Inaction on Hill seen as jackpot for online-gambling states
Months after D.C. lawmakers repealed a measure that would have allowed first-in-the-nation online gambling on home computers and at select sites in the shadow of Capitol Hill, several states are forging ahead with online games of chance while a harried Congress remains unlikely to pass a federal bill that would regulate the practice.
The push to introduce online-gambling legislation as a source of revenue —or protect those who play wagered games on offshore websites — has gathered steam in the year since the U.S. Justice Department declared that the Wire Act of 1961 prohibits Internet gambling only on sports. The legal opinion, a reversal of the government’s position, opened the door to online gambling via state lottery systems even though it was intended to address whether Illinois and New York could use out-of-state transaction processors to sell lottery tickets to adults within their borders.
Since the Justice Department issued its opinion, “at least seven states — California, Delaware, Hawaii, Iowa, Illinois, Mississippi and New Jersey — have introduced legislation authorizing forms of Internet gaming in their states,” according to the National Conference of State Legislatures. Many bills are pending or have died in committee, but Delaware authorized forms of online gambling in June.
“The whole dynamic changed Dec. 23 of last year,” Frank Fahrenkopf Jr., president of the American Gaming Association, said of the release of the Justice Department opinion. “It has set the stage that, if Congress doesn’t act quickly, it will be the largest expansion of gambling in the nation’s history.”
His association supports a draft bill from Senate Majority Leader Harry Reid, Nevada Democrat, and Senate Minority Whip Jon Kyl, Arizona Republican, that would make online gambling illegal — except for Internet poker. The card game has a long tradition in the United States, and participants play against one another and not the house, Mr. Fahrenkopf said.
Yet the bill faces an uphill battle in a deadlocked Congress that is grappling with the best way to avoid the “fiscal cliff” of automatic tax increases and spending cuts at the start of next year. Both senators told National Journal in November that they would like to act on the gambling proposal, but acknowledged the stark challenges of enacting legislation amid more pressing issues.
As lawmakers hash it out on Capitol Hill, approaches to gambling in the D.C. region — either through online gambling or bricks-and-mortar casinos —reflect the spectrum of debate across the country. States are using wagered games to quench their thirst for revenue or, conversely, thwarting attempts to use gambling as a way to balance the budget.
Maryland voters approved hotly contested Question 7 on the Nov. 6 ballot, authorizing the state to open table games at five existing and planned casinos and to build a sixth casino in Prince George’s County. National Harbor, located along the Potomac River just south of the Capital Beltway, is considered to be the most likely site for the new casino.
Virginia Gov. Bob McDonnell said on WTOP-103.5 FM radio on Tuesday that he is not concerned about Maryland’s table games “having a bad impact” on the Old Dominion and signaled that his state would not go all in on games of chance.
“That’s a choice that Maryland has made,” Mr. McDonnell told the station. “That’s not how we’ve expanded revenue in Virginia.”
In the District, council members Marion Barry, Ward 8 Democrat, and Jack Evans, Ward 2 Democrat, introduced a bill in September to establish a 23-member citizens commission “to investigate the economic and social feasibility of implementing various forms of legalized gambling” in the city. Mr. Evans said the bill likely will die in committee when the council term expires at the end of the year.
Besides Maryland’s new offerings, West Virginia touts the Hollywood Casino at Charles Town Races,roughly an hour-and-a-half drive from the nation’s capital. Mr. Evans said it is unclear whether the neighboring casinos draw away revenue or bring in tax dollars through increased tourism to the region.
“That’s the purpose of the study,” he said. “I don’t know if it’s a positive or a negative.”
D.C. Council members in February repealed an “i-gaming” statute that passed as part of a broader budget bill in December 2010. Its path to law caused critics to question why it was not fully vetted as stand-alone legislation with public hearings.
The city lawmaker who pushed online gambling in the District, Michael A. Brown, at-large independent, repeatedly warned that the federal government may step in and regulate the practice before local governments could set up their own systems. The prospect of that is on the table, but no one is betting the house on the bill’s passage.
“We’re an industry that depends on luck,” Mr. Fahrenkopf said. “And we’re going to have to be lucky to get this done during the lame-duck session.”
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