House Passes Bill to Restrict Internet Poker

By Shailagh Murray and James V. Grimaldi
Washington Post Staff Writers
Wednesday, July 12, 2006

The House easily approved a bill yesterday to curb online poker games, sports betting and other Internet-based wagering that gained infamy as a central focus of a major lobbying scandal.

The 317-to-93 vote came nearly six years to the day after a similar measure went down to surprise defeat. At the time, unknown to its conservative supporters, the bill was derailed by lobbyist Jack Abramoff and the office of then-House Majority Leader Tom DeLay, on behalf of the disgraced lobbyist's gambling clients.

"This is the opportunity to expunge a smear on this House done by many lobbyists," Abramoff included, said Rep. Robert W. Goodlatte (R-Va.), one of the legislation's chief sponsors. "Now is the time to set the record straight."

The bill that was passed yesterday seeks to restrain the booming but difficult-to-regulate Internet gambling business. Proponents of the crackdown said the industry, which is mostly based overseas, provides a front for money laundering, some of it by drug sellers and terrorist groups, while preying on children and gambling addicts. Americans bet an estimated $6 billion per year online, accounting for half the worldwide market, according to analysis by the Congressional Research Service.

Critics said the bill overreaches and would be difficult to enforce. At its heart are two provisions. One would update the 1961 Wire Act, which bars gambling entities from using wire-based communications for transmitting bets, to include the Internet. The other aims at cutting off the money flow from players to Internet gambling sites by barring the use of electronic payments, such as credit-card transactions.

The biggest losers could be the estimated 23 million Americans who play poker over the Internet. "This bill would needlessly make outlaws of the millions of adult Americans who enjoy online poker, and is the latest example of how our representatives in Congress are ignoring real issues facing our country," warned the grass-roots Poker Players Alliance, in an alert to its more than 25,000 members.

The alliance urged Congress to regulate and tax online poker, rather than effectively ban it, as the House bill would. An economic analysis by the group showed that the federal tax revenue could reach $3.3 billion annually, while states could collect $1 billion more. "We hope that this analysis will give a fresh perspective for U.S. senators about the benefits of regulation," said Michael Bolcerek, president of the alliance.

Some Senate Republicans, in particular Jon Kyl of Arizona, have promoted similar measures and may revive their efforts now that the House has acted. The bill carves out exemptions for horse and dog racing, online lotteries and other games, including fantasy sports leagues, that are legal within state boundaries.

Abramoff's efforts in 2000 to kill the House bill have been under scrutiny in the federal government's ongoing corruption investigation. In March this year, Tony C. Rudy, a former senior DeLay aide, pleaded guilty to fraud conspiracy. Rudy admitted to helping Abramoff scuttle the bill as part of a series of acts he performed in exchange for a stream of gifts, including luxury trips, golf fees, restaurant meals, entertainment, use of sports arena skyboxes and cash payments to his wife's political consulting firm.

Among other things, Rudy e-mailed Abramoff internal congressional communications and advice helpful to defeating the legislation, The Washington Post reported last year. Months later, Rudy was hired as a lobbyist by Abramoff.

DeLay, who ranked third in the Republican House leadership at the time, voted against the bill, saying that it had unacceptable loopholes to placate regional lawmakers, such as exemptions for horse racing. Two months before he voted against the bill, DeLay, his wife, two aides and two lobbyists took a lavish $70,000 golf trip to Scotland, paid for by Abramoff clients who opposed the bill. DeLay denies any connection between the trip and the vote.

An Abramoff ally in the earlier fight, the Rev. Louis P. Sheldon of the Traditional Values Coalition, has appeared on Capitol Hill this year to again oppose the bill. In 2000, gambling opponents such as Sheldon and Ralph Reed, former head of the Christian Coalition, were enlisted as part of Abramoff's $2 million pro-gambling campaign.

Sheldon said last year that he could not remember receiving money from Abramoff's client and that he was unaware that Abramoff was involved in the campaign to defeat the bill. A spokesman for Reed, now a candidate for lieutenant governor of Georgia, said that he and his associates were unaware that any money they received had come from gambling activities.

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