By Frank Brown/Mississippi Business Journal
The introduction of federal legislation to regulate Internet gambling could bring a calm to the patchwork of state laws that appear inevitable — or it could split the gaming lobby, leaving it up to states to write their own online gaming laws.
“I think that’s a positive,” said state Rep. Bobby Moak, D-Bogue Chitto, who has made two unsuccessful attempts to pass online gaming bills on the state level in Mississippi.
Rep. Peter King, R-N.Y., last week introduced a bill that would fully regulate in at the federal level.
Bills to legalize Internet poker have failed in recent years, but this year’s legislation comes on the heals of three states taking significant steps to provide online gaming with their borders.
In 2011, the U.S. Justice Department ruled that online gambling would be legal in states that passed the necessary legislation. Nevada, New Jersey and Delaware have legalized some kind of online gambling, and legislatures in other states are weighing the issue.
“I actually favor a broader piece of legislation. It’s easier for the industry, and a lot of folks in Mississippi have gaming houses in lots of other jurisdictions in the United States,” said Moak. “I think federal is the way to go to give states guidance and parameters.”
Even with his support of the federal bill, Moak said he plans to again introduce online gaming legislation in 2014.
Larry Gregory, executive director of Mississippi Casino Owners Association, said he and his group are taking a wait-and-see approach.
“We’re not going to get excited about this yet,” said Gregory. “We’ve been hearing about it for 10 years, and it just doesn’t look like there’s any appetite at federal level. We might see some action at the state level, but until then, we’re just going to sit back and observe and see where internet gaming is headed.”
For some states, particularly high-population states, it may be a race to pass their own legislation to avoid any federal restrictions.
King says his measure, called the Internet Gambling Regulation, Consumer Protection and Enforcement Act of 2013, would allow states and players to navigate the world of online betting with confidence.
“A common federal standard will ensure strong protections for consumers, protect against problem and underage gambling, and make it easier for businesses, players, lawmakers and regulators to navigate and freely participate,” he said in a statement, the Associated Press reported.
The bill would create an office of gambling oversight in the Treasury Department, impose safeguards against underage and compulsive gambling, and facilitate interstate online wagering.
States and American Indian casinos would have right to opt-out of a federal system and keep their own internal gaming practices.
“That’s one of the provisions that’s been looked at during the years,” said Moak. “The issue has always been that if Congress got involved, those states that have already put in a legalized gaming mechanism would be able to opt-out if they decide to not participate. If you have an opt-in provision, that’s almost like going through the gaming statutes again for each state.”
Morgan Stanley predicts that by 2020, online gambling in the U.S. will produce the same amount of revenue as Las Vegas and Atlantic City markets combined: $9.3 billion.
But not all Internet gambling supporters are going all-in.
Senate Majority Leader Harry Reid, D-Nev., and Sen. Jon Kyl, R-Ariz., tried to legalize Internet poker but never introduced the legislation. The bill failed in part because opposition felt it gave too much regulatory power to Nevada.
Reid told the Las Vegas Sun that King’s legislation made the prospects of a poker bill even bleaker, because it “basically authorizes everything — 21, poker, everything.”
While Reid added that he doubted King’s bill would pass, the introduction of a broad piece of gaming legislation both divides the sympathies of pro-gaming lawmakers and helps to stiffen the resolve of those opposed to gaming.
The American Gaming Association, meanwhile, is not sure about King’s bill. “We spent the last four years working very, very hard to get in a position to support such legislation if it was introduced,” American Gaming Association CEO Frank Fahrenkopf told the Associated Press. “So we’re now left in a situation where Kyl, who was very important in the process, has retired, and you’ve got a multitude of states starting to pass legislation, so we think the urgency is even more important now.”
The AGA, which has supported an online poker-only strategy, is expected to decide whether to change its stance and support the King bill next month.
King’s bill will probably need to be added to unrelated House legislation to pass, an aide told the New York Daily News last week.