VEGAS INC archives
Advocates for legalizing Internet gambling have neutralized opponents with arguments designed to appeal to fiscal and social conservatives.
The argument that regulated online gambling could raise millions of tax dollars and generate thousands of jobs — benefits going to countries where the gambling sites are located — has gained steam with fiscal conservatives opposed to raising taxes.
And federal indictments in April of the three biggest online poker companies have fueled interest from social conservatives by identifying a need for tougher regulations than exist in countries where gambling websites operate.
The Justice Department seems little fazed by a political landscape that has slowly shifted toward acceptance of many forms of gambling. Although the U.S. attorney’s office has declined to comment on its law enforcement strategy involving online gambling, strongly worded testimony by the office has associated Internet casinos with a criminal underworld engaged in activities such as money laundering and narcotics trafficking.
Which is why a new effort to legalize online poker could appease law enforcement officials who view Internet casino operators with the same persistent disdain as their predecessors viewed the mob.
Last month, a high-powered advocacy group, Fair Play USA, was formed to build public support for Internet poker legislation. Founding members include former Homeland Security Secretary Tom Ridge, a conservative Republican, and child safety advocate Parry Aftab. The group won’t employ registered lobbyists or push legislation on Capitol Hill, Executive Director Marisa McNee said. Instead, it wants to build consensus among potential critics, including consumer advocates, parenting experts and law enforcement officials.
“We’d like to show Congress that there is broad support for the regulation of online poker, because federal laws really aren’t working with respect to Internet gambling,” McNee said. “There needs to be consumer protection.”
On its website, www.fairplayusa.com, Fair Play has posted a petition to Congress in support of federal regulatory controls governing Internet poker.
Among the goals: Combat illegal gambling, block online access for children and impose the same rules on online operators as for commercial casinos in the United States.
Such rules are more easily implemented by casino giants that have long operated under extensive gambling regulations at the state level — companies such as Fair Play’s big corporate sponsors, MGM Resorts International and Caesars Entertainment, said I. Nelson Rose, a gambling law professor and industry consultant.
Both companies seek to legalize Internet poker at the federal level, he said, in part because they can compete on a bigger scale and don’t want to fight for market share in each state that may decide to offer Internet gambling absent federal regulations.
Although MGM and Caesars have long pushed to allow Internet gambling, more of the country’s biggest gaming companies have recently jumped onto the legalization bandwagon based on the notion that online poker would grow their gambling business more than new online competition would cannibalize it.
The big casino companies “know they can pass (any federal regulatory) test and other competitors probably couldn’t,” Rose said. “Their top folks have already gone through background checks that a lot of chief executives wouldn’t tolerate.”
Although self-serving, strict regulations benefit consumers and should also appeal to federal regulators eager to take down the website operators who accepted bets for years despite the Justice Department’s public stance against it, Rose said.
Federal regulators “hate the fact that an illegal activity was being conducted openly and making a few people billionaires,” he said.
Although unmentioned in Fair Play’s initial news release, the group’s industry backers are up front about their involvement.
Caesars Entertainment, which owns the World Series of Poker, has spent more than just about any other casino company lobbying for Internet poker.
“If you don’t put in protections and enforce them, you have problems. That’s how you create a black market and an unsafe environment for people to play poker,” said Jan Jones, senior vice president of communications and government relations for Caesars.
The company hopes other gaming companies and advocates from outside the gaming industry will join Fair Play’s efforts, she said.
“There are very serious regulatory issues that should be taken into consideration before legalizing Internet poker takes place,” MGM Resorts spokesman Alan Feldman said.
The push for tougher controls is timely given continued revelations about online cheating scandals. Although online poker is viewed as an easier sell because poker involves skill and has deep cultural roots, the potential for fraud is exacerbated when gamblers bet against each other rather than the house.
The latest Internet poker legalization bill from Texas Rep. Joe Barton would create a blacklist of unlicensed online poker operators for financial institutions to avoid, and would make it a federal crime to cheat at poker, including the use of poker strategy software and “bots” — computer programs that use algorithms to make bets.
Nevada’s casino giants believe that Internet gambling can be properly regulated given the right controls. State legislators have opened the door to online gambling in Nevada by establishing regulations to license such operators, regardless of whether Congress approves it at the federal level.
The state Control Board is expected to release a draft of the proposed regulations within a month.
Fair Play may help law enforcement agencies such as the Justice Department warm to the potential of an Internet poker industry run by entrenched, state regulated casino giants rather than foreign companies that oppose the feds on Internet gambling.
Still, poker proponents face a hurdle that’s bigger than any one opponent.
Growing public support for Internet poker may be no match for the adversarial political climate gripping Washington, Rose said.
“Almost nobody cares about this issue in Washington, so you’re not going to get massive votes in support. And Republicans were rewarded for being the party of ‘no’ in 20,10 so their best chances of winning would be to continue to say no to just about any legislation.”