Lawmakers in D.C. clash over bill that would ban N.J. online gambling



The future of federal legislation that would ban online gambling in New Jersey and the two other states that allow it may depend on whether proponents can assure lawmakers that technology can keep out-of-state bettors and children away from the virtual casinos.

The future of federal legislation that would ban online gambling in New Jersey and the two other states that allow it may depend on whether proponents can assure lawmakers that technology can keep out-of-state bettors and children away from the virtual casinos.

That was a concern of legislators and witnesses at a House Judiciary subcommittee hearing today on a bill to reverse a 2011 Justice Department ruling that gave states the right to offer Internet gambling to their residents. Online gambling is allowed in New Jersey, Nevada and Delaware.

The legislation was introduced by U.S. Rep. Jason Chaffetz (R-Utah), who presided over today's hearing. U.S. Sen. Lindsey Graham (R-S.C.) will sponsor the bill in his chamber, spokesman Kevin Bishop said.

Chaffetz said a change of this magnitude "should be done through the regular congressional process," he said.

While expressing concerns that online gambling sites could be used to launder money, House Judiciary Committee Chairman Bob Goodlatte (R-Va.) also said he wanted to prevent residents of states that didn't want online gambling from accessing these sites.

"How would a state-by-state regulatory approach to Internet gambling affect the citizens of states who do not want legalized gambling within their borders?" Goodlatte said. "In other words, how would you ensure that online gambling, if legal in one state, wouldn't bleed over into a neighboring state where it is not legal, particularly since the Internet doesn't stop at state borders?"

And Rep. Sheila Jackson-Lee (D-Texas) said many Americans have smartphones and computers and "each of these Internet-connected devices is a potential slot machine or roulette wheel."

Addressing such concerns in advance of the hearing, Marco Ceccarelli, senior vice president at Caesars Interactive, one of the companies operating in New Jersey, used a map of the Garden State as a backdrop as he demonstrated the technology designed to prevent out-of-state or underage customers from gambling online. Players must go through as many as eight different verifications, including providing their Social Security numbers, before they can start betting, he said.

Parry Aftab of Wyckoff, executive director of Wired Safety, said that the fears of underage or out-of-state betting are unfounded in the three states with online gambling.

"That is not happening in New Jersey, Delaware or Nevada,'' said Aftab, whose group deals with cybersafety issues. "It is happening with many of the offshore gambling sites that are not covered by our laws."

And the top Democrat on the Judiciary Committee, John Conyers of Michigan, said he opposed the bill.

"We cannot ban our way out of this problem," he said. "The better option is to allow states to permit online gaming as they see fit, subject to regulation and monitoring."

Lawmakers also heard from John Warren Kindt, a professor at the University of Illinois law school, who said that it was impossible to regulate online gambling. "We need to keep the Internet gambling genie in the bottle," Kindt said.

Kindt's concerns were echoed by another witness, Michael Fagan, a professor at the Washington University law school.

"There is no way that the federal government, or any individual or combination of state governments, can expand to the degree necessary to effectively police and regulate the likely scale of legalized Internet casino, poker, and/or sportsbook gambling," he said.

A leading supporter of the bill is casino billionaire Sheldon Adelson, chairman and chief executive officer of Las Vegas Sands and a top Republican donor. Adelson and his wife gave $93 million to Republican-leaning outside groups in 2012, more than any other donor. He called online gambling "a societal train wreck waiting to happen" in Forbes magazine in 2013 and said it wouldn't hurt his business but could force other casinos to close.

Adelson was the biggest donor to the Republican Governors Association when Gov. Chris Christie was its chairman, giving $3.5 million. The energy company Koch Industries and executive vice president David Koch also gave $3.5 million between them.

He and wife Miriam helped former House Speaker Newt Gingrich (R-Ga.) stay in the 2012 Republican presidential race by donating millions to an aligned super-political action committee. He has yet to decide on a favorite for 2016, but his efforts to stop online gambling have drawn the support of several Republican hopefuls, including Graham, former Texas Gov. Rick Perry and Louisiana Gov. Bobby Jindal, according to a list read by Chaffetz at the hearing.

Opponents have suggested that the bill is a thank you to Adelson for his support of Republicans. John Pappas, executive director of the Poker Players Association, called it "a love letter" to the casino magnate.

Chaffetz dismissed those allegations.

"It's a pretty shallow argument," Chaffetz said in an interview during a break in the hearing. "If they're not willing to argue on the merits, they're not going to win."

Christie, a potential 2016 GOP presidential candidate, approved online gambling in New Jersey, saying it would help struggling Atlantic City casinos.

The fight over the legislation divided the gambling industry, with Adelson's Las Vegas Sands supporting the measure and Boyd Gaming, MGM and Caesars Entertainment, all of which offer online gambling in New Jersey, among the companies that oppose it.

Each side has built a coalition of supporters to back their point of view. Adelson is backing the Coalition to Stop Internet Gambling, led by former New York Gov. George Pataki and former U.S. Sen. Blanche Lincoln (D-Ark.). Caesars is part of the Coalition for Consumer and Online Protection along with MGM, Boyd, Golden Nugget and Tropicana. Its leaders include former Reps. Mike Oxley (R-Ohio) and Mary Bono (R-Calif.).

This is a reprint from nj.com. to view the original, click here.


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