Frank’s Departure Hurts Gamblers; Michigan Looks at Internet Cafes; Gambling in Florida
Online Gambling is about to Lose It’s Biggest Advocate in Congress
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By Hartley Henderson – exclusive to OSGA
Read more from Hartley and others at the superb gaming website www.osga.com
The OSGA website is a must read for people interested in gaming from every possible stand point
Since the first offshore betting website opened in the late 1990s, government officials in the United States have set out to shut down the business. John Kyl, the Senator from Arizona who unashamedly announced that he hated everything about gambling, introduced a bill, The Internet Gambling Regulation, Consumer Protection, and Enforcement Act to make it illegal for Americans to wager online. Kyl’s agenda when introducing the bill was to scare adults by suggesting they could lose everything in an unregulated environment. His tag line “click the mouse and lose the house” was specifically aimed at parents who should be worried that their kids would steal their credit card and bet the limit. He further argued that offshore bookies were unscrupulous and that underage betting couldn’t be prevented. The tactic didn’t work and Internet gambling continued to grow in the U.S. throughout the first half of the 2000s despite Kyl’s efforts. In fact there was an indication that by 2005 there was up to $12 billion being bet online in the U.S. While Kyl’s gambling bill went nowhere, others in Congress, inspired by his efforts tried to pass their own bills which they believed would be better accepted in the Senate. Robert Goodlatte and Jim Leach both believed that no law could pass that was targeted at bettors so they introduced bills that would make it illegal to process payments for online gambling transactions. In their opinions if the government could stop payment options to websites then it would effectively cut off the activity at its knees. After all, if no one could deposit or withdraw then there is no business. They were correct in believing the bill would be better accepted and the majority in supported the new bill. Moreover, the religious right came aboard to support the cause. Focus on the Family, for example, made it a mission of theirs to support a gambling ban and worked side by side with evangelicals in the Republican Party to achieve that objective. In 2006 Goodlatte and Leach’s bills were combined to form the UIGEA and the bill passed in Congress in the fall of 2006. The bill was then sent to the Senate for consideration but was given little chance of passing before the winter break. So in a last ditch attempt Congressmen Bill Frist attached the bill to the Safe Port Act, which was already guaranteed passage and the UIGEA became law.
Poll after poll indicated that the majority of Americans wanted the right to wager online but it seemed that few in the government were listening to their plea. One man, however, Barney Frank, the Democratic Congressmen from Massachusetts took up the gamblers’ cause and made it a mission to overturn the UIGEA which he called “one of the stupidest laws ever passed.” Frank himself isn’t a gambler, but he said that he couldn’t personally support a law that does not harm the general public and is a clear intrusion on personal liberty.
“If it affects me, mind your own business,” he said. “If affects others, let the government get involved.”
The issue of online gambling went before the House Financial Services Committee on several occasions as that committee oversees the area of gambling and until 2007 the chairman was Alabama Congressman Spencer Bachus, who had no sympathy for anyone connected to online gambling. He argued that gambling was immoral and proceeded to support that notion by providing numerous nonsensical arguments relating to the danger of the activity. Each time, Barney Frank was present to present the gambler’s side of the equation but wasn’t able to make much headway. That changed in the fall of 2006, when the Democrats gained control of the House and Barney Frank was appointed Chairman of the House Financial Services Committee. His impact was immediate. He set out to stop the implementation of the UIGEA, which had just passed months prior by introducing HR2266, a law that tried to stop implementation of the UIGEA for one year as well as a companion bill, HR2267, The Internet Gambling Regulation, Consumer Protection, and Enforcement Act, which was aimed at taxing, regulating and heavily monitoring gambling in the United States. The bill initially planned to exempt all forms of gambling from the UIGEA but sports betting was excluded from the bill when Frank conceded that the leagues have far too powerful a lobby and it was unlikely to gain any traction unless sports was excluded. The bill, however, called for the immediate legalization of poker which Frank said was a game of skill and should never have been included in the UIGEA in the first place. Not surprisingly, those comments made Frank an immediate hit in the poker industry and he was featured numerous times by the Poker Player’s Alliance. Other bills to legalize poker were introduced prior to Frank’s bill such as Robert Wexler’s Skill Game Protection Act, but none gained much support. Frank’s bill, on the other hand, got immediate support and eventually garnered 70 co-sponsors on both sides of the House. Frank was determined to ensure that the bill would be bi-partisan. Perhaps Frank’s biggest achievement was getting the backing of Republican Ron Paul, who said that as a libertarian he couldn’t justify telling Americans how to spend their own money. Paul also became an instant celebrity in the online gambling field and it is hoped that he will take up Frank’s cause when he leaves.
