[SBR_John]

U.S. Ban of Online Casinos unlikely to succeed 30 million U.S. online gamblers are a major impediment to banning online casinos


Morgan Stanley, one of the top international business services groups has issued an objective analysis of the new moves in the USA to ban online gambling, coming to the conclusion that it is unlikely that bans will come about in the next 12 to 18 months at least.


Surveying the three seperate legislative attempts in process from Reps.Goodlatte, Leach and Sen Jon Kyl, the report examines the effects of state vs federal authority, lobbying and " carve out" efforts from a wide range of self-interested audiences, the history of previously failed attempts going back a decade, political timing and the fact that 2006 has the fewest ever Congressional days before November elections.


In relation to these forthcoming elections, the report notes that with Nielsen NetRating numbers indicating 30 million or more American online gamblers, these potentially unpopular proposals may well face a lack of political support. Summing up, the authors say that an "Adverse regulatory outcome is unlikely."

Considering the financial contraints under consideration, the report notes that U.S. financial institutions introduced these in a private and de facto sense some two years ago, with credit card financing dropping from 90 percent to less than 50 percent, and alternative methods appearing that resulted in the industry continuing to grow.

In the event of the proposals becoming law, there would also be a 12 month lag time to enact the new law, and difficulties in its enforcement, especially if this involved interference in access to the Internet for Americans should an ISP blocking strategy be adopted. The report quotes Sen. Kyl himself as saying, " Online gambling would be a difficult kind of activity to regulate, because we don't have jurisdiction over the people abroad who are doing it."

The report also notes the recent WTO rulings and the still
outstanding amendments to horse racing betting over the nternet if the US is to be consistent with its claim that it objects to online gambling on moral grounds.


Quoting CCA statistics, the report reveals that the global industry is expected to turn revenues of $15 billion in 2006 and more going forward, with 80 nations outside the US, including Great Britain licensing operators and 300 companies with over 2 000 sites. " Ultimately, we think that the size and scale of the industry will dominate the attempts to moralise and prohibit," the authors opine. " It is inconsistent with its popularity to ban online gambling."

The report touches on regulatory moves within the industry, saying: "Operators have gone to great lengths to legitimise the industry, including initiatives such as eCOGRA, with measures to limit problem gambling, increased security and identity checks, a full audit trail to eradicate money laundering and promoting websites such as Gamcare."

Mention is also made of the Bet On Sports initiative to prove there are no links between online gambling and money laundering.

Concluding that the US legal scene is likely to remain " a grey area" for at least the next 18 to 24 months, the report calls attention to developments in the UK, pointing out that online gambling is regarded in that country as a " legitimate leisure activity" to be regulated, and that this view will predominate internationally in time Goodlatte to Re-Introduce Prohibition Bill From Igamingnews.com


U.S. Rep. Bob Goodlatte, R-Va., has announced plans to introduce an online gambling prohibition bill to the House of Representatives. It is believed that such a bill would resemble a previous bill he authored in that it would amend the federal Wire Act with language specifying that online gambling is illegal. It is also believed that Goodlatte will introduce the new bill sometime next week.

Goodlatte's last attempt to champion a prohibition bill was the Combating Illegal Gambling Reform and Modernization Act (HR 3215), introduced in November 2001. The bill would have revised the Wire Act to clarify that it is not just "wire" bets that are illegal, but also communications via "cable," "satellite" and "microwave," whether "fixed or mobile."

The bill also sought to address financial transactions by making it illegal for interactive gambling operators to accept payments in the form of credit cards, checks and Internet transfers for illegal online gambling transactions. It contained a provision that provided an enforcement mechanism to address offshore gambling businesses using U.S. bank accounts.

The lives of Goodlatte's past bills were marked by amendments that either inserted or removed exemptions for various forms of gambling (horse racing, state lotteries, Indian gaming, fantasy sports, etc.) that often proved detrimental to them.

Another current bill aiming to prohibit online gambling, meanwhile, has already found its way to the House. The Unlawful Internet Gambling Enforcement Act (HR 4411), introduced by Rep. James Leach, R-Iowa, would prohibit online gambling among the American public by making it illegal to pay for such services using credit cards, wire transfers, or any other banking instruments. Leach's bill would not update the Wire Act.

Leach's office says the congressman worked closely with Sen. Jon Kyl, R-Ariz., when drafting the bill. Kyl has seemed ready to introduce a similar bill in the Senate since the beginning of the 109th Congress in January 2005.


Last weeks featured article was written by Bradley Vallerius at the River City Group I-gaming Prohibition Becoming a Priority for Republican Leaders Following revelations that Jack Abramoff and Tom DeLay may have manipulated voting and other factors surrounding the Internet Gambling Prohibition Act in 2000, Republican lawmakers could be hoping to rectify the past and distance themselves from political scandal by putting an online gambling prohibition bill to vote once again in 2006.

The legitimacy of events surrounding voting on the Internet Gambling Prohibition Act of 2000 first came under suspicion in October 2005 when the Washington Post reported that an aide of Rep. Tom DeLay (R-Tex.) helped defeat the bill after receiving favors from Jack Abramoff. DeLay, who until recently was House Majority Leader, is now under indictment for criminal conspiracy while Abramoff, a Republican lobbyist and fundraiser, has already plead guilty to several political crimes and still faces more charges.


The alleged corruption surrounding the online gambling bill in 2000 is only one of many potential ethics and financial scandals facing the Republican Party today. With the Party facing such a severe threat to its integrity, its members appear eager to put the scrutiny surrounding DeLay and Abramoff behind them by whatever means possible.


