Saturday, August 21
Senator Steven Geller, Chair of the PSGSC, called the meeting to order at 9.10 a.m.
Dr. Lance deHaven-Smith, Executive Director of the PSGSC, reviewed the survey results, question by question. He stated again that the purpose of the survey was to provide direction for the staff during the report drafting process and to identify any areas of concern to the commission members.
During the review of the survey, the areas in which all of the commission members agreed to exclude were subsequently omitted. The areas in which there was not a clear majority of the commission in agreement were suggested for further discussion.
The commission members agreed to proceed through the survey, addressing each question in turn.
What follows is a listing of each survey question, the summary of the results and additional written comments provided by the commission members, and the comments made by the commission members during the entire day's discussion.
The numbers in the left margin indicate the number of the original survey question and are provided as a reference.
For each question, the commission members noted whether the issue should be included or excluded and whether they agreed or disagreed with the idea proposed, were not sure of the idea proposed, or might agree with the idea proposed if the question were reworded.
Underlined text indicates comments that were added to the original text; strikethrough indicates text that was deleted from the original. In some instances, entire questions were deleted or combined with other questions to form new questions. The italicized comments are the written comments of the commission members taken from the completed survey forms.
The information that follows is arranged in the following manner. First, the original question is listed. A few of the questions will have underlined or stricken text to reflect the final decision of the commission. Next, the written comments taken from the commission members' surveys will appear in italics. Third will be the discussion that took place among commission members. There was no discussion over some questions, in which cases it will be indicated that the commission agreed or had no objections.
About the Public Sector Gaming Study Commission
1) The Public Sector Gaming Study Commission was organized by the National Council of Legislators from Gaming States to provide advice from the public sector about policy toward gaming and gambling at all levels of government, to provide a snapshot of the gaming industry, and to serve as a resource on gaming issues for the public sector.
The commission had no objections or additional comments.
2) The Public Sector Gaming Study Commission was necessary, in part because the National Gambling Impact Study Commission did not include representation front the public sector.
Part of the reason.
Senator Oleen requested clarification on the procedure for addressing the survey responses and the additional comments made by commission members. Senator Geller replied that the commission would review each question individually, taking into consideration both the survey results arid the additional written comments. Wording changes would be discussed, but the actual changes would be made by staff following the conclusion of the meeting.
Ms. Paul replied that the comment on question (2) referred to the first question. The PSGSC was established to fulfill the duties listed in that question as well as to a provide public sector perspective on gaming.
(3) The Public Sector Gaming Study Commission included representatives from all of the major elements of the public sector that are dealing with gaming and gambling policy.
About the Conclusions and Recommendations in this Report
(4) Information about gaming in the United States is limited, changing, and in some instances contradictory or ambiguous. The conclusions and recommendations in this report reflect the best judgements of the commission members at this point in time based on the information presented to them in hearings, their own experience, and findings gathered by staff.
(5) The gaming industry is evolving rapidly because of changing laws, new court rulings, developments in technology, shifting religious and moral beliefs, and other factors. The conclusions and recommendations in this report are directed at the industry at the present time. As the industry evolves, the conclusions and recommendations of this report should be revisited.
The gaming industry is evolving rapidly because of changing laws, new court rulings, developments in technology, shifting religious and moral beliefs, and other factors. The conclusions and recommendations in this report are directed at for public policy consideration and the industry at the present time. As the industry evolves, the conclusions and recommendations of this report should be revisited.
The commission agreed that the revision proposed was not grammatically sound.
(6) This report represents the majority opinion of the Commission members. Members who disagreed with the majority on specific issues were encouraged to prepare written opinions on the issues in questions. These dissenting opinions are contained in Appendix A.
Include if necessary.
Intergovernmental Relations in Gaming and Gambling Policy
(10) Historically, regulation of gaming and gambling in the United States has been the purview of the state governments. The states are fully competent to continue handling this responsibility.
(11) In general, the federal government should exert authority over gaming and gambling in the states only when interests beyond the state level are directly involved.
(12) Federal authority over gaming and gambling should be exercised with respect to:
(a) Internet gaming, provided federal regulations include allowances for telecommunication transmissions from lotteries and parimutuels.
Does not preclude wire work for lotteries and parimutuels.
Senator Geller stated that this language is similar in nature to the provisions in the pending Kyl bill.
Internet Gaming
(20) Internet gambling is laden with problems of access by minors or by those who have gambling or other psychological disorders, fairness in the games offered, and legitimacy of the gaming operator's background and financial resources.
(21) Internet gaming also raises issues of communication and the legality of gambling activities across state and national boundaries.
(22) Internet gambling should be made illegal and enforcement of such laws will require federal monitoring and intervention.
Internet gambling should be made illegal regulated and enforcement of such laws will
require federal monitoring and intervention.
Must have some exceptions (like Kyl Bill does) for things like parimutuels.
Senator Geller stated that the commission, based upon the survey results, was overwhelmingly in favor of recommending that gambling via the Internet be made illegal.
Mr. Hill commented that people would have access to Internet gaming, even if it were made illegal, so regulation seemed the more viable option. He also noted that the prohibition put forth in the Kyl Bill would be detrimental to 60 Indian nations because they use the technology for Class 11 bingo. The Kyl Bill does not take existing Class 11 gaming into consideration.
Senator Geller responded that this exception ought to be included in the Kyle Bill or similar proposed legislation, as it allows for an exchange of information and function in a manner similar to the shared pools of parimutuels. What the commission would like to see made illegal is the access individual gamblers would have.
Mr. Hill replied that the average gambler would find a means of gambling on-line, therefore, the industry should simply be regulated rather than outlawed.
