Las Vegas Sun

April 24, 2014

Currently: 84° — Complete forecast | Log in | Create an account

Harry Reid rushes effort to legalize Internet poker

Image

AP Photo/Harry Hamburg

Senate Majority Leader Harry Reid meets reporters on Capitol Hill in Washington, Thursday, Dec. 2, 2010.

Reader poll

Should Internet poker be legalized?

View results

With just days left before the 111th Congress calls it quits, Senate Majority Leader Harry Reid is taking what’s almost certain to be his last, best chance for a while to fast-track an effort to legalize Internet poker and deliver a prize to some of his biggest backers.

Reid has been circulating draft language for a bill that would create a licensing system for companies hoping to operate legal online poker forums in the U.S., establish federal regulations to police the new system and let both states and the federal government reap profits from this $25 billion industry.

But Internet gambling is as controversial in Washington as it has historically been in the gaming industry, meaning that while the lame-duck session is likely Reid’s best chance to push something through, it’s still going to be a hard road.

The bill is a work in progress, but opposition is in full swing on the Hill, where critics are lobbying against it on both moral and fiscal grounds.

Ranking Republicans of the House’s three committees with jurisdiction on Internet gambling — Spencer Bachus of Financial Services, Dave Camp of Ways and Means, and Lamar Smith of Judiciary — are lobbying the Senate against taking up any measure that “might be partially motivated by one of the gravest sins that afflicts this Congress: desperation for more tax dollars to pay for ever-increasing federal spending.”

“Creating a federal right to gamble that has never existed in our country’s history and imposing an unprecedented new tax regime on such activity require careful deliberation, not backroom deals or earmarks or special interests,” they wrote in a letter sent to Reid and Senate Minority Leader Mitch McConnell — who has historically opposed Internet gambling.

The letter amounts to little more than emphatic opposition from the minority. But in a few weeks, those same Republicans enter the majority in the House, from where they could easily stop similar legislation, adding to the urgency for Reid to work fast.

Lobbyists guess that the bill could hit the Senate floor as early as next week.

Reid won re-election with the backing of Nevada’s biggest gaming operators. For example, Caesars Entertainment facilitated union efforts to drive up voter turnout among members. And MGM Resorts CEO Jim Murren endorsed Reid in campaign ads.

Mainstream Republican opposition to legalization of online gambling has always been fierce. In 2006, one of the last acts of the Republican Congress was passing the Unlawful Internet Gambling Enforcement Act, which outlawed all forms of gambling online — and, advocates say, helped to drive this offshore business further underground.

Reid’s bill is still in flux, but at the end of the day would legalize only poker. That is as far as Reid, who opposed all forms of Internet gambling until just a few months ago, is himself willing to go.

Still, if it passes, it’s likely to bring about a sea-change in the gambling industry.

Poker’s popularity has boomed in recent years, and the online share is a $25 billion global industry with 15 million paying American customers.

Although the American Gaming Association is staying mum on the proposed legislation, it supports Internet gambling legalization as a way to boost business.

States will ultimately oversee the licensing and see the bulk of the revenue generated. But they would have to give the federal government a 20 percent cut as an annual fee to sponsor the licensing.

Internet gambling observers call Reid’s proposed bill the most nuanced and realistic effort to legalize Internet gambling by seeking a compromise among a complex web of business and government constituents.

By focusing on online poker, the bill is more politically palatable to industry opponents who view online poker — with an established base of customers who gamble from home computers — as little threat to their bricks-and-mortar operations.

The bill also considers the role of various regulatory schemes, including tribal regulators of casinos, and the rights of individual states to govern gambling within their borders.

Reid’s bill would outsource federal regulation to states or tribal governments with “extensive experience and a proven track record” of regulating gambling and allow states to opt in or out of a federal regulatory system.

Further, the bill tackles the touchy problem of how to handle the foreign companies that have long accepted bets from Americans, in violation of the Justice Department’s ban on Internet gambling.

Click to enlarge photo

Rep. Barney Frank, D-Mass., has introduced legislation to repeal the 2006 ban on Internet gambling.

