GPWA Times Magazine - Issue 19 - February 2012

COVER STORY the creation of a legal fiction deeming all wagers to have ‘originated’ in Atlantic City cannot overcome the clear and unambigu- ous language of the State Constitution.” “Moreover, certain provisions set forth in this legislation are not consistent with my administration’s policy objectives, such as the continuation of public subsidies of horse racing,” Christie added. Christie said he was also worried about the development of Internet gambling cafés in New Jersey. “Nothing contained in the legislation would prohibit commercial es- tablishments outside of Atlantic City such as nightclubs, bars, restaurants, cafés and amusement parks from offering Internet gambling opportunities in order to attract patrons or customers,” Christie said. At the end of his veto message, Christie suggested it would take a public refer- endum to change his mind about on- line gambling. State Sen. Ray Lesniak, who spearheaded the passage of the online gaming legisla- tion, says he’s authored a new bill and fixed every element of his online gambling bill to meet Gov. Chris Christie’s require- ments, except for the one that requires a voter referendum. He’s hoping to con- vince Christie that there doesn’t need to be a referendum. But if he can’t do that, he’ll put it on the ballot in November and let the voters decide. If the voters approve it, Atlantic City casinos could begin offer- ing online gaming in 2013. Don’t count out the feds Even though states now have the DOJ’s blessing to offer intrastate online gaming, it doesn’t mean Congress won’t still act on the issue. Immediately after the DOJ gave its im- primatur to intrastate online gaming, the American Gaming Association (AGA) – a trade association of commercial land- based casinos – and the Poker Players Alliance (PPA) – a grassroots and lobby- ing organization for online poker players – renewed their calls for federal regulations. “The Department of Justice’s interpre- tation regarding the scope of the federal Wire Act validates the urgent need for fed- eral legislation to curb what will now be a proliferation of domestic and foreign, un- licensed and unregulated gaming websites without consistent regulatory standards and safeguards against fraud, underage gambling and money laundering,” the AGA said in a statement. “This will provide policy makers at both the state and federal level with the legal confi- dence to move forward with licensing and regulation of online poker and other non- sporting activity within their respective jurisdictions,” said John Pappas, execu- tive director of the Poker Players Alliance. “However, it is our hope that our federal policy makers see this as an incentive to move quickly to enact federal licensing and regulation before various states produce a mix of individual state schemes that may not be the best model to serve consumers.” “[The] PPA’s million-plus members have spoken loud and clear: they prefer clear, consistent federal legislation to a patchwork of state laws to license and regulate the game they love,” added former Senator Alfonse D’Amato, chairman of the PPA. “State-by- state licensing and regulation could result in a balkanized online poker world where players across the nation would be limited in their choices of where and against whom they could play. This could potentially re- duce the number of total players, reducing revenues state lawmakers project from this activity. At the same time, it would deter en- trepreneurs from entering the online poker market, as there would essentially be 50 dif- ferent sets of laws and rules to which they would have to adhere.” The DOJ’s Wire Act reversal has made the path to passing federal legislation much more difficult. States jealously guard their rights. And the DOJ opinion essentially gave them the right to regulate online gaming. But the path still remains open. The conventional wisdom in political circles is it doesn’t matter what happens in the House of Representatives regard- ing online poker legislation. If an online poker measure is going to pass, it’s going to come from the Senate, and it will have to be attached to must-pass legislation because it can’t win a stand-alone vote in the Senate. Two people can make this happen – the aforementioned Sen. Jon Kyl and Senate Majority Leader Harry Reid. Kyl was one of the key architects of the Unlawful Internet Gambling Enforcement Act. He views prohibiting online gambling as a legacy issue. The UIGEA hasn’t been doing the job well enough. Americans are still gambling online. And the DOJ just gave states the legal authority to offer all forms of online gaming except for sports betting. So from Kyl’s standpoint, a bill that regulates online poker while banning all other forms of online gaming, is a plau- sible endgame. Lobbyists say Kyl is open to this line of thinking, and if that’s the case, he might be interested in striking a deal with Reid now. Reid really wants to pass online poker legislation. He represents the state of Nevada. The big casino companies in Nevada (except for Las Vegas Sands) want online poker. Therefore, Reid wants on- line poker. Reid knows he can’t pass online poker legis- lation through the regular process, so he has to find a bill he can attach it to. But he won’t attach it to must-pass legislation unless he knows he can get the bill through with the poker provisions. There are a limited num- ber of vehicles each year to do this. Election-year politics also complicate the equation for 2012. Democrats and Republicans alike might not appreciate being forced to vote for a pro-gambling is- sue during an election year. But if Kyl and Reid forge a deal, federal action on online poker is still a possibility in 2012. Vin Narayanan is the managing editor of the GPWA Times Magazine. “ The DOJ’s Wire Act reversal has made the path to passing federal legislation much more difficult. States jealously guard their rights. And the DOJ opinion essentially gave them the right to regulate online gaming.” The U.S. market: out of many, one — or every state for itself?