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A Showdown is Looming over Online Gambling...By Hartley Henderson

It has been about a year since Bill Frist attached the UIGEA to the Safe Port Bill and many things have changed since last September. When Frist shoved through the legislation there was little interest in the topic of online gambling among politicians or the public. Certainly a few politicians such as Barney Frank, Shelley Berkley and Jon Porter were interested in looking at the possibility of regulating the activity, but for the most part internet wagering had sporadic support at best among politicians. As well, lobby groups were relatively small and unorganized. Today, however, the same can not be said. Currently there are 30 politicians supporting one or all of the counter bills (HR: 2046 the Internet Gambling Regulation and Enforcement Act, HR: 5474 the Internet Gambling Study Act and HR: 2607 the Internet Gambling Regulation and Tax Enforcement Act), plus there is a groundswell among the public and lobby groups to have the UIGEA overturned and online gambling legalized and regulated. Among those lobby groups are the Poker Player's Alliance which has grown from miniscule numbers prior to the enacting of the UIGEA to close to 700,000 members today and iMEGA which has a strong DC lobby and whose membership grows weekly. As well, there seems to be surprising support from the American Gaming Association. The organization whose previous banter seemed to be against internet gambling seems have changed its mind. Laws which require DC lobby groups to disclose their funding sources has shown that the AGA has spent close to a million dollars lobbying for the 3 bills mentioned earlier including over $100,000 used by Fierce, Isakowitz and Blalock. While that news may be a bit surprising, it should come as no shock. In 2005 Harrah's Casino and Disney both announced that if and when online gambling is legalized they want the opportunity to be among the first to set up a casino. Consequently, it is only logical that other casino companies such as Station Casinos would also want in on the action. And since the AGA represents the land based casinos it must try and support its members' best interests.

The support by the 30 congressmen and senators include high profiled names like Alaska Congressman Don Young, Massachusetts Congressman James McGovern and Texas Representative Ron Paul. Clearly these politicians, while opposed to the UIGEA, chose not to make major waves when the bill was enacted, because there didn't seem to be a lot to gain by doing so. But with the new groundswell for online gambling from other politicians, and the public and with public opinion polls done by Zogby International and a couple of online gambling sites which shows that the majority of the public doesn't want to be told what they can and can't do online, including gambling, there are now political points to be scored by opposing the current legislation and moving alongside the policy they really believe in. Add to that the loss by the Republicans in the midterm elections last year, the defeat of Jim Leach, the resignation of Bill Frist and the eventual new U.S. President in 2008, the pro internet gambling faction may be the best group to side with. Furthermore, the loss by the U.S. in the WTO case with Antigua makes the issue all the more pressing. If the U.S. continues to balk at the WTO ruling it could cost the country billions of dollars in compensation to countries like Canada, India, Antigua and the 27 member European Union. These politicians obviously realize that trade concessions could potentially harm the United States immensely.

However, while it is clear that the Senators and Congressmen now opposing the UIGEA and supporting the counter legislation have issues with the idea of trying to preclude the public from engaging in an activity they like simply because the government doesn't agree with it (as Barney Frank and Ron Paul so clearly suggested), the state politicians have a more immediate and personal reason for opposing the UIGEA - state rights. There are certain policies that most Americans agree must be handled by the federal government. These include laws related to security, the military, drug enforcement, aviation, etc. However, gambling has always been a vice that was left to the discretion of the state governments. It was this right that allowed Nevada and New Jersey to set up the gambling Mecca they have today and why so many states have numerous lotteries that help fund public coffers. So the UIGEA, which basically makes it illegal for any state to choose whether to legalize and regulate online gambling for its citizens, is a stab in the back of the state governments. To make matters worse, the federal government via the DOJ has unilaterally declared that the wire act is applicable to online gambling when that may indeed not be the case. Thus while Nevada, North Dakota, Illinois and Georgia are all but ready to introduce online gambling in their states, the federal government has precluded them from doing so. This is a bitter pill to swallow for politicians who espouse state rights, especially given the abuse of powers by the DOJ since 9-11 which led yesterday to the resignation of Alberto Gonzalez. The pro internet gambling groups are therefore growing daily and are clearly strengthening their lobbying efforts.

On the other side of the issue are the politicians like Jon Kyle and Robert Goodlatte who have always opposed online gambling and introduced legislation to criminalize the activity, politicians who support gambling prohibition for whatever personal reasons, the fundamental religious right, the department of justice, sports leagues, and possibly the horse racing industry. The religious right, particularly a group called Focus on the Family, has called for very strict regulations to enforce the UIGEA to its fullest extent. The group, led by James Dobson, seems to feel it speaks for all religious people, but nothing could be further from the truth. Some of the more moderate protestant groups, Catholics and some other non Christian denominations do not wish to associate themselves with the group which is seen as extremest. Furthermore, aside from the U.S. Bible Belt, most other states are not so fundamentalist and prefer to be objective with regard to social vices. In fact, even the leading Republican candidate Rudi Giuliani has been shunned by the group because he is not radical, err.. Evangelical, enough to garner their support. It would seem that if Focus on the Family had their way Jeb Bush would continue on as the next president to shove values down the public's throat. Obviously aligning oneself with this group could backfire. Other Christian groups that have joined the call by Focus on the Family to enact strict UIGEA guidelines include the National Coalition Against Legalized Gambling, American Values, the Christian Coalition of America, the American Family Association, the Eagle Forum, the Family Research Council and the American Association of Christian Schools.

