Republicans vs. Democrats A Chronology of Online Gambling Decisions Part 1

This is the first in series of special articles on the U.S. political landscape and Internet gambling as we approach the upcoming Presidential election in November.

With Ron Paul announcing he is no longer officially running, Mitt Romney is the Republican candidate for the 2012 elections. If regulated gambling is on a list of election issues, many gamblers are still somewhat confused who to vote for. The online gambling community had hoped that Barack Obama would be gambling friendly and that the UIGEA would be overthrown or amended in his first term in office but was disappointed. Instead they witnessed the Democratic government seize offshore betting sites on Black Friday and no movement was ever made to legalize the product federally. Thus, one has to wonder if Barack Obama, a self-proclaimed poker player, is truly the best option for Internet bettors. Mitt Romney, on the other hand, made it clear in a speech in Nevada that he opposes gambling and would have no part in legalizing it in any form whatsoever. Unlike Obama there’s no ambiguity with Romney’s stand. If any federal law comes to his desk that legalizes online gambling he will almost certainly veto it. He can not be seen as a Mormon Republican candidate that helped pass an activity that goes against his faith. Obviously online gambling can’t be the sole basis for a decision but if it is a tipping point some analysis of the history of Internet gambling legislation and policies by party stance could help with decision making.  To that end, this article will look at the history of gambling bills from the Internet’s onset and determine who introduced them and who opposed them. This could be useful for deciding not only who to vote for President but for other elections as well. After all, bills are introduced and passed by the House and Senate. The next article in the series will look at policies and actions in the area of online gambling.

Below is a list of all U.S. Internet gambling-related bills from the activity’s onset.

1997: The Internet Gambling Prohibition Act:
Concerned about the growth of gambling on the internet, the first bill to address the issue was introduced in 1997. Republican Senator John Kyl put forth S474, The Internet Gambling Prohibition Act which was aimed at making online gambling illegal in the U.S. Kyl wanted to make it a crime to run a gambling site as well as to bet at a site. Hence in Kyl’s original draft online gambling would be strictly illegal and anyone taking part in it would be subject to arrest and a felony conviction. Kyl suggested this was necessary because gambling degenerates along with their children would take the credit card and “click the mouse, lose the house.” He also argued it was an extension of the 1961 Wire Act.  Not surprisingly the DoJ under the Democratic regime of Bill Clinton expressed concerns about arresting individual bettors so Kyl and Robert Goodlatte, who introduced the bill in Congress as HR2380 amended the bill to only charge those involved in the business of internet betting. That bill passed in the Senate by a 90-10 margin. It was noteworthy that all but 1 of the 10 Senators that voted against the bill were Democrats. In the House of Representatives HR2380 was expected to pass but an online lottery company (e-lottery inc.) fought the bill with the help of lobbyist Jack Abramoff and effectively got the bill killed before it could be voted on in the Senate.

1999: The Re-Introduction of the Gambling Prohibition Act
The above bill was reintroduced as S692 and HR 3125 two years later. It was similar to HR2380 but provided many exceptions and immunities from prosecution. The legislation grew from a few pages to over 30 and aimed to make it illegal for any gambling that took place between any 2 computers, whether it used the internet or not. At the same time it gave immunity to any ISPs from prosecution if their company hosted online gambling. Many in Congress deemed the bill far too confusing and the immunities made it virtually meaningless. Consequently it failed in Congress by almost a 2/3 margin and not surprisingly far more Democrats voted against the bill than Republicans.

2000: The Internet Gambling Funding Prohibition Act:
Realizing that even if Kyl or Goodlatte were  successful at passing a law that made it illegal to run an online gambling site, the government probably couldn’t enforce it since the vast majority of gambling operators were located in other countries where the activity was deemed legal by their government. This was obvious with the United States' failed attempt to bring some gambling operators to justice in the America despite issuing warrants against them. Those operators continued to live happily in countries like Antigua and Costa Rica. Consequently,  Republican Congressman Jim Leach introduced HR4419, The Internet Gambling Funding Prohibition Act, which was aimed at making it illegal for any gambling companies to use U.S. banks to fund gambling accounts. It also made it clear to banks that gambling transactions for the purpose of internet gambling were illegal. The intention was simple – cut off the ability to fund accounts and the industry dies. The bill also made the collection of internet gambling debts unenforceable. The bill was backed by Robert Goodlatte as well and while it was voted on several times under different forms it never really got off the ground. It was, however, instrumental in MasterCard’s decision the following year to ban deposits for online gambling.

2006: The Unlawful Gambling Enforcement Act
After numerous failed attempts to get the previous bills passed Jim Leach reintroduced his bill along with Goodlatte’s bill in a different format as H.R. 4411, The Internet Gambling Prohibition and Enforcement Act. The bill was similar to the previous bills but provided a carve out for horse racing. Its main purpose was to expand the wire act to all forms of electronic betting, make payments for online gambling illegal and “encouraged foreign cooperation.” No doubt that last part was in relation to the United States’ WTO fight with Antigua. The bill passed the House easily but not the Senate. It also clearly had no chance of passing before the end of the 2006 session but President Bush along with Kyl, Goodlatte and Leach wanted it passed before the midterm elections. So Republican Congressman Bill Frist, many say on the advice of President Bush, attached HR 4411 under the name “The Unlawful Gambling Enforcement Act” to the Safe Port Act, an anti-terrorism bill, which had nothing to do with gambling and was already guaranteed passage. By doing so the bill passed without debate and was enacted before the end of George W. Bush’s second term in office. Not surprisingly gambling proponents, mostly Democrats, felt violated and Democratic Congressman Barney Frank was outspoken calling it “the stupidest law ever passed”.

2007: The Skill Game Protection Act
Frustrated that the UIGEA encompassed all forms of gambling, Democratic Representative Robert Wexler introduced HR2610, the Skill Game Protection Act, which was designed to give an exemption to all forms of gambling that involve skill including poker, mahjongg, backgammon, bridge, chess or any other game that is deemed to involve mostly skill. The logic behind the bill was that in skill games players are betting against each other and not against the site hosting the games. Consequently, he suggested those games were legal under U.S. law which does not prohibit people wagering against each other. Moreover, Wexler argued that the U.S. encourages people to benefit from their skill set. The bill received support from numerous Democrats and only a few Republicans but never made it to a vote before Wexler resigned.

Read the second part of this sereis on the most recent bills and laws affecting Internet gambling here.