When drawing up his bill, Frank told reporters that he reread John Stuart Mill’s “On Liberty” before finalizing it. The book talked about the ‘tyranny of the majority’ where Mills believed that if left untouched the majority will develop a superiority complex and act in a way that oppresses individual freedom. No doubt Frank believed that was exactly what was happening with the UIGEA, where the Republican majority was instilling their own moral values on the American public despite the fact that few wanted it and it didn’t benefit anyone.
One of Frank’s most memorable actions as Chairman occurred in the year following the final writing of the UIGEA regulations. He brought forth numerous members from the banking association who made it clear how illogical the regulations were and how it would place an unnecessary burden on an already wounded banking sector. The meeting saw Frank, members of the banking industry and numerous other affected parties effectively teamed against Spencer Bachus. Bachus was left looking like a bumbling fool as he tried to defend the indefensible. In fact one could even sense that Bachus was questioning the logic of the UIGEA after hearing the testimony of the bankers. Frank also conducted other meetings regarding the UIGEA including a meeting in 2010 where members from the poker community (including Annie Duke), members from native gambling concerns and everyday gamblers explained why HR2267 was a good bill that would benefit the United States as whole. At every turn, Frank made himself available to discuss the silliness of the UIGEA and the advantage of a regulated online gambling economy in the United States. It appears his efforts had an impact as well, since the federal government is now seriously contemplating a law that would make poker legal in the United States.
Earlier this week, Frank announced he would not run for re-election in 2012. It’s uncertain what will happen to HR2267, but political experts I spoke to said that the bill would likely die unless someone like Ron Paul decided to run with it. It may be a moot point anyways if the government amends the UIGEA to permit poker, but it’s still important to have some Congressmen and Senators that are there to lobby for the industry. Frank hasn’t indicated what he will do after politics although some have rumored that he could follow the likes of former Senator Al D’Amato and work for the Poker Player’s Alliance or he could follow the likes of Tom Ridge and work for Fair Play USA (a lobby group that is funded by Caesars). But sources closer to Frank suggested to me that Barney Frank has bigger aspirations that have nothing to do with gambling.
“Frank believes liberty in the U.S. is being challenged on many fronts with unfair laws” the source said, “and I have no doubt his next job will be to correct those injustices.”
I sent an interview request to Barney Frank and with any luck I’ll be able to report more precisely what his plans for the future will be. But one thing is certain, the gambling industry is about to lose its biggest advocates in Congress although they were fortunate to have him batting for them when he could.
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Internet café games under legal scrutiny in Michigan
by Ray Poirier
Ray writes for www.gamingtoday.com – the place to go for world-wide gaming info
Some people call it a sweepstakes promotion while others insist it is a back-door form of gambling but nevertheless the use of computers by people who buy Internet time to play casino-type games continues to spread.
Such Internet cafes began on the east coast and rapidly found favor from New England to Florida. In some states, police moved in and closed the places saying the practice was nothing more than gambling without the proper legal authority.
In others, police have looked at the operations without taking any stand.
And, in most states, it is a matter of judgment since few, if any, have laws that specifically address the Internet gaming cafes.
Most recently, Internet play sites have begun showing up in Michigan, either in cafes, restaurants, lounges or other places of business. Again, the question of legality has arisen.
Operators insist they are forms of entertainment and are not really gambling, although players who are lucky can be reimbursed for their success at blackjack or what look like classic slot machines for up to $3,000.
“Some people refer to it as gambling, but it’s not,” said Jerry Diamond, who converted his restaurant and bar into an Internet café. Quoted by the Associated Press, Diamond added, “it falls under the sweepstakes law the same laws that McDonald’s, Wendy’s or Pepsi use for their sweepstakes. They’re selling the product and you can enter the sweepstakes. I’m selling Internet time.”
Maybe so, but a community activist had a different view.
“Communities think they’re getting trendy coffeehouses that will attract tech-savvy 20-somethings who want to Skype and sip espresso,” said Sarah Traxler, director of community development for planning and design business McKenna Associates, which works with several Detroit-area communities.
“They end up with a gambling house. It’s a bait-and-switch for communities who fall for it.”
Reportedly, the Michigan Gaming Control Board has received two complaints that are now being investigated by the State Police.
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Gambling in Florida may be set to explode
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By Kathleen Haughney – bellinghamherald.com
With the Florida legislature set to consider allowing Vegas-style casinos, even as smaller operators seek a rash of new pari-mutuel permits, the Sunshine State finds itself at a gambling crossroads.
