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Reid Drops Controversial Online Poker Proposal

Gale Courey Toensing
12/10/10

WASHINGTON – Senate Majority Leader Harry Reid has dropped his push to legalize and regulate online poker, according to the Las Vegas Sun.

The controversial Prohibition of Internet Gaming, Internet Poker Regulation and UIGEA (Unlawful Internet Gambling Enforcement Act) had drawn a groundswell of opposition from tribal leaders.

In a conference call with the Las Vegas Sun late in the afternoon of Dec. 8, Reid said that despite a flurry of last-minute lobbying, he would not be adding legalization of online poker to his list of objectives during the lame duck session that will likely end.

“We’re still working on that, we’re not able to,” Reid said.

Tribal opposition to the proposed legislation reached a high level of intensity during the days before Reid’s announcement.

An action alert from the National Congress of American Indians calling on tribal leaders to contact their senators and voice their concerns over Reid’s proposed bill has been circulating to the nations through the Internet.

“This (proposed bill) was drafted without full tribal involvement or public hearings, and without circulating a draft for tribal comment,” NCAI said.

NCAI said the bill, which was aimed at authorizing Internet poker operations at the national level, would have a negative impact on Indian country.

“As drafted, the bill will greatly impact tribes and sovereignty by: 1) imposing a six percent federal tax on tribal governments that operate Internet poker, 2) excluding from initial participation any tribe not earning five percent of total U.S. gaming revenue or approximately $4.5 billion in revenue for the last three of five years, and 3) separating the gaming operator from the tribe as a regulating authority, setting up a new and limited government role.”

NCAI asked tribal leaders to act quickly in contacting their senators because Reid was reportedly aiming to attach his bill to a must-pass budget bill during the lame duck session.

Despite Reid’s announcement that he was dropping the proposal, tribal leaders were asked to keep up their efforts and calls through the lame duck session, which is expected to end Dec. 17.

The news that Reid had dropped his efforts to push through the Internet gaming proposal would come as a “harsh blow” to some of Reid’s biggest backers in the gaming industry, the Sun said. – largely those in the commercial gaming industry who had hoped the legislation would pass before Republicans take over the House in the New Year. The Republicans generally oppose gaming both fiscally and morally.

Ranking congressional members Spencer Bachus, R-Ala., of the Financial Services Committee, Dave Camp, R-Mich., of the Ways and Means Committee, and Lamar Smith, R-Texas, of the Judiciary Committee wrote a letter to Reid and Minority Leader Mitch McConnell, R-Ky., last week voicing their opposition to speeding a gambling bill through during the lame duck. As chairmen next year, they will be well-positioned to stop any online gaming legislation to come up in the House.

The Republican-led legislature in 2006 passed the Unlawful Internet Gambling Enforcement Act, which made all forms of gambling on the Internet for money illegal. The draft language that was circulating would have legalized online poker only, but, according to the Sun, that’s an industry that is estimated to be worth about $25 billion and engage 15 million participants a year – a number that is only expected to grow if the industry becomes legal.

The Sun also acknowledged that legalizing and regulating online poker was not an easy task.

“Lobbyists for the industry speculated that lawmakers might include the legalization as part of the tax extensions package being batted between Senate Democrats, Republicans and the White House, and is expected to come up on the Senate floor sometime later this week.”

The drive to legalize Internet gaming is motivated by the desire to procure money for the federal and state governments.

“Licensing and regulating Internet poker facilities will provide additional tax revenues for the United States and for states in which customers and operators are located and will reduce tax avoidance,” Reid’s proposal says.

Under a section called “Preemption of State and Tribal Laws,” the bill would “supersede any and all state and tribal laws insofar as they may now or hereafter purport to permit, prohibit, license or regulate Internet gaming facilities, including Internet poker facilities.”

The proposal defines a “casino gaming facility” as one that provides “casino gaming on a riverboat, at a race track or in another facility that hosts 500 or more gaming devices in one physical location pursuant to a duly authorized license issued by a state or tribal gaming regulatory authority.” That language, along with the initial exclusion of any tribe not earning five percent of total U.S. gaming revenue for three of the last five years, and some murky definitions skewed the proposal in favor of the numerous commercial casinos in Reid’s home state of Nevada.

The National Indian Gaming Association wrote to Sen. Byron Dorgan, D-N.D., Dec. 3, urging him to oppose Reid’s proposed legislation “because it does not meet the principles that we believe are essential for fairness to tribal government.”

Both NCAI and NIGA passed resolutions recently stating that any federal Internet gaming legislation must preserve tribes’ sovereign rights to operate, regulate, tax and license Internet gaming with no subordination to any non-federal authority, meaning states; that Internet gaming authorized by Indian tribes must be available to customers in any locale where Internet gaming is not criminally prohibited; that tribal revenues must not be subject to tax; that existing tribal government rights under Tribal-State Compacts and the Indian Gaming Regulatory Act must be respected and IGRA must not be opened for amendments, and that Internet gaming must provide positive economic benefits for Indian country.

The United South and Eastern Tribes, which represents 25 tribes, has called for a thorough study of the social and economic impacts Internet gaming would have on Indian country. Any proposal must provide total equality for the tribes, USET President Brian Patterson said.

“If the states secure certain rights then those rights better be assured to Indian country as well. If states are able to advance gaming initiatives, then tribes must be in the position to advance as well.”

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