Gamblers take aim at Internet ban
November 16th, 2006
MGM Mirage chief executive Terry Lanni said Wednesday that the measure is “ridiculous” because it was signed into law Oct. 13 as part of a larger port security bill — and because it exempted horse races and lotteries, and online bets placed while on American Indian land.
“It makes no sense whatsoever,” Lanni told gambling industry officials attending the Global Gaming Expo in Las Vegas. “Prohibition didn’t work, this isn’t going to work.”
Later, Lanni said he hoped Congress would commission a study into the effect of online gambling.
“We’re looking even in the lame-duck session to reintroduce this bill with some of our compatriots in the House and Senate to study (Internet) gaming,” said Lanni, who directs the world’s second-largest casino company.
“We think it can be taxed, we think it can be regulated, we think it can be licensed,” Lanni said. “With the new leadership, with the Democrats winning the House and the Senate, we think we’re going to have a much better opportunity to do that.”
Lanni hinted that the promotion of Sen. Harry Reid, D-Nev., to majority leader might help the industry’s cause, but Reid said Wednesday that he opposed Internet gambling.
“I have said on many occasions that I don’t believe in Internet gambling,” Reid said in a meeting with reporters, adding he’d be open to looking at the results of a study on it.
“I know that people say it can be controlled, I just have extreme doubts that it can be. But I’ll be happy to look at the study. I’m not going to turn my head and say never, never.”
The Internet gambling ban prohibits banks from processing fund transfers from players to settle their online wagers. The Federal Reserve and other bank regulators were tasked with coming 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 companies outside the U.S.
Several London-listed gaming groups closed or sold their U.S. business after Congress added to an unrelated bill a provision that would make it illegal for banks and credit-card companies to settle payments for online gambling sites.
President Bush signed the law Oct. 14. Consolidation within the online gambling industry has been widely expected among company executives and investors after a sharp sell-off in the sector.
The online poker lobby group, Poker Players Alliance, claimed Wednesday 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.
The alliance released the results of an automated telephone survey of 1,033 voters in Leach’s congressional district conducted Monday and Tuesday by RT Strategies.
While one in 10 cited Leach’s stand against Internet gambling as a strong influence in their vote for him, a greater proportion, nearly one in seven, cited it as a strong reason to vote for his opponent, Democrat Dave Loebsack, a political science professor.
“This was an awful close race,” said pollster Thomas Riehle of RT Strategies. “It looks like on balance, Leach’s position on Internet gambling hurt him more than it helped him.”
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 the expo harshly criticized the Internet gambling law, saying it was confusing and contradictory, particularly a 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?”
