Congress Not Expected to Pass Kyl Bill Before Recess

The interactive gambling industry appears to have once again won the battle in Washington, but the war rages on.

Despite vigilant efforts from Sen. Jon Kyl, R-Ariz., and Rep. James Leach, R-Iowa, a bill aimed at cutting off the industry at its knees probably won't see action before Congress adjourns this weekend.

A spokesman for Kyl wouldn't comment on the status of S. 627, which would forbid the use of credit cards, wire transfers, and other “instruments of banking,” to fund interactive gambling accounts, but Washington insiders indicate the senator has given up for the session.

The Kyl bill has awaited action in the Senate since a similar measure passed in the House in June. Some on Capitol Hill attribute the Senate bill's failure to the current political landscape--one in which funding for the Iraq war and economic stimulus packages are top priorities.

The congressional session was expected to close this week, but it will likely stretch into the weekend and possibly the days leading up to Thanksgiving, as Congress tries to hash out details of a Medicaid reform package.

The second session of the 108th Congress, which will commence in late January, will likely get underway with much of the same acrimony that plagued it in the first session. Last week Republican senators filibustered for over 30 hours to protest Democrats' stall tactics over judicial nominations.

Both parties are wrangling over the best approach to take with a struggling U.S. economy as well, and if a post-holiday slow down hits, that debate could escalate.

Washington insiders also point out that special interest groups have played a major role in the failure of prohibition bills over the last five years.

The American Gaming Association and Native American groups, for example, have voiced concerns over any bill not including a states' rights clause, or one with carve-outs for certain segments of the industry, like racing and fantasy sports, but not others, like casino gaming or sports betting. The groups are expected to hold firmly to this stance in 2004. Kyl's failure could mean more time for online operators like Sportingbet and BetOnSports, which have lobbied for regulation and a viable tax scheme. The movement seemed far-fetched when hatched around three years ago--and remains a long shot--but has progressed significantly. Rep. John Conyers, D-Mich., in March introduced a House bill calling for a commission to study the viability of regulating I-gaming. The bill died in committee, but its introduction was a positive step for advocates of regulation.