December 3, 2012

Reid Attempts Inside Straight for Casinos on On-line Poker

Last December, the DOJ overturned a forty year old regulation prohibiting online wagering, noting that a 1961 rule governing sports betting could not be considered to cover modern games of online Texas Hold 'em. 

It was a moderate success for individual and states' rights in more than one way. Not only was the federal government leaving open the question of whether online gambling was legal- expanding the definition of legal gambling tenfold with the stroke of a pen - but now, states looking to increase revenues could consider running their own games. Obviously Nevada was the first to take the DOJ up on its offer, followed closely by New Jersey and now Delaware.

But as per usual, Congress has little interest in letting individual activity go unregulated. And, recently a small band of Congressmen led by Harry Reid have decided that states should not be free to construct their own gaming schematics, but rather, the Federal government should swoop in and decide how the development of now-unchained online gaming will progress.
“Online poker is on track toward regulation in the U.S., whether it’s done on the federal level or through the states,” said John Pappas, executive director of the Poker Players Alliance, which represents more than 1 million online poker players... 
Both the brick-and-mortar casino industry — which could perceive a threat from a sweeping expansion of its trade on the Web — and poker aficionados have thrown their support behind narrow legislation that would legalize just online poker while banning all other forms of Internet gambling. 
Majority Leader Harry Reid, D-Nev., and Minority Whip Jon Kyl, R-Ariz., are working on such legislation in the Senate, and Rep. Joe L. Barton, R-Texas, backs that approach in the House.
There are arguments to be made. After all, state-by-state regulation can be burdensome and confusing, and there's always the question of interstate commerce, but where modern technology (and modern legal structures) might enter into the equation in private industry, the government sees no such options outside their own heavy fist. But states already have systems in place that allow them to participate in multi-state lotto and OTB programs without need for additional federal intervention via the commerce clause. Moreover, these arguments seem to apply most notably to online poker, which, according to a number of state lottery directors, would not be among the games states seek to offer their residents. After all, they say, the profit margin on poker is relatively small compared to other games. 

So why worry so much about online poker? Well, the inclusion of Harry Reid should give Americans a clue as to whose interests are really at play in the passage of this bill. If Harry Reid's ideas become law, and one set of regulations governs, with only online poker being allowed, large corporations will be able to quickly snap up the lion’s share of the gaming, with most of those corporations being casinos headquartered in Harry Reid's home state of Nevada. Reid admitted as much when he castigated Rep. Dean Heller in September for allegedly not doing enough to recruit GOP support for the measure:
On Tuesday, Reid scolded Heller. “In May, you agreed to help me cement Republican support for the bill in the Senate,” he wrote Heller. “Since then, you have been unable to garner the necessary Republican votes to pass this bill. As a result, we are at a standstill. And every day we stand still, Nevada's workers, its economy and its gaming industry suffers.” 
“Reid said the legalization and regulation of online poker “may be the most important issue facing Nevada since Yucca Mountain. This bill means jobs for Nevada.”
Reid’s point is clear – his bill is about Nevada jobs, Nevada money and feathering the bed of Nevada’s biggest industry. Under his bill, the only entities that would be eligible for a federal poker license for at least the first two years would be land-based casinos, race tracks and large manufacturers for gaming machines. 
It isn't often that the government decides that it doesn't have the power to regulate something. Perhaps we should consider the long-term implications of handing the keys of online gaming directly to the Senate Majority leaders best corporate friends before we take that step.


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