Well, at least we now know why the American Gaming Association (AGA) was so tepid in its response to the federal online poker bill introduced by Rep. Joe Barton (R-TX). While delivering a keynote address at Madrid’s Gaming Executive Summit on Wednesday, AGA chief Frank Fahrenkopf said his group was “not opposing [Barton’s bill], but we are not supporting it.” Instead, the AGA intends to throw its weight behind a separate bill expected to arrive on federal legislators’ desks sometime this fall.
Fahrenkopf expects this mystery bill will differ from Barton’s effort in that states would have to opt in to take part, and regulation and licensing would be delegated to “those states that have the longest history in gaming regulation, that have the law enforcement on staff and the financial wherewithal to do tough regulation. Probably, that only means Nevada and New Jersey.” Tax revenues would be split between these regulatory states and the state where the bettor resides, while “the federal government would only receive the income tax on winnings.”
Fahrenkopf expects the feds to draw a sharp distinction between companies that got out of the market following passage of the UIGEA and those that didn’t. Fahrenkopf suggested that those companies that continued to serve US customers would be sent to a “penalty box” for at least two years.
Fahrenkopf also shone some light on the smoke-filled backroom dealings that went on during Sen. Harry Reid’s failed attempt to pass federal poker legislation last December. Apparently, Las Vegas Sands bigwig Sheldon Adelson “was personally offended by the fact there would not be a ‘penalty box’ by some. He called leaders in both houses, as did Steve Wynn.” This was prior to Wynn’s “epiphany” re online gaming that saw him align Wynn Resorts with the as-yet unindicted PokerStars. And thus we have confirmation that no federal legislation will ever pass unless it directly benefits American land-based casino companies while punishing their international competition.
The federal bill that Fahrenkopf and the AGA are eagerly awaiting may come from Sen. Jay Rockefeller (D-W.VA), current chairman of the Senate Commerce Committee. Rockefeller recently released a paper proposing 18 ways that the country could raise some ready cash to combat their $14 trillion deficit. One of the suggestions was establishing a federally regulated online gambling system, which Rockefeller estimated would reap some $41b in tax revenues over its first decade of operation, with $30b of that going directly to individual states. Quoth the Rockefeller: “Establishing online gambling regulations will protect consumers, state’s rights and state sovereignty, and eliminate a huge illegal market that today benefits only countries and companies overseas.”
Rockefeller’s spokesperson confirmed Wednesday that the senator was “considering” introducing gambling legislation. For federal bill backers, this would be a shrewd move, considering how toxic Harry Reid’s name is among the Republican rank and file, and how easily they can be motivated to press lawmakers to block anything Reid proposes. This time, Reid will let someone else take point. Should be an interesting fall.