Wednesday, October 11, 2006

In the high-stakes poker game of politics, online gambling lobbyists lost a
monster hand late last month after Congress passed legislation prohibiting
financial institutions from making payments to online gambling sites. The
long-standing issue came to a head after presidential hopeful Senate
Majority Leader Bill Frist, R-Tenn., became the torchbearer for conservative
groups lobbying to ban Internet gambling. Despite repeated attempts by
gaming groups such as the Poker Players Alliance and the International
Interactive Alliance to stymie the debate, Frist's maneuvering proved too
difficult to overcome. After unsuccessfully tacking the bill onto the
defense authorization measure earlier in the week, Frist and House Speaker
Dennis Hastert, R-Ill., were able to persuade the Republican leadership to
add the measure to the Port Safety Act. Passed in the wee hours of Sept. 30,
before Congress went into recess, the Internet Gaming Prohibition and
Enforcement Act prohibits banks and financial institutions from processing
payments for online gambling companies. Congress exempted state lotteries,
fantasy sports leagues, horse race betting and Indian gaming from the
legislation. "The politics of the moment got the bill passed," says Frank
Fahrenkopf Jr., head of the American Gaming Association. The AGA, which had
long been against regulating online gambling, did an about-face in April,
advocating for the first time that Congress look at whether the technology
exists to regulate online sites.

"While we were neutral [in the debate], we really thought the better way to
go was a study commission," says Fahrenkopf.

The bill, eight years in the making, was a huge victory for social
conservative groups and professional sporting leagues. They persuaded
lawmakers to ante up and overcome any lingering Abramoff mystique. Former
lobbyist Jack Abramoff, who represented eLottery Inc., was credited as one
of the largest contributors to the defeat of a similar ban on online
gambling in the House in 2001.

In the past five legislative sessions, bills banning online gaming have
passed the Senate twice and the House once, just never at the same time.
Advocates including Reps. Jim Leach, R-Iowa, and Bob Goodlatte, R-Va., and
Sen. Jon Kyl, R-Ariz., have historically tried different legislative
stratagems to pass the bill. But this time, Leach got Frist to promise to
bring to the floor an online gambling ban while Frist attended a field
hearing in July in Iowa, site of the first presidential caucus in 2008.

Currently, it is illegal for online gambling companies to operate in the
United States or for U.S. residents to place bets on the Internet, with the
exception of parimutuel horse racing, which enjoys an exemption from the
law.

Frist's former aide Martin Gold of Covington & Burling led the charge for
the National Football League, assisted by National Basketball Association
lobbyist Frank Donatelli of McGuireWoods. While they pushed for the overall
ban, Gold and Donatelli made the case to lawmakers that fantasy sports
leagues should be left untouched.

"It's been 10-plus years that the NFL has been supporting legislation," says
Joe Browne, an NFL executive vice president. "We don't believe that gambling
of any sort is healthy for our league -- that it goes to the integrity of
the NFL and, perhaps just as important, the perception of the integrity of
our games."