Wednesday, July 12, 2006

First step down the slippery slope

via Wired News

House Bans Most Online Gambling


If online poker is your passion or if you fancy internet roulette, you might want to consider taking up a new hobby.

Congress has taken a significant step toward banning most online gambling.

The House voted 317-93 Tuesday for legislation that would prohibit credit cards and other payment forms from being used to settle internet wagers. It would clarify and update current law to spell out that most gambling is illegal online.

It also would allow law enforcement officials to work with internet providers to block access to gambling web sites. The bill would exempt state-run lotteries and horse racing.

The fight now moves to the Senate. Leaders in that chamber have not identified Internet gambling as a priority, and the bill's supporters say the House vote gives them momentum to push the Senate to act. The bill's main champion in that chamber, Sen. Jon Kyl (R-Arizona), said Tuesday he would pursue it aggressively.

Supporters of a ban say the Internet's widespread availability makes it too easy to gamble, something that can create betting addictions and financial problems.

"It puts gambling in every living room, at every school desk and at every work station," said John Kindt, a business professor at the University of Illinois at Urbana-Champaign who has studied the issue and supports the bill.

Critics argue that the legislation favors some gambling industries over others and that regulating the $12 billion industry and collecting taxes on it would be more effective than a ban.

"Prohibition as a general principle is a bad principle, because it doesn't work," said Rep. Ron Paul (R-Texas).

The American Gaming Association, the industry's largest lobby, opposed online gambling in the past but recently softened its stance and backed a study of the feasibility of regulating it.

The internet gambling industry is headquartered almost entirely outside the United States, although about half its customers live in the U.S.

The bill's sponsors successfully beat back an amendment to strip out exemptions in the bill for the horse racing industry and state lotteries.

Rep. Shelley Berkley (D-Nevada) sponsored the failed amendment. She said it was unfair to allow online lotteries and internet betting on horse racing to flourish while cracking down on other kinds of sports betting, casino games and card games like poker.

If the horse provision were stricken from the bill, there's a good chance the measure would run into objections in the Senate from Majority Whip Mitch McConnell (R-Kentucky) and others.

Under the provision concerning horse racing, betting operators would not be prohibited from any activity allowed under the Interstate Horseracing Act. That law was written in the 1970s to set up rules for interstate betting on racing. The industry successfully lobbied for legislation several years ago to clarify that Internet betting on horse racing is allowed.

Greg Avioli, chief executive officer of the National Thoroughbred Racing Association, acknowledged the House bill likely would move internet gamblers away from banned sites toward horseracing sites.

However, he said the racing industry did not get a new exemption but that Congress recognized existing federal law, meaning the Interstate Horseracing Act.

The Justice Department has taken a different view on the legality of internet betting on horse races.

In a World Trade Organization case involving Antigua, the department said online betting on horse racing remains illegal under the 1961 Wire Act despite the existence of the more recently passed, and updated, horse racing law.

The department hasn't actively enforced its stance, though it recently indicated it was considering taking action on the issue.

"This bill does not touch the dispute between the Justice Department and the horse racing community," Rep. Jim Leach (R-Iowa) said of the House-passed gambling ban, which he helped write.

Congress has considered banning online gambling in the past.

In 2000, disgraced lobbyist Jack Abramoff led a fierce campaign against a similar bill on behalf of an online lottery company. Supporters of the bill brought up that history Tuesday and suggested that a vote for the bill was a way to make a statement against Abramoff's influence.

Opponents of the latest bill argued that the current lottery exemption wasn't in the bill in 2000, and, if it had been, Abramoff's client might have supported the legislation.

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