The state could explode with more gambling options, from glitzy, high-end resorts in South Florida that offer slots, card games and craps to barrel racing – and maybe slot machines – in areas such as tiny Gadsden County in Florida’s Panhandle. Or the courts, now considering several lawsuits challenging gambling expansion, could force all the new projects back to the drawing board.
“This obviously has a lot of moving pieces to it,” said Rep. Scott Plakon, who opposes gambling expansion efforts.
Last month, Sen. Ellyn Bogdanoff of Fort Lauderdale and Rep. Erik Fresen of Miami unveiled legislation that would bring three “destination casino” resorts to the state. About the same time, the state approved a license for betting on barrel racing in the tiny city of Gretna, and the county put a referendum on the ballot that could allow slot machines at the facility as well.
Then, a lawyer for Magic City Casino in Miami found a loophole in the law that he said would allow it to get a license for summer jai alai; another attorney wants to exploit the same loophole to put jai alai in Weston. And most recently, the owners of Hamilton Downs, a jai alai and poker room in Jasper in north Florida, also filed for a barrel-racing permit for their quarter-horse track.
Finally, Internet cafes – offering “sweepstakes” that critics say are akin to slot machines – are continuing to pop up in strip malls all over the state.
For Bogdanoff, this explosion of gambling is reason enough to pass her bill – to get control of the industry through a new state gambling commission. Bogdanoff said she wants to create a “strategic vision” that starts with high-end resorts – and then decide how these facilities fit that vision: Seminole Indian casinos; slot-machine “racinos”; pari-mutuel tracks, frontons and poker rooms; and Internet cafes.
“We have to decide they’re here. Do we protect them? Do we give them parity? Do we want to continue to expand through clever lawyering? Or do we want to say, ‘This is it, this is the strategic vision: up to three destination gaming resorts,’” she said last week.
“Let the gaming commission make the decisions on the nitty-gritty, how it gets done. But we don’t want any more Internet cafes; we don’t want any other counties expanding,” she said.
For the backers of destination resorts and the smaller gambling venues, the expressed motivation is the same: jobs.
In Gretna, plans are under way to hire 178 people, a significant amount in a city of about 1,700 people that is poor and largely black.
“For us, this is just the tip of the iceberg,” said Clarence Jackson, mayor of Gretna. “We’re sure that we’ll have some opportunities. The main thing for people around here, they’re looking for jobs.”
Casino executives from Las Vegas and Asia are making the same promises using bigger numbers: up to 100,000 if three megaresort-casinos open in Miami-Dade and Broward counties. Plus, they say, they’ll attract millions of new tourists who will shop at local restaurants and travel to other Florida destinations such as Disney World.
“The potential here is exciting,” said Jessica Hoppe, general counsel for Genting, which has spent more than $300 million for bay-front property in Miami to build a $3.8 billion resort, including the world’s largest casino.
But the Florida Supreme Court – and the legislature – could bring all these plans to a screeching halt.
Last week, owners of Miami Jai Alai and Calder Casino and Race Course asked the court to hear their appeal of a judicial decision allowing Hialeah Park racetrack to open a racino. More significantly, they’re also challenging whether the Legislature has the authority to expand gambling or whether expansion requires a statewide constitutional amendment.
They argue that a 2004 referendum allowing slots in Miami-Dade and Broward applied only to pari-mutuels that were open at the time; Hialeah was closed. But in 2009, legislators authorized slots at Hialeah, and in 2010 a Leon County circuit judge said the Legislature could allow gambling anywhere in the state.
The case is crucial to the destination-casino bill. If the Supreme Court were to side with Calder, it would mean casino executives would need a constitutional amendment – passed by 60 percent of voters – to go forward. Three attempts in the past 33 years to pass such an amendment have failed.
If a statewide referendum were required, said Las Vegas Sands lobbyist Nick Iarossi, the company would “probably take our ball and go home” rather than wage an expensive campaign that had a high probability of failing.
Gretna’s facility has also drawn a legal challenge from critics who say wagering barrel racing – normally a rodeo contest, not a betting event – was never authorized by the Legislature and therefore can’t be permitted by the Department of Business and Professional Regulation.
In December, an administrative-law judge is set to hear a challenge by the Quarter Horse Racing Association, which called barrel racing an “entirely new form of activity never before authorized or approved for pari-mutuel wagering in this state.”
Dan Adkins, vice president of Hollywood’s Mardi Gras Casino, called the Gretna plan a “scam.”
“All of this is patently illegal,” he said.
The legislature is watching the court cases but will move forward with destination-casino discussion. A full Senate vote is expected in mid- to late January.
But Bogdanoff admitted that the legislature has shied for decades from making big changes to the gambling industry and might not agree this year.
“I don’t know that the bill passes,” she said. “That’s why we’re having the discussion.”
