GPWA Times Magazine - Issue 18 - October 2011

From: Joe Brennan, iMEGA To: John Pappas, PPA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . If there were a federal solution to the Internet gambling question, I’d be happy. After all, I live in the D.C. area. It would be easier for me to make the 30-minute drive into Washington than to hike up to Trenton, N.J. or Harrisburg, Pa. or down to Tallahassee, Fla., for example. However, for the last four years, we’ve been of the opinion that the best way to make progress on the iGaming question would be to focus on gaming states, and that the federal prospects were slim in the near-term. Low Fed prospects aren’t for a lack of effort or investment or good people. It’s simply a question of numbers: 1. Passionate congressional opponents of iGaming far outnumber passionate supporters. 2. The potential tax and job-creation yields are not high enough in Washington terms to motivate the ambivalent bulk majority of the remainder of Congress. 3. The numbers and the issue do not elevate the issue to the level of a priority for members of Congress. There is just too much attention required elsewhere – on the economy, on jobs, on health care – for the issue to be given the serious consideration it deserves. 4. A majority of the members of Congress who voted in favor of the Unlawful Internet Gambling Enforcement Act in 2006 are still there, and thus far have had little incentive to “change” their position on iGaming. 5. The current and previous Speakers of the House have had no intention of bringing the issue to a floor vote. Gary Loveman of Caesars Entertainment recently said, “I think there is the will in Congress to legalize online poker.” There isn’t, at least not a majority will. Maybe Senate Majority Leader Harry Reid does, but he doesn’t have the power to push it through. And despite commentary to the contrary, Senator Jon Kyl is not in any hurry to join Reid in pushing a bill in the Senate. A half-dozen states have begun to seriously consider Internet gambling. The opportunity numbers scale better at the state level, in revenue, taxes and jobs. If those states began to permit and regulate the activity, it would add heft to the lobby in Washington to have the Feds address this beyond UIGEA. Unfortunately, Mr. Loveman and Caesars have myopically chosen to commit suicide on the federal efforts, and claim that state-level efforts hurt their push in D.C. That’s illogical, and frankly, a lie. We understand that Caesars (and more importantly, their private-equity owners) want a Fed system because it will give their individual company its highest-possible valuation (at least that’s what they’ve told investors). But for the foreseeable future, it’s not going to happen. So, better to make lemonade than sit around holding our breath waiting for things to change in D.C.