Sports leagues have their heads in a knot over gambling because they seem to feel that gambling is the impetus for all the troubles in their leagues. Rather than trying to work with online gambling sites to see how they can help solve issues with illegal gambling on their sports by those who shouldn't be gambling, they simply want all gambling outlawed. Even Barney Frank's option to allow leagues to exempt themselves from online gambling doesn't seem to be enough for them. The logic of the sports leagues is confusing, particularly given the success of European sports leagues that have worked successfully with online sportsbooks to weed out illegal activities. But the U.S. sports leagues have been adamant and consistent about doing everything to prohibit gambling on sports for the longest time.

The United States Department of Justice has been insistent that all online gambling is illegal under the wire act and have been unwavering about it. In fact when the horse racing industry was granted the exemption to offer remote gambling the DOJ petitioned heavily against it. The DOJ seems more concerned with the money laundering and tax avoidance issues related to online gambling more than the social problems that the religious right is concerned with. Having said that, Alberto Gonzalez, who has tendered his resignation as Attorney General, has still not written and released the regulations for the UIGEA as he was required to do almost a month ago. Perhaps online gambling really isn't as big an issue for the DOJ as they would lead one to believe.

Last on the list of those opposed to online gambling is the Horse Racing Industry, or so we believe. The industry was given an exemption in the Interstate Horseracing Act to offer remote wagering, which includes the internet. They lobbied hard for this right and received it with little fanfare or opposition aside from some grumbling by the DOJ. However, that exemption has turned out to be a noose around the neck of the American government. As a result of that exemption, the United States stands to lose billions in trade compensation to countries that filed claims in the WTO case with Antigua. The WTO ruled that because horse racing was given an exemption to offer online wagering, the U.S. doesn't have the right to block other forms of remote gambling from foreign operators. The horse racing industry is only too happy to support the UIGEA because Americans can still deposit funds to their online horse racing accounts by credit card, cheques or other means, plus blocking online gambling takes away one of their main forms of competition. But some politicians are now suggesting that the United States should repeal that exemption in order to make the U.S. compliant with WTO requirements and avoid the necessity for compensation. The horse racing industry, however, has stated that they will concede that exemption "over our dead bodies" and clearly any move to get that exemption removed will be met with fervent opposition and a possible move by the horse racing industry to the side of the pro online gambling lobby.

Missing in the whole mix of pro and anti-online gambling forces are the banks, credit card companies and internet service providers. Thus far the banks and credit card companies have taken a wait and see attitude. More specifically they are awaiting the UIGEA regulations to see what exactly is required of them, how difficult it will be for them to enforce the guidelines and most importantly how much it will cost them. The banks have done their utmost to try and stop payments for offshore gambling sites despite the fact that until this point they have been given no guidelines on how to do so. If the government eventually releases their guidelines and makes it virtually impossible for the banks to enact the guidelines, or if it will cost the banks too much money, don't be surprised if the banks issue a counter proposal and/or move to the side of the pro gambling forces where the requirements and cash layout on their end would be a non-issue if gambling was simply made legal.

Lastly on the list of those on the sidelines are Internet Service Providers. Thus far the ISPs have stated little in this dispute, although many of the larger companies have made it clear that it will be difficult if not impossible to block access to gambling sites by Americans. If Jon Kyl had his way, ISPs would be held responsible for ensuring that no American gambles online. To accomplish that would be virtually impossible. There is absolutely no possible way to guarantee that a site is not an internet gambling site as a result of spoofing and ongoing emerging technologies. Thus, while an ISP can try and block access to an internet gambling site if absolutely required to do so, guaranteeing this would not be possible. As well, ISPs do not feel they should be required to be the "internet police". ISPs simply provide access to customers to surf the web. Where the customers go on the web is not their concern. The ISPs can provide filters for blocking sites, but it shouldn't be their responsibility to do the job of the DOJ to guarantee Americans are not doing anything illegal on the internet. Consequently, if the ISPs are backed into a corner to choose the anti-online gambling side, which would require them to perform an impossible task or the pro online gambling side, which would not have the same requirement, it would not be surprising to see ISPs like AOL come along side of the pro online gambling lobby to defeat any laws that hinder them.

So as one can see, the U.S. seems headed for a showdown over online gambling. The activity could become a 2008 campaign issue, and if it is, it will be up to politicians and the public to choose sides. Should they back the pro-online gambling groups and risk the wrath of the fundamental Christian vote, sports leagues and many fundamentalist voters or should they support the anti-online gambling groups and run the risk of upsetting the various lobbies and much of the population who like to gamble online?

Much of the answer to that question could depend on which people are chosen as the next Presidential candidates and also how many signatures each side of the lobby gets.

One thing is for certain, the U.S. is headed for a showdown over the issue of online gambling.

Hartley Henderson

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