I-gaming Prohibition Becoming a Priority for Republican Leaders

24 January 2006

Following revelations that Jack Abramoff and Tom DeLay may have manipulated voting and other factors surrounding the Internet Gambling Prohibition Act in 2000, Republican lawmakers could be hoping to rectify the past and distance themselves from political scandal by putting an online gambling prohibition bill to vote once again in 2006.

The legitimacy of events surrounding voting on the Internet Gambling Prohibition Act of 2000 first came under suspicion in October 2005 when the Washington Post reported that an aide of Rep. Tom DeLay (R-Tex.) helped defeat the bill after receiving favors from Jack Abramoff. DeLay, who until recently was House Majority Leader, is now under indictment for criminal conspiracy while Abramoff, a Republican lobbyist and fundraiser, has already plead guilty to several political crimes and still faces more charges.

The alleged corruption surrounding the online gambling bill in 2000 is only one of many potential ethics and financial scandals facing the Republican Party today. With the Party facing such a severe threat to its integrity, its members appear eager to put the scrutiny surrounding DeLay and Abramoff behind them by whatever means possible.

Now that DeLay has stepped down as House Majority Leader, three House Republicans have stepped forward to try to claim the vacancy. The Majority Leader is one of the most powerful positions in the House and is responsible for planning the daily, weekly and annual agendas of the House as well as scheduling legislation for floor consideration and consulting with members to gauge party sentiment.

One of the contenders, Rep. John Shadegg (R-Ariz.) has on several occasions mentioned his five-point plan for reforms he would pursue if voted into the position, and among those five priorities is obtaining another vote on legislation to prohibit online gambling. Last week Shedegg wrote in an op-ed piece in Congressional newspaper The Hill that "In 2000, a ban on Internet gambling received 245 votes on the suspension calendar, but, according to news accounts, we were kept from passing it because of Jack Abramoff’s machinations and manipulation. Passing it now would be good public policy and a clear signal that the era of Abramoff's influence is over."

At the moment Shadegg, who has confirmed support from only about ten House Rebublicans, seems to be the long-shot candidate for the House Majority Leader election that will take place on February 2. The best odds are on Rep. Roy Blunt (R-Mo), who has secured 91 votes, followed by Rep. John Boehner (R-OH) with 47 votes. A candidate needs 117 votes to win the election.

Even though Shadegg has only an extremely thin chance of winning, the I-gaming industry is not completely safe from prohibition becoming a serious part of the Republican agenda in 2006. There is always the possibility that Shadegg could withdraw from the race and throw his support behind one of the other candidates in exchange for their vowing to concentrate some effort on his five-point platform. Also, the other two candidates are also pledging to make reforms a crucial part of their agendas. (Incidentally Blunt and Boehner have lately come under scrutiny for tainted ethical records, as has Shadegg too, although to a somewhat lesser degree than the two.)

Rep. Jim Leach (R-IA), who has authored prohibitory I-gaming legislation during the last five Congressional sessions, says the bill he introduced in November 2005 has been gaining momentum as the Abramoff scandal has gained more attention.

"We expect this to move sometime this year," stated a Leach spokesperson to news publication American Banker last week. Leach's bill has already attracted 23 co-sponsors, including Rep. Spencer Bacchus (R-Ala), who chairs the House subcommittee with jurisdiction over financial institutions and has been a vigorous supporter of I-gaming prohibition in the past.


Some of the events surrounding the fate of the Internet Gambling Prohibition Act of 2000, a bill introduced by Rep. Bob Goodlatte (R-VA), came to light in October and afterward following the initial report by the Washington Post and subsequent others in other publications. It has been revealed that Tony Rudy, who was a staffer for DeLay in 2000, received favors from Abramoff and encouraged house members to vote against the bill. It has also come to light that Abramoff's law firm Preston Gates Ellis & Rovelas Meeds lobbied on behalf of eLottery to fight the bill. Federal records show that Connecticut-based eLottery Inc., a company that wants to facilitate the sale of state lottery tickets over the Internet, spent $1.15 million to fight the prohibition that year, $720,000 of which went to Abramoff's firm. The firm did not represent any other clients in lobbying against the legislation.

Earlier this month Abramoff pleaded guilty to several counts of an indictment in the U.S. District Court for the District of Columbia. One part of his confession stated, "Beginning at least in 1999 through 2001, Abramoff and others sought Staffer A's agreement to perform a series of official acts, including in assisting in stopping legislation regarding Internet gambling… With the intent to influence those official acts, Abramoff provided things of value, including, but not limited to, from June 2000 through February 2001, ten equal payments totaling $50,000 through a non-profit entity to the wife of Staffer A. The total amount paid to the wife of Staffer A was obtained from clients that would and did benefit from Staffer A's official action regarding the legislation on Internet gambling…"

Goodlatte's bill came to a vote before the House in July 2000. The bill was placed on the suspension calendar, which is typically reserved for non-controversial matters because it limits debate and requires that a bill receive approval from two-thirds of the 435-member House. Although the bill easily achieved a majority of votes with 245 in support and 159 in opposition, the bill inevitably failed because it fell short of the necessary two-thirds.

Some Republicans now publicly speculate that the lobbying efforts of Abramoff and his alleged spreading of false information about the bill may have been responsible for swaying some of the Congressmen to oppose it.

One fact that should not be overlooked however is that other lobbying groups played a significant role in blocking the 2000 bill. Concerned groups such as the National Indian Gaming Association, various state lotteries, Internet service providers and the Interactive Gaming Council all concentrated lobbying efforts on defeating the bill.

At any rate, atoning for the scandals involving Abramoff and DeLay is now a primary concern for many Republicans and a re-vote on I-gaming prohibition, may be one area in which they believe they could accomplish their goal.

Meanwhile, Sen. Jon Kyl (R-Ariz) is believed to be ready to introduce an identical prohibitory bill in the Senate soon. Doing so would eliminate the hurdle of merging two competing versions of the bill at a later date.

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