Playing the Odds

Reid could push online gambling bill during lame duck, helping friends and punishing enemies

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December 4, 2012

An online gambling bill sponsored by Senate Majority Leader Harry Reid (D., Nev.) could slip through during the lame-duck session and become law, giving Reid’s home state a competitive advantage over other states in the online poker industry.

Cosponsored by outgoing Sen. Jon Kyl (R., Ariz.), the bill would outlaw all forms of online gambling except poker and would set up a federal Office of Online Poker Oversight in the Department of Commerce.

Reid indicated last week that the bill was not likely to pass, as he needed 15 to 17 Republican votes.

"At this point, we've got none," he told the Las Vegas Review-Journal.

Brian Darling, senior fellow for government studies at the Heritage Foundation, said Reid has three options for passing the bill absent bipartisan support to pass a standalone bill.

Reid could attach the gambling bill to other "must-pass" legislation—such as a possible fiscal cliff deal—as an amendment. He could wait and attach the bill in conference between the Senate and the House as they hash out differences on a must-pass bill. Or he could insert the bill directly into the base language of another bill.

"If he has the will to do it, he has tools at his disposal," Darling said, suggesting a "secret negotiation" could be undertaken to pass it.

Reid also has significant political backing at home. Nevada Republicans Sen. Dean Heller and Gov. Brian Sandoval support the bill. Nevada newspapers have been covering the bill’s progress extensively, as has the poker industry.

Heller indicated that the bill is a top priority for the Senate majority leader. Online poker "is an issue that’s on the front burner for me, for Sen. Reid and Sen. Kyl," he told the Las Vegas Sun last week.

Reid, Kyl, and Heller’s offices did not return a request for comment on the bill.

This would not be the first time Reid has tried to attach the online gambling bill to other legislation. Reid tried to add a version of the bill to a 2010 deal to extend the Bush tax cuts. Some speculated during the debt ceiling negotiations last year that the government would legalize online poker to create a new stream of revenue.

Darling said Reid had an opportunity to attach the bill to the Defense Authorization Bill in the Senate and will have another opportunity to attach it to any fiscal cliff legislation. That bill will be the "last ship that sails," he said, making it a prime target for unrelated legislative items.

Nevadans argue that Nevada’s extensive experience in regulating poker places it in a good position to capitalize on these new regulations.

"I think it’s very well positioned," said David Schwartz, director for the Center for Gaming Research at the University of Nevada, Las Vegas. "I think that they have put a lot of effort into developing both the systems and the regulatory regime that can handle it."

A.G. Burnett, chairman of the Nevada State Gaming Control Board, agreed that Nevada is in a strong position to capitalize immediately on the new regulations.

He said Nevada could "instantly pull the trigger" to start lawfully regulating online poker across state lines because of its preparations over the past few years.

"I think, to put it quite bluntly, Nevada has been the leader in gaming regulations," he said.

The regulation of online poker "may be the most important issue facing Nevada since Yucca Mountain," Reid told the Las Vegas Sun. "This bill means jobs for Nevada."

However, lawmakers in other states are not yet ready to concede the economic boon to Nevada. Massachusetts Treasurer Steven Grossman wrote a letter at the end of October to Reid and Kyl expressing his opposition to the bill.

"The proposed Act would effectively limit participation in the online gaming marketplace to gaming operations with a presence in Nevada and sharply constrain the ability of state lotteries to offer online products," he wrote.

Maryland Gov. Martin O’Malley (D.) threw a spotlight on, and helped halt, a previous effort by Reid to sneak an online poker bill into debt negotiations.

Politico has also observed that the bill heavily favors Nevada as it "sets qualifications for states to license legal online gambling that only Nevada meets."

Additionally, Grossman argued that the bill infringes on what has traditionally been an area controlled by the states.

The National Governors Association made the same observation in a letter to Congress.

"The regulation of gaming is an issue that has historically been addressed by the states," the governors wrote in March. "States that have elected to authorize gaming derive significant revenues which support important programs for education, senior care, veterans’ services, and other good causes."

The governors asked that they be included in any negotiations over regulating the gambling industry.

Others argue that the bill is entirely unnecessary.

"This bill is a solution in search of a problem. States have demonstrated they are more than capable of protecting consumers," said Alex Fitzsimmons, a National Conference of State Legislatures spokesman.

The NCSL passed a resolution at the end of the summer opposing the bill, arguing that it infringes on states’ rights.

Burnett disagreed, arguing that a lack of federal oversight can lead to "chaos" and "confusion" as different states pursue online gambling in different ways. A lack of federal regulation also exposes players to dangers, he said.

"There should be a level of federal oversight," he said.