Interest groups lining up to lobby on Web gambling

 

By Kate Phillips
New York Times

 

WASHINGTON, July 3 — While Internet gamblers lay down big money on World Cup soccer this summer, teams of lobbyists are facing off on Capitol Hill in a contest over whether the United States should choke off the growth of wagering on the Web.

 

Faced with bills to curb online betting, which attracts an estimated $12 billion a year in wagers worldwide, an array of interest groups like casinos here and abroad, as well as sports leagues, antigambling coalitions and even poker players, has dispatched lobbyists to argue what should be legal and what should not.

 

Major League Baseball wants to make sure that any measures do not diminish fantasy sports games, which it credits for a resurgence in its popularity.

 

The big Las Vegas casinos, which have been neutral over online betting, have embraced a proposal in the House to establish a study commission. Convenience stores are watching to see whether sales of lottery tickets might be affected, though Powerball seems to be safe for now.

 

The horse racing industry seems sanguine, but dog tracks are worried. Offshore casinos are fighting any restrictions.

 

The Justice Department has always considered Internet gambling illegal. But that has not stopped online wagering from flourishing.

 

Gambling opponents are pushing for bills to put teeth into enforcement. In the House, proponents of a crackdown merged two bills. The majority leader, Representative John A. Boehner, Republican of Ohio, announced a few days ago that the measure would be voted on this summer as part of what the Republicans call their American Values Agenda.

 

The odds of a bill's becoming law this year appear long. Beyond that, nearly everyone agrees that online betting may be unstoppable because of the reach of the Internet and the difficulty in regulating its activity.

 

David O. Stewart, an analyst and a lawyer who produced a study of online gambling for the American Gaming Association, a client of his firm, paraphrased an adage used by the Supreme Court in a campaign finance case, saying: "Money, like water, will find its way. And I really think that applies to this. The money will find a way to get to the offshore sites."

 

Proponents of Internet gambling argue that the Congressional trend goes against the growing tide of international wagering. As many as 80 countries allow it in some form.

 

The most prominent model is Britain, which through revisions of its gambling laws is about to devise a tax-and-regulatory structure that it hopes will entice offshore gambling companies to locate there.

 

Britain is sponsoring a fall symposium on instituting such changes.

 

Other countries are eyeing rulings of the World Trade Organization, where tiny Antigua, with its offshore casinos, continues to press the trade body to find that the United States is violating trade agreements by trying to block access to online gambling.

 

"Americans are already gaming in large numbers because it's entertainment," said Mike McComb, a spokesman for Betmaker.com, based in Costa Rica. "It's an extension of entertainment. In England, what they've found is that it's just something that needs to be regulated to protect consumers. And it's a great source of revenue."

 

In the United States, the fight is set to resume when Congress returns from its Fourth of July recess. The House proposal would make it illegal to use a banking instrument like a check or credit card to settle Internet wagers, and it would penalize institutions that act as intermediaries channeling money between the offshore gambling enterprises and American bettors.

 

The measure would also update the Wire Act of 1961 to prohibit Internet gambling specifically.

 

"It will not be a perfect preclusive approach, but it will be pretty strong," said Representative Jim Leach, Republican of Iowa, a co-sponsor of the bill.

 

The Poker Players Alliance, a relatively new player on the Hill, and others that would be affected by a ban point to big-money interests like horse racing that are is not covered under the proposal.

 

The bill, said Michael Bolcerek, an amateur player who is president of the alliance, is "picking winners and losers."

 

Celebrity players have even dealt a few hands to lawmakers in an effort to show that poker is a game of skill, not chance, a critical legal distinction in the debate.

 

Mr. Leach said the poker players offered a fairly persuasive argument. But he added that he still believed that there were no social benefit and few "happy aspects" to Internet gambling. Not only can gambling be addictive, with debts racked up quickly online, Mr. Leach said, but from a moral standpoint, gambling also breaks apart families and poses a danger to under-age players.

 

Some gambling opponents want an even broader bill. The Traditional Values Coalition, a conservative group, wrote in a letter to Congress in the spring that the exemption of horse racing showed that it paid "to pony up."

 

The Center for Responsive Politics calculated that a sizable part of the racing industry has contributed more than $3 million to lawmakers, presidential candidates and state and federal political action committees since 2000. Far more than half the total went to Republicans, the center said.

 

Mr. Leach bristled at the notion that special interests or campaign contributions influenced him. He said he did not accept PAC money.

 

Kathryn Rexrode, a spokeswoman for Representative Robert W. Goodlatte, the Virginia Republican who is a co-sponsor of the merged bills, said the horse racing industry contributed when Mr. Goodlatte was not sponsoring such legislation, but when he was chairman of the Agriculture Committee.

 

Mr. Leach said that "we authorize nothing new for horse racing," because it is regulated under the Interstate Horseracing Act. Even fantasy sports games, he added, would be further restricted under the bill, with bans on betting on individual teams or players.

 

Mr. Leach pointed to the coalition of supporters for the bills, including churches that represent many denominations, like Christian fundamentalists, that tend to have a consensus on little else.

 

"I just think the stars are in alignment, that Congress knows it has to deal with this issue," he said.

 

On the Senate side, Mr. Leach is counting on two Republicans, the majority leader, Bill Frist of Tennessee, and Jon Kyl of Arizona. The Democratic leader, Senator Harry Reid, a former gambling commissioner in Nevada, "has serious concerns about our ability to properly regulate Internet gaming," his spokesman, Jim Manley, wrote in an e-mail message.