Proposed language wouldn’t exclude these offshore companies upfront, as Massachusetts Rep. Barney Frank’s previous attempt at Internet gambling legalization would have done. Instead, any gambling operator can apply for a license in the Reid bill. And yet, proposed language would allow only operators of existing casinos or racetracks to obtain licenses in the two years after regulators issue the first Internet poker license.

This provision, one of the most controversial in the Reid bill, is a reasonable compromise, although it has upset poker players who view it as unfairly benefiting Nevada casino giants over their favored gambling websites, said Dan Michalski, founder and editor of Pokerati.com, a Las Vegas-based poker blog.

Some lawmakers and their constituents view these foreign companies as lawbreakers. And U.S. casino companies probably wouldn’t support an equal playing field for Web casino operators, given that the U.S. companies have waited on the sidelines for more than a decade for the chance to make money online, Michalski said.

“This kind of puts (the online operators) in the penalty box for a while and says, ‘We might let you in but you’re certainly not going to be the first in line.’ I think that was to be expected.”

Other key language leaves open the possibility that American casino companies could partner with Internet companies to license software, brand names or Web portals where potential customers gather and obtain coupons and other enticements.

Although Nevada’s casino giants no doubt want the first crack at the Internet gambling market, they and others need the specialized expertise of Internet operators that have been cultivating this business for years, according to a source who requested anonymity.

“This is going to be a horse race to see how fast people can partner with the Internet gambling operators, because no one is really ready for this in the U.S.,” the source said. “These are sophisticated systems. You have to build them, and then it takes time for it to ramp up before you can implement it.”

U.S. companies will need to tap player databases and technology owned by foreign operators to succeed, although they are estimated to generate less in earnings than investors have expected, in part because smaller operators have more limited opportunity to capture players, according to a report by gaming industry analysts at Morgan Stanley. Analysts concluded Monday it was “too difficult” to handicap the bill’s passage.

While addressing the business concerns of sometime opponents of Internet gambling, the bill probably won’t survive attacks from Republicans who have pledged to block bills backed by Reid and the Democrats, said I. Nelson Rose, an attorney and Internet gambling expert in California.

“Even though Democrats still have the majority, the perception is that Republicans are in charge,” Rose said. “And being the party of ‘no’ has worked in Republicans’ favor.”

Join the Discussion:

Check this out for a full explanation of our conversion to the LiveFyre commenting system and instructions on how to sign up for an account.

Full comments policy

Previous Discussion: 19 comments so far…

Comments are moderated by Las Vegas Sun editors. Our goal is not to limit the discussion, but rather to elevate it. Comments should be relevant and contain no abusive language. Comments that are off-topic, vulgar, profane or include personal attacks will be removed. Full comments policy. Additionally, we now display comments from trusted commenters by default. Those wishing to become a trusted commenter need to verify their identity or sign in with Facebook Connect to tie their Facebook account to their Las Vegas Sun account. For more on this change, read our story about how it works and why we did it.

Only trusted comments are displayed on this page. Untrusted comments have expired from this story.

  1. You voted for him, dipstick, enjoy him.

  2. Three things are certain if this goes through- it will help the gaming companies, the companies will use overseas labor for the gaming websites, and it will not bring one job to Nevada.
    Wait a minute, four things- Harry Reid will get more campaign donations.

  3. So, this is how the wonderful Sierra Harry is going to help Nevada's gaming industry, eh? Well, you folks who bought his campaign BS and voted for him can now reap the misery of your folly. "THERE ARE NONE SO BLIND AS THOSE WHO REFUSE TO SEE"

  4. My,My but Harry sure is in a hurry to do the bidding of his casino bosses. And just think, with unemployment benefits extended (once again) the unemployed can stay home and use that money playing Internet poker.

  5. This country is in very serious trouble and this dolt is out paying back his donors. What a loser.

  6. Quit trying to regulate morals and individual preferences that cannot be controlled by fiat as long as they do not infringe upon another. While I am for legalizing Internet gambling, it's the process Harry the Red uses to get his pet projects through that disgusts me. Why is prostitution illegal in most jurisdictions when it is alive and well in Washington, D.C.?

