Legalizing Internet poker gets push from Harry Reid in lame-duck session

By Dan Eggen
Washington Post Staff Writer
Saturday, December 11, 2010; 12:00 AM

As it scrambles to consider landmark legislation on taxes, immigration and gays in the military, the lame-duck Congress is suddenly engaged in a debate it didn't anticipate: whether to legalize online poker.

Senate Majority Leader Harry M. Reid (D-Nev.) is pushing a bill that would give official government approval to Texas hold-'em, five-card stud and other Internet poker games, which currently exist in a legal twilight zone dominated by companies operating from the Isle of Man and other exotic foreign locales.

The idea is to lure some of that multibillion-dollar business into the United States - and give the federal government up to $3 billion in annual revenues in the process.

The measure would be a boon for Las Vegas-based casinos, which supported Reid in his hard-fought reelection campaign and are eager to enter the lucrative world of online gaming. Many states and localities, including the District, have started thinking about legalizing Internet gaming on their own, giving federal lawmakers even more incentive to act.

"Under the status quo, Internet poker is played by millions of Americans every day in an essentially unregulated environment," Reid said in a statement this week. "The legislation I am working on would get our collective heads out of the sand and create a strict regulatory environment to protect U.S. consumers, prevent underage gambling and respect the decisions of states that don't allow gambling."

The bill's chances are uncertain at best, and Democratic staffers are struggling to find a way forward that doesn't bog down other legislation. But backers say the proposal offers the best odds yet for online-poker proponents, who until now have gained little traction despite millions of dollars in lobbying and campaign contributions.

Many conservative groups and GOP lawmakers, however, strongly oppose the measure, seeing it as an official sanction of immoral behavior. Legalizing poker - or any other type of online gaming - is far less likely with Republicans in control of the House next year, according to many legislative aides and lobbyists.

Lawmakers in New Jersey and California are pushing ahead with plans to legalize online gaming in those states. D.C. Council member Michael A. Brown has proposed legalizing online poker and fantasy sports gambling as a way to slash the city's $200 million budget deficit.

The Senate poker legislation was written with help from major gambling and casino interests, who played a significant role in funding Reid's expensive reelection campaign, according to lobbyists and legislative aides. Reid has collected more than $1.6 million in contributions from gaming companies and their employees over the past two decades, according to the Center for Responsive Politics.

Two major Las Vegas casino companies, Caesars Entertainment and MGM Resorts International, also gave a combined $375,000 to an outside Democratic group, Patriot Majority, that ran election ads in favor of Reid this fall, records show.

Reid and his supporters say the bill is a common-sense and limited solution to the problem of unregulated online poker, which is played by an estimated 10 million Americans. Proponents say a 2006 law banning financial transactions for online gambling has had little discernible effect.

"Certainly Vegas interests will be well served by this, but this is first and foremost a consumer protection issue and an opportunity for job creation and revenue for governments," said John Pappas, executive director of the Poker Players Alliance, a group that has ties to offshore gaming firms and has been pushing for legalization. "If lawmakers believe the status quo is acceptable, they're not facing reality."

Opponents say legalizing poker would harm families by encouraging reckless and problem gambling.

"Congress should not take advantage of the young, the weak, and the vulnerable in the name of new revenues to cover more government spending," Rep. Spencer Bachus (Ala.) and two other Republicans wrote in a letter to Reid.

Under Reid's proposal, the federal government would issue licenses for Internet poker operators under supervision of the Commerce Department. Approval would be limited to existing casinos, horse tracks and slot-machine makers for the first two years after the bill passes, limiting the ability of overseas companies to enter the market.

Only players inside the United States could be customers of licensed operators for the first three years. The bill would also allow states to decide for themselves whether to allow Internet poker in their jurisdictions, according to a summary issued by Reid's office.

The Reid proposal is narrower than a House bill backed by Rep. Barney Frank (D-Mass.) that would legalize other online betting games such as mah-jongg. The poker bill, by contrast, would "make all other types of Internet gambling clearly illegal," Reid said.

The poker legislation marks a change of position for Reid, who was long considered an opponent of online gambling. Critics say the Democratic leader has flip-flopped as a favor to hometown casinos that have decided that the popularity of online poker offers them a lucrative business opportunity.

Focus on the Family, a conservative group, issued an "action alert" to supporters last week urging them to contact Reid and other lawmakers in opposition to "the largest gambling expansion effort in the history of the U.S."

The group said Internet gambling would lead to severe "addiction and social costs . . . with numerous families, marriages and lives destroyed."

Reid initially toyed with adding the proposal to the tax-cut compromise between Republicans and President Obama but decided against it amid concerns that it would further complicate that bill's chances for getting passed, according to lobbyists and aides. The measure could be added to an omnibus spending bill or other must-pass legislation in coming days.

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