Rep. Peter King’s (R-NY) incendiary comments about the National Security Agency’s surveillance programs last week ended up overshadowing some more substantial news: his introduction of the Internet Gambling Regulation, Enforcement, and Consumer Protection Act of 2013, a bill that would explicitly legalize online gambling across the country.
By now, most industries — retail, banking, publishing — have online counterparts. The US gambling industry does not. Heavy regulation prevents casinos, Native American tribes, and private companies from opening online gaming rooms, a business that is booming in other places such as the UK.
The idea that online gambling is illegal came from a broad interpretation of the Wire Act, which outlawed interstate sports betting over "a wire communication facility" in 1961. The Unlawful Internet Gambling Enforcement Act of 2006 then made it a crime to accept payments in connection with "illegal" online gambling; this change facilitated the 2011 crackdown on US poker sites, which had previously been allowed to operate unmolested. But at the end of 2011, the Justice Department issued a pivotal new interpretation of the Wire Act, deciding that it only applied to sports bets.
As states make their own rules, pressure on the federal government is increasing
That’s when the floodgates opened. In 2012, New Jersey, Nevada, and Delaware became the first three states to legalize forms of online gambling at the state level. California, Illinois, and other states are looking at doing the same. And as the states make their own rules, pressure on the federal government to weigh in is increasing. "Federal law needs to be updated to make clear its relationship to internet gambling," King’s bill says.
So will King’s bill finally put the issue to rest? Advocates are not optimistic. There are many special interests such as casinos and tribes, which both want special rights that will allow them to cash in on online gambling, as well as a long list of less-obvious interests such as state lotteries and charities, which have carved out exceptions in federal gambling statutes. There are also family and Christian conservative groups that object on moral grounds. Even the NFL lobbied hard against internet gambling in the past. The theory was that online gambling would pave the way for sports betting, which the league considers detrimental to the game (although it also fought for an exception for fantasy leagues).
A major push to pass federal legislation legalizing online poker introduced by Sen. Harry Reid (D-NV) and Sen. Jon Kyl (R-AZ) failed last year, even though it earned the support of conservative groups. Sources familiar with the legalization efforts speculated that the bill became too heavily politicized due to the election. It was also criticized for being too weighted toward Nevada’s interests.
Even the NFL lobbied hard against internet gambling
Things are different this year, said Rich Muny, the vice president of player relations for the Poker Players Alliance, which has been one of the loudest voices in the debate over online gambling. "Cards are hitting the virtual felt right now in Nevada and they’re going to be hitting in New Jersey," he said. "What was a theoretical possibility before now is reality."
But even with states putting pressure on the federal government, national legislation seems like a longshot. "I think this bill is a big underdog still — they always are," he said. "All these different stakeholders are trying to get the biggest slice of the pie possible, and some are willing to settle for no pie." The online gambling industry is estimated to grow to $1.5 billion in New Jersey alone in the next five years.
It’s hard to say whether online gambling proponents outnumber opponents, or the other way around. Public opinion varies by state; 53 percent of voters in California approve, while 73 percent in Iowa do not. Beyond that, there are powerful interests on both sides. The revenue is attractive to states, and casinos such as Caesars are itching to get online. Furthermore, the knee-jerk moral opposition to online gambling is not as strong as it was in the past — although there are still some groups that say online gambling is a gateway drug for money laundering and the corruption of minors. There are some powerful opponents, such as casino mogul Sheldon Adelson, who some suspect is responsible for an anti-online gambling provision in the 2012 Republican party platform.
Knee-jerk moral opposition is not as strong as it was in the past
The 2013 battle for some form of federally-sanctioned internet gaming is just beginning. Rep. Joe Barton (R-TX) is expected to introduce a poker-only bill in the next month or two. These two gaming bills are likely to be bundled with some larger, unrelated legislation if they’re to ever make it to the floor.
Even if no federal law passes, Muny is confident that online gaming is on an inevitable march to acceptability. "We’re not seeing a big coalition against this the way we did six or seven years ago," he said. "When the legislation passed in New Jersey, there wasn’t a peep. It’s becoming more seen as a reality at this point. It’s just how it’s going to happen."