Gamers seek repeal of bet ban

Nov 28, 2006 6:06 AM

Casino operators and a poker lobbying group are hopeful that a change in Washington, D.C.’s power structure will help them overturn an Internet gambling ban rushed through Congress two months ago.

Speaking at a G2E panel discussion, MGM Mirage chief executive Terry Lanni said that the measure is "ridiculous" because it exempted horse races and lotteries, and online bets placed while on American Indian land.

"It makes no sense whatsoever," Lanni said. "Prohibition didn’t work, this isn’t going to work."

Lanni added he hoped Congress would commission a study into the effect of online gambling.

"We think it can be taxed, we think it can be regulated, we think it can be licensed," Lanni said.

The idea that the online betting ban could be a precursor to legalization and/or regulation in the U.S. was planted within the legislation itself, which specifically exempts Internet gambling conducted within a state that allows gambling.

The Internet gambling ban specifically prohibits banks from processing fund transfers from players to settle their online wagers. The Federal Reserve and other bank regulators were designated to come up with practical measures to enforce the law by July 2007.

Americans bet an estimated $6 billion per year online, according to industry figures, most of it through sites run by operators — mostly online poker rooms and off-shore sports books — outside the U.S.

Several London-listed gaming groups closed or sold their U.S. business after President Bush signed the law Oct. 14.

The online poker lobby group, Poker Players Alliance, claimed that anger over the ban helped sink the re-election bid of 30-year House legislator Rep. Jim Leach, the Iowa Republican who helped write the bill.

Michael Bolcerek, president of the 120,000-member poker alliance, said the election results emboldened the group.

"Our members and other poker players went to the polls. They influenced the federal election," he said. "In the next 12 months we’re confident that we’ll get a study commission bill. We think an exemption is in order, as well."

Legal experts at G2E harshly criticized the Internet gambling law, saying it was confusing and contradictory, particularly the section that appeared to sanction Internet betting conducted within a state.

"It’s a public embarrassment. ... it’s a mess," said professor I. Nelson Rose of the Whittier Law School. "Eventually I think they’ll get Congress to change the law to do for Internet poker exactly what they did for Internet horse racing. It’s an exemption but (based on) states’ rights."

David Stewart, a lawyer with Washington-based Ropes & Gray LLP, predicted lawmakers would let the courts work out the law’s weak points.

"Whenever they legislate on something, they don’t come back to it for a while," he said. "They want to see, did they really screw it up or can people work their way around it?"