Place your bets: Online gambling clears obstacle

WASHINGTON -- Congress took a step on Wednesday to allow for legalized gambling over the Internet when a House panel approved a bill that would license companies to offer online poker and other casino games.

The legislation was approved by the Financial Services Committee by a 41-22 vote. Onlookers included lobbyists for the gaming industry, Indian tribes, poker interests and companies that operate gaming sites outside the United States.

All are eager to tap into the billions of dollars that Americans bet online each year, a lucrative pot that some say could be an important market for the gaming industry.

No Nevada lawmakers are on the committee, but they follow the legislation with interest on behalf of casinos weighing online visions and possible effects on their "brick and mortar" operations.

Rep. Shelley Berkley, D-Nev., said a number of casinos are concluding the future is online, and that expansion on the Internet will create jobs.

"I believe Internet gaming is the wave of the future," Berkley said. "I suspect that most of the (casino) industry will be involved in legal Internet gaming."

The committee's endorsement "was a very crucial step and we will move on from here," said Berkley, a bill cosponsor along with Rep. Dina Titus, D-Nev.

According to figures cited by the American Gaming Association, U.S. gamblers spent $5.9 billion online in 2008, a figure that some analysts say could grow to more than $24 billion in the next five years if the practice is legalized.

"The idea of licensing and regulating the industry obviously is winning the way and the old view of Congress to prohibit it is losing the way," said John Pappas, executive director of the Poker Players Alliance, an advocacy group promoting online legalization.

During a three-hour debate, supporters said taxes that would be levied on Internet gaming would generate welcome revenue for cash-strapped Uncle Sam.

"The best reason for this bill is the prospect for revenue," said Rep. Brad Sherman, D-Calif.

But for others, the government's embrace of online gambling was a sign of social disintegration, and another step by "big government" to sweep away what has traditionally been an area of state regulation.

Rep. Spencer Bachus, R-Ala., said it will not be possible to keep problem gamblers and minors from casting wagers online, a prediction that was dismissed by bill supporters.

"It strikes me as ironic that after all the talk of shutting down the casinos of Wall Street, we are talking about setting up casinos in every bedroom and dorm room and every computer in America," Bachus said.

But Rep. Barney Frank, the committee chairman and the leading proponent of legalization, said the bill was freedom-affirming. It would roll back a 4-year-old law that sought to block online gambling by forbidding banks to process payments to gaming sites.

"What we are doing is letting people in America make their own choices," Frank said. "I don't think it is the business of the United States government to tell people what they should be doing with their money."

Rep. Emanuel Cleaver, D-Mo., said if Internet gambling were on the ballot, "it would be approved by voters in every state of the union."

Despite the committee's endorsement, the path ahead for the controversial legislation is up in the air.

Frank said this week he believed the House will vote on it before the end of the year, and that he had spoken with Senate Majority Leader Harry Reid of Nevada and others about its prospects in the Senate.

But a Reid spokesman said there have not been any talks with the House on the bill "at this point in time."

"Sen. Reid would not allow any bill to move forward if it would hurt the hundreds of thousands of Nevadans employed by the gaming industry," spokesman Tom Brede said.

Some lobbyists envision a scenario where, if the bill does pass, it may do so in the final days of this year's session, possibly attached to other legislation. That was how Republicans in 2006 passed the restrictions that are in place.

Another possible scenario, lobbyists and some lawmakers say, is the legislation being narrowed to allow for online poker, the most popular game people play on the Internet. At the insistence of the National Football League, the legislation does not allow for sports gambling.

Contact Stephens Washington Bureau Chief Steve Tetreault at stetrault@stephens
media.com or 202-783-1760.