Wednesday, November 22, 2006

The recent Global Gaming Expo (G2E) in Las Vegas saw a marked absence of
online gaming companies and executives discouraged from travel to the USA by
the recent passing of the Unlawful Internet Gambling Enforcement Act, but
the industry nevertheless generated an abundance of media comment. Aside
from the widely reported comments of top land gaming executives like Terri
Lanni of MGM Mirage and Frank Fahrenkopf of the AGA who now favour a study
of online gambling's impact in the USA, other personalities were giving
their views on everything from the unorthodox manner in which the UIGEA was
rammed through Congress to the likely efficacy in the enforcement of the
legislation. Describing the Act as "cumbersome, confusing and potentially
ineffective," the Las Vegas Sun newspaper opined that while the bill is
unlikely to curb the public's appetite for online gambling, the legislation
will make it more difficult for Americans to find reputable sites that will
accept their money. The real purpose of the bill, convention goers said, was
to pander to religious conservatives. The House had earlier passed
legislation authored by Rep. Jim Leach, but passage of a Senate compromise
Leach-Goodlatte bill had appeared unlikely after senators objected to a move
by anti-gambling advocate Jon Kyl, R-Ariz., to fast-track the Leach bill to
a floor vote in the Senate. That led to the involvement of Majority Leader
Sen Bill Frist and the deployment of political manouevres that involved a
late-night, last minute attachment to an unrelated "must pass" security
Bill. "No meeting, no reading, no debate - no problem. Many members of the
Homeland Security Committee - not to mention most senators - hadn't read the
bill," the Vegas newspaper reported.

Hopeful views that a change in political power in Washington could bring
about a reversal of the UIGEA inevitably resulted in contrary opinions,
notably from one David Stewart, a legal eagle who counsels the American
Gaming Association. He felt that it could be many years before there was a
legislative change.

The Sun reported that Stewart said: "If it comes up again, they're going to
say, 'We've already dealt with that issue.' They were exhausted by this
latest effort."

The newspaper claims that although the association's two largest members,
Harrah's Entertainment and MGM Mirage, want to legalise Internet gambling in
the USA, other members may not be as comfortable with the idea. The group
expects to decide at a board meeting next month whether to push for
legislation that would study legalising Internet gambling. Rep. Jon Porter,
R-Nev., introduced such a bill in the last session of Congress that gained
support from more than 40 co-sponsors.

Among a slew of Democrats perceived as friendly to the industry is Rep.
Barney Frank, D-Mass., an outspoken liberal who will head the Financial
Services Committee and who voted against the Internet gambling prohibition
bill that originated in his committee.

Even if more libertarian minds prevail in the online gambling debate,
Stewart told the Las Vegas Sun that it could take at least a decade for
Congress to legalise Internet betting: "They don't have the appetite for
it," he said of members' desire to pursue a debate. Online gamblers are
growing in number but don't yet have the political clout to influence
legislation, Stewart told the newspaper.

Respected legal personality Professor I Nelson Rose presented an interesting
alternative to nationwide legalisation, suggesting that Congress may
eventually pass a law allowing states to opt into a regulatory system
enabling Internet betting for in-state residents. A similar system enables
gamblers to bet on horse races from remote locations in their home states as
well as other states that choose to participate.

Short of that, states will likely seek to regulate Internet betting within
their borders. "I think states will make it a state's rights issue," said
Rose, a professor at Whittier Law School in California. One effort is under
way in his home state, where poker rooms are working on legislation that
would legalise Internet poker wagering for California residents.

The Las Vegas Sun reviewed online gambling developments in Nevada, reporting
that in 2003 the Nevada Legislature passed a bill allowing regulators to
study whether Internet gambling could be regulated. The state Gaming Control
Board heard testimony from technology companies with software claiming to
pinpoint the location and identity of gamblers using satellites, online
background checks and account information. But regulators did not pursue the
issue after receiving a letter from the Justice Department restating the
federal government's position that internet gambling fell under the 1961
Wire Act and was therefore illegal.

Nevada regulators considered appeals to legalise online gambling for Nevada
residents but didn't pursue the matter. While Nevada casinos don't want to
run afoul of the feds, some local companies may seek the right to allow
Nevadans to bet online in the years to come, Rose said, adding that Nevadans
already can make sports bets from their home computers after registering at
a casino and transmitting bet information over a secure line.

"If at-home sports betting is legal, then Internet gambling should be legal
for Nevada residents," Professor Rose said.

The Professor is on record elsewhere as being strongly critical of the
UIGEA, saying it is confusing and contradictory with all its carve-outs, and
noting how a portion of the bill even sanctions Internet betting conducted
within states and tribal lands.

"It's a public embarrassment...it's a mess," says Rose. "Eventually I think
they'll get Congress to change the law to do for Internet poker exactly what
they did for Internet horse racing. It's an exemption but (based on) states'
rights."

Undeterred by some opinions that the UIGEA is here to stay, Ambassador Colin
Murdoch, permanent secretary in the Antigua and Bermuda Ministry of Foreign
Affairs told the Antigua Sun that he expected some progress in negotiations
on the gaming issue, once power shifts into Democratic Party hands in the
USA in January, when newly elected representatives take office in both
houses.

"I do not necessarily believe that there is much difference in the
Democratic and Republican administrations. In fact, some of the harshest
blows that the Caribbean has received in recent times, we got from the
Democrats - like bananas," he said. "That was done under a Democratic
administration.

"Having said that, I believe that when it comes to Internet gaming, there
will be some new opportunities, with the new Congress, after January, to
explore with them some change to the legislation that has been passed.
Either a repeal or an amendment of that legislation," Murdoch said.

However, Ambassador Murdoch acknowledged that the US legislative system
vests significant veto authority in President George W. Bush, who has gone
on record backing restrictions on Internet gaming and who signed into law
the recent legislation geared at blocking payments between online gambling
sites and their clients.

He said this system was a potential barrier to the furtherance of Antigua's
cause and described it as one of the obstacles that needed to be overcome.

Despite this, he expressed the hope that if some change can be pushed
through Congress, negotiations with the White House can effect a compromise
legislation that both Democrats and Republicans can live with.

"I think even the White House has seen the change in the American political
environment and I believe that they would be amenable to moving towards the
centre and have position based on compromise," Murdoch said.