Now that DeLay has stepped down as House Majority Leader, three House Republicans have stepped forward to try to claim the vacancy. The Majority Leader is one of the most powerful positions in the House and is responsible for planning the daily, weekly and annual agendas of the House as well as scheduling legislation for floor consideration and consulting with members to gauge party sentiment.


One of the contenders, Rep. John Shadegg (R-Ariz.) has on several occasions mentioned his five-point plan for reforms he would pursue if voted into the position, and among those five priorities is obtaining another vote on legislation to prohibit online gambling. Last week Shedegg wrote in an op-ed piece in Congressional newspaper The Hill that "In 2000, a ban on Internet gambling received 245 votes on the suspension calendar, but, according to news accounts, we were kept from passing it because of Jack Abramoff’s machinations and manipulation. Passing it now would be good public policy and a clear signal that the era of Abramoff's influence is over."


At the moment Shadegg, who has confirmed support from only about ten House Rebublicans, seems to be the long-shot candidate for the House Majority Leader election that will take place on February 2. The best odds are on Rep. Roy Blunt (R-Mo), who has secured 91 votes, followed by Rep. John Boehner (R-OH) with 47 votes. A candidate needs 117 votes to win the election.


Even though Shadegg has only an extremely thin chance of winning, the I-gaming industry is not completely safe from prohibition becoming a serious part of the Republican agenda in 2006. There is always the possibility that Shadegg could withdraw from the race and throw his support behind one of the other candidates in exchange for their vowing to concentrate some effort on his five-point platform. Also, the other two candidates are also pledging to make reforms a crucial part of their agendas. (Incidentally Blunt and Boehner have lately come under scrutiny for tainted ethical records, as has Shadegg too, although to a somewhat lesser degree than the two.)


Rep. Jim Leach (R-IA), who has authored prohibitory I-gaming legislation during the last five Congressional sessions, says the bill he introduced in November 2005 has been gaining momentum as the Abramoff scandal has gained more attention.


"We expect this to move sometime this year," stated a Leach spokesperson to news publication American Banker last week. Leach's bill has already attracted 23 co-sponsors, including Rep. Spencer Bacchus (R-Ala), who chairs the House subcommittee with jurisdiction over financial institutions and has been a vigorous supporter of I-gaming prohibition in the past.


Flashback


Some of the events surrounding the fate of the Internet Gambling Prohibition Act of 2000 came to light in October and afterward following the initial report by the Washington Post and subsequent others in other publications. It has been revealed that Tony Rudy, who was a staffer for DeLay in 2000, received favors from Abramoff and encouraged house members to vote against the bill. It has also come to light that Abramoff's law firm Preston Gates Ellis & Rovelas Meeds lobbied on behalf of eLottery to fight the bill. Federal records show that Connecticut-based eLottery Inc., a company that wants to facilitate the sale of state lottery tickets over the Internet, spent $1.15 million to fight the prohibition that year, $720,000 of which went to Abramoff's firm. The firm did not represent any other clients in lobbying against the legislation.


Earlier this month Abramoff pleaded guilty to several counts of an indictment in the U.S. District Court for the District of Columbia. One part of his confession stated, "Beginning at least in 1999 through 2001, Abramoff and others sought Staffer A's agreement to perform a series of official acts, including in assisting in stopping legislation regarding Internet gambling… With the intent to influence those official acts, Abramoff provided things of value, including, but not limited to, from June 2000 through February 2001, ten equal payments totaling $50,000 through a non-profit entity to the wife of Staffer A. The total amount paid to the wife of Staffer A was obtained from clients that would and did benefit from Staffer A's official action regarding the legislation on Internet gambling…"


Leach recollects that by July 2000 the prohibition bill "had passed the Senate by unanimous consent and was poised to clear the House until opponents launched a vigorous campaign to defeat it."


When it reached the House, however, the bill was placed on the suspension calendar, which is typically reserved for non-controversial matters because it limits debate and requires that a bill receive approval from two-thirds of the 435-member House. Although the bill easily achieved a majority of votes with 245 in support and 159 in opposition, the bill inevitably failed because it fell short of the necessary two-thirds.


There is now some speculation that DeLay's office might have intentionally put the bill on the suspension calendar in order to defeat it.


One fact that should not be overlooked however is that other lobbying groups played a significant role in blocking the 2000 bill. Concerned groups such as the National Indian Gaming Association, various state lotteries, Internet service providers and the Interactive Gaming Council all concentrated lobbying efforts on defeating the bill.


At any rate, atoning for the scandals involving Abramoff and DeLay is now a primary concern for many Republicans and a re-vote on I-gaming prohibition, may be one area in which they believe they could accomplish their goal.

Meanwhile, Sen. Jon Kyl (R-Ariz) is believed to be ready to introduce an identical prohibitory bill in the Senate soon. Doing so would eliminate the hurdle of merging two competing versions of the bill at a later date.

[JoshW]

Glad to hear it. I think once people realized that it will stop them from playing online poker, that will drive a lot of people to act. Lot of players like their small online poker games and as MS report points out, why piss those people off in an election year.

[bigboydan]

at least they seem perty optimistic about this bill not passing. i'm just hoping that there right is all.

[picantel]

Can you imagine the screw job to americans if it did pass. The books would simply refuse to pay any ofthe money in your account and there would be nothing you could do about it.

[SBR_John]

picantel,
Nothing would change. The books that pay now would still pay. If it does pass we might rethink the SBR ratings and give publicly traded companies with high amounts of non-American clients the highest rating. But very little would change.

[bigboydan]

Originally Posted by picantel

Can you imagine the screw job to americans if it did pass. The books would simply refuse to pay any ofthe money in your account and there would be nothing you could do about it.

i've actually heard a book use that excuse before already believe it or not. i'd say the books name, but i think it would start WWIII