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Gaming industry leaders see a window of opportunity to pass federal legislation legalizing and regulating Internet gambling, but a panel at Wednesday’s iGaming North America conference believes efforts are being slowed by the inability of the industry to develop a unified regulatory strategy.
“I don’t think we’ve earned the right to even have the discussion” about how Internet gambling should be regulated, said panelist Laurie Itkin, vice president of government and public affairs in North America for Betfair, a British Internet gambling company whose U.S. subsidiary takes horse racing wagers in 18 states.
The industry is split over whether the federal government or the states should regulate online gambling. Most believe that because the Internet has no borders, the federal government should regulate it as interstate commerce. But most also agree that several states, like Nevada, have regulatory structures in place that could be implemented quickly.
Some industry leaders worry that if several states adopt different rules and standards that the public would be confused about what is and isn’t legal.
The question of federal vs. state regulation was discussed at a session of iGaming, a two-day conference on Internet gambling attended by more than 300 people at the Monte Carlo.
VEGAS INC. was an event sponsor.
“I think the industry has gotten a D-minus in developing a unified front,” Itkin said.
She said it’s not just about rival casino companies seeing eye to eye. It’s about casinos, California card rooms, the horse racing industry and other shareholders getting together.
The American Gaming Association, the industry’s top lobbyist, was neutral on Internet gambling, but panelist Mark Tenner, president of consultant Concept Development Group, said he expects the organization to change course and support federal legislation and regulation.
Tenner said he expects Internet poker players will continue to be vocal about legalization and that online casino games could eventually win approval. But online sports wagering won’t win favor, in part because the National Football League opposes it and only recently agreed not to stand in the way of the legalization of online poker, he said.
Panelist Linda Shorey, a partner with the K&L Gates firm, said five states, including Nevada, have pending legislation on online gambling. California has two Senate bills in play; New Jersey’s legislation was vetoed by Gov. Chris Christie; and Washington, D.C., has approved a bill that legalizes games of skill and games of chance, as long as they don’t violate federal law.
In New Jersey, Sen. Raymond Lesniak is expected to sponsor a resolution for a referendum in November that effectively would clarify that casino gambling via the Internet could occur outside Atlantic City, one of Christie’s reasons for vetoing the bill.
Nevada’s proposal, introduced by Assemblyman William Horne, D-Las Vegas, has been referred to the Ways and Means Committee. The legislation directs the Nevada Gaming Commission to develop online gambling regulations once the state has assurances that it won’t violate federal laws.
Florida, Iowa and Hawaii, meanwhile, have pending legislation, in addition to the two California bills.
One California bill provides for intrastate Internet poker, while the other allows for other games. Both allow tribal casinos to participate and have been referred to the state’s Committee on Governmental Organization.
On the federal side, Rep. John Campbell, R-Calif., has introduced legislation similar to Rep. Barney Frank’s Internet gambling bill providing a regulatory framework and prohibiting sports wagering.
Tenner said he thinks there is a small window of opportunity for federal lawmakers to take up the legislation before the summer recess.
“But if it doesn’t happen this year,” he said, “it’s not likely to happen until after the 2012 election.”
Panelists said the fallout from “Black Friday,” the April 15 unsealing of indictments against 11 executives from three online poker companies, is that it stopped any momentum that had been building in its tracks. But they said it also proves that the industry is in need of regulation.
Conservative Republicans in the Senate have been able block votes that would advance the proposal, and the panelists feared they would be further emboldened by the effect of the indictments, even though the key accusations were that online companies misrepresented what was being paid for online and defrauded banks.
“It gives the antis (those opposed to Internet gambling) something to hang their hat on,” Tenner said. “They can look at UIGEA (the Unlawful Internet Gambling Enforcement Act) and say, ‘It works.’”
The panelists said there would still be a chance for federal legislation if poker fans remain vocal, if the gaming industry develops a unified front and if the need for additional tax revenue becomes too great to resist.