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Gambling Industry Dealt a Good Hand In New Congress

By: Kenneth P. Vogel January 30, 2007 07:11 AM EST

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Gambling interests hope the Democratic takeover of Congress will mean better odds for success than last session when the Republican-controlled Congress targeted the industry in a flurry of last-minute lawmaking.

In the political maneuvering leading to last fall's election, then-Senate Majority Leader Bill Frist, R-Tenn., inserted into an unstoppable port security bill a long-stalled provision clamping down on Internet gambling.

The Unlawful Internet Gambling Enforcement Act owed its momentum at least partly to a desire by Republican leaders to eradicate the specter of corruption lingering over their party from the gambling-tinged Jack Abramoff lobbying scandal. Still, the new law will loom over the gambling industry and its occasionally conflicting agendas this session.

The segments of the industry most impacted by the law are eager to chip away at it -- if not reverse it -- through rule-making and legislative lobbying. They'll also seek to build political influence so they can head off any congressional efforts to regulate gambling.

Some parts of the gambling industry -- among them lotteries, fantasy sports, horse racing and tribal gambling interests -- emerged unscathed in the last session. Congress carved out exemptions for them, and they're likely to keep a low profile this session, concentrating on initiatives primarily related to taxation and federal rule-making.

Gambling isn't expected to be the subject of the rigorous oversight that Democratic leaders have promised of other industries. And most gambling interests generally anticipate more receptive audiences in the new Democratic-controlled Congress, thanks partly to the diminished influence of religious conservatives who oppose gambling on moral grounds.

NEW CONGRESS,

NEW ATTITUDES?

Some leading gambling opponents were defeated or lost power in the Democratic takeover, including Frist, who retired from the Senate; Rep. Jim Leach, the Iowa Republican who authored the last session's gambling law; and Rep. Richard Pombo, a California Republican who unsuccessfully pushed to prohibit Indian tribes from opening casinos off their reservations. Another powerful member who tried to restrict off-reservation gambling, Sen. John McCain, R-Ariz., lost the reigns of the Senate Committee on Indian Affairs.

Gaining clout were industry allies or sympathizers, including Senate Majority Leader Harry Reid, D-Nev., a former chairman of the Nevada Gaming Commission; Senate Minority Leader Mitch McConnell, R-Ky., who represents a bastion of the horse racing industry; and Senate Minority Whip Trent Lott, R-Miss., who represents the Gulf Coast, where casinos are a major industry.

On the flip side of the partisan shift, gambling interests could face opposition from empowered liberals who oppose gambling because they believe it preys inordinately on the poor and elderly.

"It just brings it into a discussion of social morality instead of just personal morality," said Tom Grey, spokesman for the National Coalition Against Legalized Gambling. "We don't lose either side."

Perhaps the most significant obstacle to action on gambling issues may be political inertia, because Congress is typically reluctant to revisit recent controversies.

"It's going to be difficult for someone to do something on Internet gambling -- or maybe gambling as a whole -- because there was just major action on it," predicted Greg Means, a lobbyist for the National Thoroughbred Racing Association.

The increasingly powerful Indian gambling lobby also survived attempts to restrict off-reservation gambling.

"The outlook is definitely better," said Jason Giles, an attorney for the National Indian Gaming Association. He predicted that Congress would pay more attention this year to other pressing issues on the nation's Indian reservations, such as health care and illegal drugs.

BEYOND CONGRESS

Other gambling interests will also look beyond Congress, thanks in part to disagreements over the application of the Internet Gambling Act and other federal, state and international gambling rules.

Cash-strapped states are continually eyeing new forms of gambling, as well as expansions or tighter regulations on existing forms. And there are likely to be behind-the-scenes skirmishes over the crafting of rules to implement the Internet Gambling Act. That could get tricky because the law doesn't penalize gamblers, but rather banks and credit card companies that process online banking transactions.

The rules must be completed by mid-July. And the Department of Justice, which will help the Federal Reserve and U.S. Treasury implement the law, asserts that the horse racing, state lottery, fantasy sports and tribal exemptions are trumped by prohibitions on all Internet gambling.

Those prohibitions, it contends, are included in three laws that predate the modern Internet by more than 30 years, including the Wire Act of 1961. The horse racing industry counters it would welcome a legal challenge on those grounds, because it says the 1978 Interstate Horse Racing Act extends explicit protection for gambling.

The Internet gambling lobby would like Congress to legalize and regulate online gambling.

One of the leading groups in the lobby is the Interactive Gaming Council. It represents foreign companies, some of which abandoned U.S. markets or saw their stocks plummet after the passage of the Internet Gambling Act.

FUTURE OF INTERNET ACT

In the new Congress, the Interactive Gaming Council is expected to focus on lobbying for a narrow amendment to exempt online poker from the new law.

"You get less support when you start adding other games," said Keith Furlong, the council's deputy director. "Poker to me has a better chance when you sit down with legislators because the players are playing against each other, and you have the element of skill and you have the element that poker is American," he said. "It's like apple pie."

The council will be joined in pushing for the poker exemption by the Poker Players Alliance. It argues that poker will proliferate even if it's prohibited, so it's safer and more profitable to legalize and regulate it. The group intends to take that message to state legislatures as well as Congress.

The American Gaming Association, representing large, publicly traded casino operations, is taking a more measured approach, in part because its membership is divided on Internet gambling.

The group, which has opposed Internet gambling for years, officially took no stance on the issue last year. And this year, it will ask Congress to study the feasibility of legalizing, regulating and taxing Internet gambling.

"We've got to be convinced that it can be regulated and it can be controlled," said the association's president, Frank Fahrenkopf.

In the meantime, he said, "Don't anticipate that the gambling industry is going to be going to this new Congress asking for anything huge."

For more information, please see "Poker Players Put Chips on Entertainment Value."

TM & © THE POLITICO & POLITICO.COM, a division of Allbritton Communications Company


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