Representative Caron stated that the Kyl Bill seemed to allow a lot of exceptions for a lot of special interests. Existing legislation, such as the Wire Act, could be updated to cover Internet gambling concerns.
Senator Geller proposed that the commission next examine questions (23) and (25), then return to this discussion.
(23) Internet gambling has potentially serious adverse consequences on states for several reasons. First, if people gamble on the Internet on unregulated and untaxed gambling sites, there is a clear cannibalization of money spent on legal, regulated, and taxed state gambling such as lottery, parimutuels, and casinos, etc.
Internet gambling has potentially serious adverse consequences on states for several reasons. First, if people want to gamble on the Internet on unregulated and untaxed gambling sites, there is a clear cannibalization of money spent on legal, regulated, and taxed state gambling such as lottery, parimutuels, and casinos, etc. activities
The comment appears to relate to word choice. The commission agreed with the proposed change
(25) Third, Internet gambling sites can track parimutuel wagering, and offer higher odds than the legal parimutuels, because internet sites are not paying state taxes, are not paying for the cost of regulation and are not paying owner's awards, breeder's awards, or purses. The commission heard testimony of at least one sit that is thus able to offer 10 percent rebates on all gambling losses. If this continues, this can put the state licensed and legal parimutuels out of business.
Third, Internet gambling sites can track parimutuel wagering, and offer higher odds than the legal parimutuels, because Internet sites are not paying state taxes, are not paying for the cost of regulation, and are riot paying owner's awards, breeder's awards, or purses. The commission heard testimony of at least one site that is thus able to offer 10 percent rebates on all gambling losses. If this continues, this can put state licensed and legal parimutuels out of business.
Senator Oleen stated that the original question reflected only one incident that was described in testimony As a matter of consistency, it should be removed.
Senator Geller replied that there was more than one example given in previous testimony, and supporting comments could be added.
Senator Oleen then agreed with the proposed change.
(24) Second, Internet gambling sites can use the states' own numbers in lotteries and make higher payouts because they do not need to pay money for the cost of regulation or running the lottery, and do not make any contributions to state general revenue. This would result in lower state lotteries.
Second, Internet gambling sites can use the states' own numbers in lotteries and make higher payouts because they do not need to pay money for the cost of regulation or running the lottery, and do not make any contributions to state general revenue. This would result in lower state lotteries. This could potentially decrease revenues generated by state lotteries.
Senator Oleen and Senator Geller agreed that the original question (24) was poorly worded. The commission accepted the proposed change.
The questions concerning Internet gaming being discussed, the commission returned to the broader issue of Internet gaming policy, should the commission support making Internet gambling illegal or legalizing, regulating, and taxing Internet gambling?
Senator Geller proposed that the commission recommend making Internet gaming illegal because of the potential to harm state lotteries, parimutuels, and casinos and because of the states' right to decide what form of gambling is legal within their own borders. The Internet transcends these traditional boundaries by making it possible for operators to introduce into a state forms of gambling the state may not support.
Senator Oleen stated that Congress has already usurped state authority by placing a moratorium on Internet sales. There is also the concern that if a gambler, who resides in a state that does not allow Internet gambling, loses money to an Internet operator, there may be a tendency to look for help from the state's attorney general's office. This is not fair to the state Senator Oleen supports banning Internet gambling, with the exceptions already listed as they are states' rights issues.
Mr. Hill stated again that the technology will allow black market operations to survive. The states should seek to protect the consumer. It should be up to the individual states whether or not they would like to prohibit Internet gaming.
Senator Geller stated that the proposal put forth excluded Internet use by parimutuels and by the Indian tribes cited by Mr. Hill.
Senator Oleen, Mr. Patton, Lieutenant Governor Taylor, Senator Geller, and Ms. Paul were in favor of making Internet gaming illegal, with the exceptions already discussed. Representative Caron, Mr. Hill, and Sheriff Lopez supported the legalization and regulation of Internet gaming.
Senator Geller asked Dr. deHaven-Smith to also solicit input from the three commission members not present.
Mr. Hill asked if each of the commission members who voted in favor of outlawing Internet gambling and who did not previously voice an opinion could elaborate on their vote.
Mr. Patton stated that Mississippi allowed gambling as a form of economic development. The Internet would not offer the same benefits', in fact, it may harm existing operations.
Lieutenant Governor Taylor was fearful that Internet gaming may compete with the lottery.
Ms. Paul was concerned that Internet may harm the lotteries or gaming operations of Indian tribes in individual states. Players will follow the large jackpots-, they will not be limited by state boundaries as they are when they physically must go to the reservation or the lottery retailer to wager. Ms. Paul was in favor of approaching this issue from a states' rights issue, even though putting gambling in an individual's home was undoubtedly problematic.
Senator Geller cited his previous reasons, as well as the examples provided in previous testimony. The Internet can not be regulated on a state-by-state basis.
Senator Geller again stated that as this vote did not represent a clear majority of the 11 member commission therefore, the opinions of the three members not present should be taken into consideration.
Senator Geller requested that Dr. deHaven-Smith add to the wording of the commission's policy that the means of prohibiting Internet gaming would be through credit card and wire transactions.
Dr. deHaven-Smith stated that the staff would draft a report based upon these recommendations. The commission members should bear in mind that the day's discussion provided direction for the staff, and that the compilation process was in its preliminary stages. Further revisions would be necessary. More surveys might be utilized to identify areas of disagreement.
Dr. deHaven-Smith also suggested that Mr. Hill might wish to write a minority report should his concerns not be adequately discussed in the commission's final report.
Senator Geller asked that staff solicit additional written testimony, supplemental materials, or proposed findings from all segments of the gaming industry.
The meeting was adjourned at 5:00 p.m.