|
|
 |
|
|
 |
Online Gambling Bill Faces Long Odds
Congress Daily
June 19, 2006
House members trying to move a bill that would crack down on the $12 billion online gambling industry face long odds in their quest, in part because of strong lobbying by the horse racing industry and because of a World Trade Organization ruling that lead to trade sanctions against the United States.
Lobbyists and legislators note that two bills to ban most forms of Internet betting do not address pari-mutuel wagering on horse races. The politically powerful industry has benefited from the 1978 Interstate Horse Racing Act. It allowed interstate simulcasting, which now accounts for an estimated 85 percent of the wagering at tracks such as Churchill Downs in Louisville, Ky.
But there are differing opinions about what is already legal.
The Justice Department maintains the 1961 Wire Act, which prohibits businesses from using wire transmissions to accept bets over state and foreign lines, gives it authority to prosecute betting on all forms of interstate gambling, including horse racing. But at least one court has a different view. The 5th U.S. Circuit Court of Appeals ruled in 2002 that under the Wire Act, sports wagers are illegal but casino games are legal because the statute only refers to "bets or wagers on any sporting event or contest."
Many observers contend the discrepancies between the Wire Act and the Interstate Horse Racing Act will ultimately be settled by the Supreme Court, not Congress.
While lawmakers wrangle over the legal complexities of U.S. gambling law, they also must factor in a WTO determination that the United States treats domestic and foreign online gambling industries differently because U.S. officials allow bets on horse races here but not in other countries. The case was brought by tiny Antigua, which has been rebuffed in its attempt to negotiate a settlement. But now that more than 70 countries have online gambling industries, the United States might not be able to continue such a stance in the near future.
"Although Congress seems unfazed by the prospect of trade sanctions from Antigua, a much larger conundrum could be posed should a major U.S. trading partner (such as Great Britain) bring a similar case," said an American Gaming Association study of online gambling.
Given such threats, the AGA in April called for a commission to study the issue, including whether the United States should regulate and tax the industry rather than enacting a complete ban. So far, lawmakers have been hesitant to adopt such a view and have wanted to curb its growth, a difficult task given its international reach.
"It's a mess," said one gambling industry lobbyist who represents foreign providers.
The legislative wrangling has not been any easier than the international political fight. House Republicans are trying to reconcile two bills so they can bring one to the floor.
A bill sponsored by Rep. Bob Goodlatte, R-Va., would amend the Wire Act to ban most forms of interstate gambling carried out through new technologies. A bill sponsored by Rep. Jim Leach, R-Iowa, would bar banks and credit card companies from processing payments for online bets and would make it a crime for a gambling business to accept credit cards, wire transfers or any other bank instrument to process payments for illegal gaming transactions.
Some lobbyists and lawmakers say Leach's bill would be easier to pass because it focuses solely on payment issues rather than amending U.S. gambling laws. The Senate has typically not wanted to make changes to the Wire Act, but Goodlatte has lobbied hard for his measure.
"I think there can be aspects of it [Wire Act] in the final bill ... It will have to be carefully done. We want to do it in such a way that a consensus emerges," Leach said. "We're hopeful. There are no assurances to anything."
But one House GOP aide suggested the odds of an agreement between the Leach and Goodlatte camps are about as long as the chances of hitting a jackpot.
Goodlatte went out of his way not to offend the horse racing industry, which has strong allies such as Senate Majority Whip McConnell and House Homeland Security Appropriations Subcommittee Chairman Harold Rogers, both Kentucky Republicans. Goodlatte also attempted to modify his bill to assuage the Justice Department's opposition to a special carve-out for the horse racing industry. Goodlatte's bill was revised to say that "nothing in this act may be construed to prohibit any activity that is allowed" under the horse racing act. The language did not directly amend the Wire Act, but was placed under a new section of law.
"It's hard to say which side caved. But the horse guys have real money in this. My guess is that [the] Department of Justice caved," said the lobbyist who represents foreign gambling operators.
Gregory Avioli, a lobbyist for the National Thoroughbred Racing Association, called the Goodlatte bill a "significant win" for his industry. But Avioli said the bill still did not resolve his industry's battle with the Justice Department over the Wire Act. He said the association remained "vigilant against any efforts to restrict business practices that are authorized under the [horse racing act]."
If anything, lawmakers have made the issue even murkier. For example, in 2000 Rogers placed language into an appropriations conference report that expanded the horse racing act to include interstate wagering via telephone or other electronic media. Critics said the provision basically legalized interstate pari-mutuel gambling over the Internet. President Clinton in his signing statement noted that the Department of Justice disagreed with that interpretation.
|
|
|
|
RETURN TO THE PREVIOUS PAGE