  7. Oh yes, let's not ensure a level playing field for our casinos. This will likely help our gaming industry, as online poker won't take business away from local casinos and may very well encourage online players to come here to play in person. And by doing this in a way that doesn't hurt our casinos, our people don't lose their jobs. What's so horrible about this?

    I thought teabaggers were about more "freedom". So what do they have against online poker? And against gaming, for that matter? Does anyone here really want to see what Nevada would be like with no casinos?

  8. I'm sure his legislation will reduce the unemployment percentage in Nevada by at least 3 percentage points. What in the world is going on in Washington, DC?

  9. The American public is already playing poker on line to the tune of about Six Billion Dollars a year.

    It is about time that that American Money gets to stay in this country. It is all leaving the country and not being taxed now.

    They are not making it easier, just making it legal so they can tax it. It is easy already. Anyone of you could be playing within the next five minutes if you wanted to but your money would be leaving the country never to be seen again.

    Most every major gaming company already has games in place and ready to go on line, they just need the green light to do so. To the surprise of many, those games where developed right here in Nevada and just need to be tested and approved by Nevada Gaming.

    Time to keep the money at home folks. Thanks Mr. Reid for finally doing something that most of the public does want you to do. Much better then that "Dream Act" that we don't want.

  10. Washington STATE made online gambling a FELONY long ago -- along with buying tobacco online, padding one's resume, and parting out your car without a wrecker's license. A FELONY, which strips those convicted of basic liberties, like voting and being armed. Defined as "1. an offense, as murder or burglary, of graver character than those called misdemeanors, esp. those commonly punished in the U.S. by imprisonment for more than a year. 2. Early English Law . any crime punishable by death or mutilation and forfeiture of lands and goods."

    Despite dipstick's endorsement of a bigger police/nanny state to save all us consenting adults from ourselves, the state promise has always been to leave us alone unless we cross certain thresholds. Like actually injuring another.

    An excellent example of what We have allowed this police state to become on a municipal level is found @ http://www.youtube.com/watch?feature=pla...

    "Quit trying to regulate morals and individual preferences that cannot be controlled by fiat as long as they do not infringe upon another. While I am for legalizing Internet gambling ... Why is prostitution illegal in most jurisdictions when it is alive and well in Washington, D.C.?"

    lvfacts101 -- excellent points made. You might be interested to know one of the early definitions of a prostitute included a public officer, especially a judge, who sells his office's favors.

    "The legitimate powers of government extend to such acts only as are injurious to others." -- Thomas Jefferson, Notes on the State of Virginia, 1781-82

  11. How obvious can you be, Senator Reid?

    Help me get reelected and I will push this bill for you, Loveman and Murren.

    It's like a bad movie.

  12. Although I am personally against legalizing on-line gambling, I'll leave it to the legislators to decide the issue.
    What struck me as interesting is the thought that Harry Reid's handling of this matter is a clear example of how politics works in America. He is paying back his large campaign donors for their support. I don't get the impression that he is considering any other constituents' interests.
    America works well for the rich and powerful. The rest of you, not so much.

  13. No doubt if this passes, We will hear more stories about people gambling their paycheck, rent, etc. without ever even leaving their home. This will only hurt the weak among us. At least now, you have to make the effort to go to a casino or lottery outlet to do your gambling.
    Unfortunately while a few good poker players may actually win, the majority will lose. I personally would rather see the actual cards being dealt, not an electronic card which the computer (dealer) has total control over what comes up next.
    Online gaming is bad for America, regardless of what party one is a member of. Harry could find something more important to work on, how about unemployment, for example.

  14. Here is our great Senator Harry Reid, who I supported and voted for, being bought out by the large gambling corporations. This legalization of online Poker, as another commentator noted, will not bring a single job to NV, as the processing will probably be outsourced to India or China. Tsk, Tsk, Tsk, Mr. Reid, you are 70 years old and were elected, I supposed, to help our country and, especially, NV; so why are you not doing so? I have mentioned certain other methods to help NV, yet you choose to immediately repay your benefactors; for the sake of the select, the rich, and not for the jobs for the masses of NV, who got you reelected.

