Editorial: What about the Senate?

13 July 2006

Now that the Goodlatte/Leach Internet gambling prohibition bill (HR 4411) has passed the House of Representatives, the question on everyone in the industry's mind is what are its chances of passing the Senate. It appears, at least for the moment, that the difficulties facing the bill will likely prove insurmountable, but then again history does teach us that anything is possible in the political realm.

When evaluating HR 4411's potential for success in the Senate, the primary consideration is the amount of time remaining on the legislative calendar. Senate Majority Leader Bill Frist has set Oct. 6 as the tentative adjournment date for 2006, which means that the bill will have to clear the Senate in less than three months.

It should be noted that the Senate is already facing a tough agenda that should consume a great deal of its time. Issues that seem certain to take priority over Internet gambling prohibition include border security and immigration; labor; health and human services; appropriations; and stem cell research. Various other spending bills and lobbying reform should absorb a fair amount of time as well.

The Senate will adjourn in early October so that its members who are running for re-election may devote a month toward their campaigns. Thirty-three of the 100 Senatorial seats are being contested this year. One significant factor is that as the election draws closer, incumbents are monitored more closely by the public, so they may be reluctant to take on issues that are controversial or take stances of which their constituents might disapprove.

The man who would lead efforts to support HR 4411 in the Senate, Jon Kyl, happens to be one of the 33 senators up for re-election this year. Although his race was months ago forecast to be one of the most tightly contested elections in 2006, he appears to be pulling away with the lead. A survey of Arizona voters conducted in June by consulting firm Angus Reid indicates that if the election would have been held last month, Kyl would have received about 43 percent of the votes while the Democratic challenger Jim Pederson would have received about 29 percent. (The remaining respondents were undecided.) It should also be noted that the sample size for the survey was very small--only 384). Although a victory seems fairly secure for Kyl, his campaign should certainly demand a large amount of his attention.

Furthermore, Kyl has been, and is likely to remain, one of the individuals leading debate on immigration. Kyl represents the southwest border state of Arizona, through which he claims more than half of the illegal immigrants coming into the U.S. travel. Immigration is also one of the key fronts on which Pederson is challenging Kyl. Although online gambling prohibition is an issue for which Kyl has vigorously fought in the last 10 years, choosing to do so again this year could mean sacrificing other important issues or spreading his resources thin.

Kyl introduced stand-alone Internet gambling prohibition bills in the 1995-96, 1997-98, 1999-2000, and 2003-04 legislative periods, but he has not introduced such a bill in 2005-06. He has, however, on two separate occasions attempted to attach such legislation as amendments to larger bills. In September 2005, he tried to attach online gambling legislation to a Commerce-Justice-Science appropriations bill, but his effort failed when the ranking member of the Commerce, Justice and Science Appropriations Subcommittee objected to the attachment on the grounds that it constituted general legislation on an appropriations bill and was, therefore, out of order. Then in March 2006, Kyl wanted to attach a piece of legislation--thought to be identical to Rep. Leach's bill in the House--to a larger bill aimed at lobbying reform, but debate over the lobbying reform bill was sidelined by a proposed amendment aimed at preventing a United Arab Emirate company from managing several key U.S. ports.

HR 4411 passed in the House this week by an overwhelming vote of 317-93, meaning support was clearly bipartisan. It is generally speculated that support and opposition might adhere more closely to party lines in the Senate, however. Senate Democrats are led by Sen. Harry Reid of Nevada, a former Nevada gaming commissioner, who has already expressed reservations about the ability to prohibit Internet gambling. It is thought that Reid would oppose HR 4411 and would be able to exert his influence to make other party members oppose it as well.

Furthermore, the intent of the American Gaming Association, which represents the commercial land-based casino entertainment industry in the United States, is not clear. The association in April modified its legislative position on Internet gambling to reflect that it now strongly supports the creation of a one-year congressional study commission that would evaluate the impacts of online gambling. AGA President and CEO Frank Fahrenkopf, Jr. insisted at the time, however, that the AGA would not oppose House prohibition bills. He stated, "We're not opposing Leach because the important thing you have to remember is that the legislation that is there now is aimed at illegal Internet activity. Leach, and particularly Kyl--although Kyl hasn't introduced his bill formally--talk about not defining what is illegal but leaving it to the courts to define what is legal. So even if Internet gambling were to be legalized in the U.S., we would be opposed to offshore, unlicensed, unregulated Internet activity. It would have to be prevented somehow, and it may be that the Leach and Oxley approach is the only way to do it. That's why we feel the study commission is necessary."

The threat of prohibition legislation passing appeared less plausible three months ago than it does now though, and although the AGA's official stance is that it will not oppose the bill, it doesn't seem likely to support it. The AGA is a powerful lobbying force and commits large amounts of money to campaign contributions.

Other special interest groups could take opposition to HR 4411 in the Senate as well. Although the banking industry provided little resistance in the House, it is possible that it has simply chosen to save its resources for a battle in the Senate. Debate on HR 4411 in the House this week focused almost completely on the measures introduced by Goodlatte, which deal with updating the language of the Wire Act. Discussion over the measures introduced by Leach, which deal with prohibiting payments to Internet gambling sites, was virtually nonexistent. Spokespersons for the banking industry have indicated that HR 4411 would place incredible burdens on American financial institutions, which would effectively become policing agents under the bill. Internet service providers can be expected to oppose the bill as well because it would also place policing demands on them.

One simple fact that remains, however, is that the Senate, like the House, is dominated by the Republican Party, which has all year considered Internet gambling prohibition a crucial part of its platform to rid American politics of corruption and the influence of Jack Abramoff, who was behind efforts to derail previous I-gaming prohibition bills. If HR 4411 comes to a vote and it is split down party lines, a majority of supporting votes could be anticipated from the Republicans.

Bradley Vallerius

Articles by Bradley P. Vallerius, JD manages For the Bettor Good, a comprehensive resource for information related to Internet gaming policy in the U.S. federal and state governments. For the Bettor Good provides official government documents, jurisdiction updates, policy analysis, and many other helpful research materials. Bradley has been researching and writing about the business and law of internet gaming since 2003. His work has covered all aspects of the industry, including technology, finance, advertising, taxation, poker, betting exchanges, and laws and regulations around the world.

Bradley Vallerius Website