How Anti-Online Gambling Legislation Could Be A Win-Win For Everybody

Posted By Steve Ruddock on March 27, 2014

It’s hard to predict what will come of the proposed online gambling ban that has been introduced in Congress by Senator Lindsey Graham (R-SC) and Representative Jason Chaffetz (R-UT).

The Restore America’s Wire Act bills were introduced into the House of Representatives and the Senate on Wednesday, and the architect of these pieces of legislation, Sheldon Adelson, has been unequivocal in calling for a comprehensive ban, but is this really the case?

If a piece of online gambling legislation is going to make it through both houses of Congress, and receive the signature of the president, it’s going to take a number of amendments and compromises, and in the end Adelson’s war against online gambling may see both sides come out victorious.

The path in the Senate

If this bill is going to pass (in some form, but certainly not as written) its toughest road will be in the senate. The bill is expected to be sent off to the Judiciary Committee where both Lindsey Graham and two of the bill’s three co-sponsors are members, Diane Feinstein (D-CA) and Mike Lee (R-UT).

Interestingly, there is only a single member of the Senate Judiciary Committee who represents a state with legalized online gambling, Chris Coons (D-DE). However, both senators from Minnesota, Al Franken and Amy Klobuchar are on the committee, and Minnesota has recently enacted online lottery sales. Minnesota radio also made headlines last week due to a misinformation filled online poker debate.

The bill already carves for certain carveouts, including horse racing (considered to be an olive branch for Kentucky Senator and Minority Leader Mitch McConnell) and fantasy sports, and will likely need to strengthen its language concerning online lotteries to make it through the committee.

The Reid factor

If this is a serious attempt to strengthen and clarify the Wire Act, and not simply posturing in order to court Adelson campaign donations, the Judiciary Committee will almost certainly have to address online poker in the bill, as Senate Majority Leader Harry Reid has indicated he wants an online poker carveout in any legislation of this type, and might introduce a competing bill doing just that.

We should know if Graham, Feinstein, and the rest of the committee are serious about this legislation based on the inclusion or exclusion of online poker.

It should be noted that Senator Graham has already floated the idea of an online poker carveout:

“If you want to have online gambling, then come to the Congress. … If you want to have a poker exception, offer an amendment and see if it will pass.

Appeasing Delaware and New Jersey

Another potential amendment to keep an eye out for is a grandfather clause for Delaware and New Jersey, allowing them to continue to offer online casino games.

This is not only important to gain support and votes, but this would also ease the concerns of the state’s rights wing of the Republican party, a group that could also be reached with an opt-out clause for any carveouts that are included in the bill, essentially allowing each state to choose its own destiny.

What a passable bill would look like

Here is what a passable ban on online gambling would look like in my opinion:

  1. Include a poker carveout
  2. Grandfather in Delaware and New Jersey’s online gambling industries
  3. Allow states to “opt-out”
  4. Call for companies to relocate to the US and hire US citizens (an idea stolen from John Mehaffey)
  5. Ban all casino games and sports betting

Why it’s a win for everyone

With the above amendments the Poker players Alliance and online poker players get precisely what they want, federal legislation legalizing online poker.

The AGA benefits mostly by putting the issue to bed and reuniting their members, as well as seeing an expansion of online poker.

The Christian conservative wing will certainly not be thrilled with the carveouts and grandfather clauses, but it’s still a win as it bans many forms of online gambling.

State’s rights advocates will see the grandfather clause and the ability to opt-out as 10th Amendment victories.

Fiscal conservatives concerns beyond tax and licensing revenue could be strengthened by mandating US companies and US jobs.

What about Adelson?

Sheldon Adelson would appear to be the loser in this scenario, but I have to wonder if this is precisely the outcome he wanted all along?

Was his call for a ban on everything, simply an instance of leveraged bargaining (you start high and I start low) where he was more than willing to allow online poker to seep through, as this will not detract from his brick & mortar properties. Is online poker merely his bargaining chip?

Did Adelson focus on poker knowing it would rile up an organized contingent of poker supporters who will fight tooth and nail to keep online poker legislation moving forward, while taking everyone’s eyes off his real target; online casino games?

If the above bill I outlined is passed by Congress I would be extremely happy, and I think most others would as well, but if Adelson had started with “I’m ok with online poker,” the AGA and PPA may have pushed for more, especially considering we already have New Jersey and Delaware to point to. Obviously this all speculation on my part, but it does make sense.

The reason this theory makes even more sense in my mind is that Adelson was quite quiet when Nevada (a state where he owns a casino) passed online poker legislation in 2011. Adelson seemed to only get excitable about iGaming when Delaware and New Jersey went live with comprehensive online gambling.

Perhaps Adelson only sees online casino games as a potential competitor for his brick & mortar properties; after all, it was during the online poker boom that land-based casinos were thriving.

Furthermore, it would explain the somewhat amateurishness of Adelson’s and CSIG’s anti-online poker campaign thus far.

From the laughable collusion and terrorism connections, to sending an obviously disinterested Andy Abboud out as the messenger, to Cold War style web videos, to paltry social media campaigns, it’s clear that Adelson’s money is not being spent wisely… but maybe that’s the whole point.

If this is Sheldon Adelson’s angle we may in fact see legislation similar to the proposed Reid / Kyl bill from 2012 passed. Poker players will get exactly what they want, and the anti-online gambling crowd can claim a major victory, stopping the scourge of online gambling at Delaware and New Jersey … it’s a win-win for everybody.

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Steve Ruddock

Steve is a well-recognized voice in the regulated U.S. online gambling industry. He writes for a number of online and print publications including OnlinePokerReport.com, USA Today, and others, with a focus on the legal market.

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