  15. Well, now you know what politicans do for a living: accept "GRAFT," ala campaign, lobbyist, and other contributions - which fill their coffers.

    NOW, Harry will help put the LAST NAIL in the coffin of Las Vegas and Atlantic City - and complete the ruin that began with this economic recession. Because as visiting Las Vegas and cost of air travel gets more expensive each year, people who formerly came here for the gambling and shows, etc., MAY NOT COME BACK - if they can gamble in the comfort of their own home, ON-LINE, using the money they would have otherwise spent in Las Vegas.

    The thrill is in the game; not the location. And since Las Vegas casinos have become so cheap (with comps, etc.) they squeek - as Liz Benston suggests - I believe this WILL be a "sea-change" for the entire gambling industry. Just as Indian Casinos started as a (not seen by Las Vegas as) competative drain on Las Vegas tourism; now, Harry Reid will finish it.

    Even if some segment of people still want what a Casino (e.g., Las Vegas or Atlantic City) has to offer - they may not be enough to support the financial bottom-line of Las Vegas Casinos. And the more than 180 Indian Casinos - located all over the country - offer similar shows and venues that people will not have to travel very far to get.

    If this Internet Gambling Bill passes - it will open the door for anything to be possible in the future. The camel's nose will be under the tent, and saying "Good luck" in Las Vegas will take on a whole new meaning for its casinos.

  16. atdleft: you rant in an incoherent way, buddy. What do you know about the TEA Party? Attend a meeting and you might come away a changed person. I'm a member, supporter and contributor to TEA Party causes and I am for on-line gambling, legal prostitution & legalization of "recreational" drugs. I am also dead set against the use of "recreational" drugs because they will eventually control the user but I agree it's up to the individual to choose, not me, as long as they do not harm others in doing so.

  17. So Nevada voters are waking up to the sad fact that our trusted politicians can NOT be trusted. Senator Reid and Senator Ensign have biz to take care of, that is clearly not in Nevada peoples' interest. Senator Ensign protects corrupt MSHA officials and Corp Mining interests here in Nevada, Senator Ensign HAS shown in correspondence to Paul Rupp(Miner)that any timely complaint filed asking for an investigation into health and safety violation's here in the Nevada mining industry will NOT go forward. . .for a cab fire inside a moving 400,000 lb haul truck unless the fire rages for 30 minutes or the miner dies= NO RIGHTS FOR SHIFT MINERS. . . Thanks Senator Ensign And Senator Reid for standing up and PROTECTING the folks that you guys really represent. PRupp B125 SP NV 89047

  18. im one of those 'stupid' people that vote for who i think will do 'good for the people.' i agree with DIPSTICK who states that online gaming will hurt the family. i also agree it should be legalized & let people make their own decisions re: their sucess or downfall.

    JERRY states prostitution should be legal. again, while i dont participate, i agree it should be lagal AND TAXED.

    sorry LEE, on-line gaming WONT reduce the unemployment rate in nevada. i actually believe it will hurt it just as the proliferation of gambling in many other states have.

    im in my 50s & VEGAS & hawaii have always been the top 2 vacation spots for americans. the problem is with on-line gaming the average american (making 35-50k a year) wont be able to visit VEGAS if they are losing their mortgage payment on-line.

    KILLER B put up a link to a news story that i enjoyed watching. while the story doesnt go into WHY they want to evict him (back taxes, not meeting local restrictions) i fully agree to 'live & let live.'

    i hope VEGAS recovers soon as i have been 'vacationing' there the past 25-30yrs and, god bless, i will be able to visit your GREAT CITY the next 25yrs. i enjoy the free room offers, free food & free play offers i get every few weeks. i also enjoy the off strip places where my neighbor from BELLVILLE CANADA plays. he is a low roller who, despite being from another country, enjoys VEGAS & the locals & downtown places. they offer just as much fun & enjoyment as your strip hotels & at a much better value.

    GOOD LUCK to all in the valley.