Inside Asian Gaming

INSIDE ASIAN GAMING | June 2008 36 Online Gaming the powerful Financial Services Committee,a positionhewas awardedafter theDemocrats took back the House in the 2006 mid-terms, Frank is playing to much larger audiences. But even he hasn’t been able to muster the votes to get his bill out of committee. Its several “companions” are languishing in similar fashion. McDermott’s had one co-sponsor as this went to press. That was Neil Abercrombie of the great state of Hawaii. “The Frank bill is the lead bill, and it must move first before Jim’s legislation,” a spokesman for the congressman explained. Florida Democrat Robert Wexler had gotten one committee hearing for his bill to exempt poker from the federal fatwa, his argument being that it’s a game of skill. LasVegas Democrat Shelley Berkeley had one hearing last year on her bill calling for a study of Internet gambling by the National Academy of Sciences. Berkeley is co-chair of the Congressional Gaming Caucus, and her bill is the only one endorsed by the American Gaming Association. This is worth mentioning because the AGA,the federal lobbying armof the land-based casino industry, has a history of success when it comes to commissioning academic studies to promote its members’ image and economic agenda. The big Vegas-based operators that dominate the association have been hankering for years for a slice of the multibillion-dollar Internet pie. The problem is they also oppose federal taxation and regulation, which they hold to be the exclusive purview of the states where they operate. Indeed, they formed the AGA specifically to keep Washington as far away from their casinos as possible. There is a double irony here because it’s this very states’ rights thing that must be finessed if remote gambling is ever to be viable as a legal industry in the United States. Seven states specifically prohibit Web gambling. Five more have issued opinions opposing its legality. Most of the remaining 38 don’t want it either. (McDermott’s own state of Washington classifies gambling on the Internet as a“Class C”felony,equivalent to possessing child pornography, threatening the governor or torturing an animal.Violators can be imprisoned for five years and fined up to $10,000.) Of the 50 state attorneys general, 49 are on record as supporting Frank’s “stupidest law,” and 45 have put their signatures to a letter to Congress opposing his legislative bid to undo it. Nevada’s was not one of them. No surprise there. But the big sports organizations whose games are the mainstay of the Vegas sports books — the NFL, the NBA, Major League Baseball, the National Hockey League and the National Collegiate Athletic Association — all have signed a strongly worded letter urging the members of Frank’s committee to resist any attempts to repeal UIGEA or water it down. Frank’sresponse?Hescheduledahearing last month to examine the burdens UIGEA will impose on the banking and financial services industries charged with enforcing it. What did this hearing uncover? It was impossible to know, as of this writing. But I think the chairman tipped his hand when he said,“The hearing is going to show — I want to show — that it’s not that the regulations weren’t done well,it’s that they can’t be done well given the inherent nature of the issue.” Capitol Hill Then there is Oregon Congressman Peter DeFazio,who wants the office of the US Trade Representative to disclose the details of concessions made to the European Union late last year that bought the EU off Antigua’s victorious World Trade Organisation complaint against the US Web ban. It might be a gross disservice to those crafty Old Europeans to suggest that they sold out their own gambling companies by waitinguntillittleAntiguawonitscasebefore joining in the free-for-all for compensation, then got out quickly with whatever bennies they could wring without too much trouble — but that’s sure how it looks. For some inexplicable reasons the Bush administration has classified the details of this on grounds of“national security”.DeFazio wants to know why. So do those gambling operators across the Pond. Antigua won its case by arguing that Washington’s policies are discriminatory because they exempt horseracing, which legally accepts Web bets in dozens of states. The Bush administration eliminated this apparent contradiction ex post facto by withdrawing gambling from the WTO’s General Agreement on Trade in Services, saying it was never intended that US gambling policy be subject to the global free market. And how could it have been, given that the Internet was largely an unknown quantity back in the early ’90s when GATS was crafted? And also there are those prohibitions to contend with on the state level. The Remote Gambling Association, infuriated by how Brussels played an apparent winning hand, has now gone to the European Commission claiming US enforcement activities before the GATS withdrawal—measures that have included fines, forfeitures and the arrests of European nationals—still amount to discrimination. The association, which represents many of Europe’s largest Web gambling operators, has brought its case under the EU’s Trade Barriers Regulation, which obligates the Commission to respond. So now a Common Market awash in court cases over gambling industry protectionism and sloshing about in gambling-related sports scandals is investigating gambling in the United States with a view to achieving a “constructive and mutually satisfactory solution.” By James Rutherford, editor of Interna- tional GamingandWageringBusiness (IGWB) magazine. Special to Inside Asian Gaming .