond state borders," Jones said. "I find that a specious argument."
Past bills would have relied on Internet service providers to block Internet casinos from users. Goodlatte's bill will instead place the burden on credit card issuers by making any credit card debt incurred on an Internet gambling site uncollectible.
"Visa and MasterCard are fighting it," Fahrenkopf said. "Visa (officials) are saying, 'We don't think we ought to become the enforcers.' "
And that could prove a tough hurdle for Goodlatte, Bible said.
"The Kyl legislation encountered substantial opposition from the Internet Service Providers... they were successful in the House at putting the kibosh on the bill," Bible said. "That will be a pretty powerful argument they (the credit card industry) will make."
Separately, Fahrenkopf warned another gambling ban could raise its head again in Congress soon -- a proposed ban against betting on college sports, promoted by the National Collegiate Athletic Association.
"There's an attitude by some that the NCAA (bill) is dead, but I think that's a mistake," Fahrenkopf said. "I don't think that's the case."
It is feared that proponents of the betting ban will attach a rider to an House appropriation bill dealing with drug testing programs for amateur sports. A bill introduced in the Senate last year by Sen. John McCain,R-Ariz., merged this with a ban on collegiate sports betting.
The House version wouldn't include the college sports betting ban, but it's believed that ban would be attached to the Senate version of the appropriations bill after the House passes it, Fahrenkopf said.
Nevada's congressional delegation is following the situation "very carefully," Fahrenkopf said.
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