Congressional Update

by Allyn Jaffrey Shulman

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In mid-March, Detroit Democrat John Conyers, Jr., was joined by Nevada Democrat Shelley Berkley, Utah Republican Chris Cannon, and California Democrat Joe Baca in reintroducing last year's legislation to establish a federal gaming commission to recommend ways to regulate Internet gambling. The battle slowly rages on in Congress with sides being drawn irrespective of party or state loyalty.

On one side, Reps. Conyers, Cannon, Baca and Berkley take the spirited position that regulation rather than prohibition is the best way to control internet gambling. "Rather than passing ineffective prohibition legislation in the vain hope that the problems related to Internet gambling will simply go away, the Commission will confront the issues head-on and formulate realistic, workable solutions," Conyers said when introducing H.R. 1223. "Just as outlawing alcohol did not work in the 1920s, current attempts to prohibit online gaming will not work, either," said Conyers.

Alan Feldman, a spokesman for MGM Mirage, called the Conyers-Berkley bill a welcome indication that some lawmakers have open minds about how technology and the public appetite for gambling have evolved.

LINKAGE CAUSES PROBLEMS

Advocates for the regulation of online gambling face an uphill battle because opponents link online gambling with terrorism, creating a knee jerk reaction amongst those with less political acumen. On the other hand, the lost revenue to the United States is monumental. A British online trading company, Sportingbet PLC, estimated that USA could have collected $1.4 billion in 2002 by taxing Internet gambling as they do B&M casinos. Gambling industry analysts Christiansen Capital Advisors estimate that online gambling internationally will exceed $6 billion this year and $10 billion in 2005, much of it from Americans.

That's a chunk of change, folks.

On the other side of the battlefield, La Falce, Leach, Kyl and Goodlatte, who publicly link online gambling with terrorism and money laundering, were pleased on March 13, 2003, when the Unlawful Internet Gambling Funding Prohibition Act (2003 Leach Bill HR 21) was approved by the House Financial Services Committee. This bill is a combination of HR 556 and HR 3215, prohibiting the usage of a credit card, electronic fund transfer or any other bank instrument to pay for Internet gambling (I have described these in previous CardPlayer.com/OPN articles). The bill now faces a full House vote prior to being presented to the Senate. It will most likely pass through the House of Representatives just as its predecessor HR 556 did.

DIFFERENT VIEWS FOUND AMONG NEVADA LEADERS

It is interesting to note how representatives from the same state can almost cancel one another out by holding contrary views regarding the future of Internet gambling. Take Nevada, for example. House Representative Shelley Berkley commented on the Conyers Bill she co-sponsored by saying, "Congress should not stem the tide of new technologies, but we must find a way to mitigate its adverse impacts. Regulating web based gaming is difficult at best. How do we stop money laundering by terrorists or by organized crime? How do we address problem gamers? Or minors? And how does each state enforce its own gaming laws? These are questions which have yet to be answered to my satisfaction. Gaming technology is still a moving target, and before we try again this year to pin governing legislation on it, it is appropriate that we fully understand its size and shape. A commission with balance and expertise will be able to recommend policy changes that minimize unintended consequences."

On the other hand, Nevada's senior Senator Harry Reid (D), the Senate Minority Whip and a former state gaming regulator, said he will only support a bill that outlaws online gambling altogether. "I don't like it," Reid said. "It can't be controlled. It's ripe for cheating. And it's open to fraud." Both representatives come from the gambling capital of the world, Nevada, whose existence depends upon gaming revenue.

In 2002, the largest operator of Las Vegas Strip hotels, MGM Mirage Inc., became the first major U.S. gambling company to open an online casino, based in and regulated by the Isle of Mann (a small island between England and Ireland). The failure of our government to make laws regulating Internet gambling serves to FORCE companies to set up shop outside the United States. Hopefully, the Senate will soon come to terms with an inevitable truth: The US government is losing billions in revenue by refusing to regulate a growing business that will not be halted.diamonds

Allyn Jaffrey received her Bachelor of Arts from the University of California at Irvine in 1977, where she graduated cum laude and became a member of Phi Beta Kappa for scholastic achievement. She is a practicing criminal defense attorney, having received a Juris Doctorate with scholastic merit from Western State University where she served as Research Editor and Executive Editor of Law Review in 1982-1983. She has lectured all over California, teaching other attorneys the fine points of criminal defense. She specializes in legal research and her areas of expertise include the filing of extraordinary writs, appeals and motions where a lower court judge commits legal error or where the police or prosecutors engage in misconduct. Allyn has been closely following the development of gaming law and the Internet ever since Jay Cohen was convicted in New York of operating a sports betting business from Antigua in violation of the Wire Act.

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