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Online gambling finding support from legislators

Jun 24, 2008 7:00 PM

Staff & Wire Reports | On Tuesday of this week, the House Financial Services Committee will amend proposed legislation that would prohibit the U.S. Treasury and Federal Reserve System from implementing regulations related to the Unlawful Internet Gambling Enforcement Act, passed by Congress in 2006.

The bill, introduced by Representatives Barney Frank and Ron Paul, is based on testimony from the financial services industry that implementing a ban would be next to impossible to enforce.

A companion piece of legislation would require regulation and taxation of Internet gambling.

While the bills are still in their infancy, momentum appears to be building in support of legalizing online gambling.

Earlier this month, a panel of experts told state lawmakers that Internet gaming is here to stay and, instead of trying to prohibit it, state governments should start regulating the exponentially growing business.

Speaking before the National Council of Legislators from Gaming States on June 14 in Napa, California, the panel of industry experts updated the lawmakers on the aftereffects of the Unlawful Internet Gambling Enforcement Act.

"The United States is going one way, and the rest of the world the other," said consultant Frank Catania, who predicted that after the 2008 presidential election the U.S. would join the regulatory wave.  "The online gaming market will continue to expand regardless of decision to regulate. Consumer demand and industry growth will force governments to act."

Horse racing enjoys an exemption from the federal Internet gaming laws, but state interpretation of those regulations varies greatly.

"But I shouldn’t have to call a bookie to make a bet on the Lakers-Celtics game tonight," said Ken Kirchner, former senior vice president of the National Thoroughbred Racing Association. "I should be able to do that in a legal manner regulated by state government. It’s an entertainment experience and it’s my money. It’s like going to the movie theater. I should know that my funds are deposited with a legitimate company and that I’ll be paid if I win. And I should not be fearful of prosecution by federal or state authorities for my activity."

Catania, estimated the value of current online gambling in the U.S. at more than $15 billion.

"States are better equipped to regulate online gaming than the federal government," he said. "States have done an excellent job in regulating traditional gaming facilities and that experience could be used to regulate online gaming."

The reasons for regulation of Internet gaming are the same as for regulating traditional casinos or other gambling outlets, added Catania, former assistant attorney general for New Jersey’s gaming authority. "Keep out those that do not have good character and provide fair and honest games as a means of protecting the public from unscrupulous operators.

"We’re talking basic consumer protection," he added, noting that states should be able to regulate such aspects as age restrictions. "We need requirements to know where that player is and how old. Some lessons have been learned. The states have the experience and they should use it. Indian gaming is the only gambling area that the feds regulate and they’ve done a terrible job."

Florida State Sen. Steve Geller, a past NCLGS president, moderated the discussion. "We may end up with Internet gaming whether we like it or not," Geller said. "With new forms of technology, the effort now is to regulate it the best you can."