The Graham and Chaffetz Online Gambling Bills are Hypocritical, Ill Advised and Undemocratic



A movement to ban online gambling with recent bills in Congress is a misguided and illogical effort driven essentially by one man on a crusade.

According to Forbes magazine, Sheldon Adelson is the 8th wealthiest man in the world with a net worth over $38 billion. Needless to say one doesn't get that rich by giving up or even compromising. So when Sheldon Adelson was losing in his quest to stop online gambling he did what any responsible businessman would do - he took out his wallet, gathered up politicians with influence and announced that he will do whatever it takes to get his way.

For those unfamiliar with the situation, when the UIGEA was passed in 2006, it allowed states to run intrastate online gambling. Most states, however, decided to stay on the sidelines since there was still some confusion regarding the Wire Act and whether that superseded any other laws on the books, but that was clarified in 2011 when the DoJ stated its opinion that the Wire Act only applied to sports betting, opening the doors to all non-sports internet wagering. A Morgan Stanley report predicted that by 2020 online gambling would net about $9.3 billion which is equivalent to what land based casinos in New Jersey and Las Vegas take in as a whole and that convinced some states and casino companies to embrace the technology as a new revenue source. MGM, Caesars and some smaller casino companies began figuring out ways to get into the online market and within 2 years of the DoJ decision Nevada, New Jersey and Delaware passed laws legalizing internet wagering and as many as 20 other states are prepared to follow suit. Caesars' WSOP.com websites were quick to jump to the top in both Nevada and new Jersey after launching their websites. Two companies that never made a move online were the Las Vegas Sands and Wynn. By all accounts the Las Vegas Sands investigated online gambling after the UIGEA was passed and began to move towards introducing online gambling sites but realizing they would be a small fish in a big pond and their revenues from online gambling would be minute, they back away. Now it appears Sheldon Adelson developed a new philosophy in life that online gambling was wrong and must be stopped for moral reasons. He did acknowledge as well that he believed online gambling would eat away at the land based business profits, but that was a minor concern; to him it was all about protecting the children.  Adelson had very little support from other casino companies until late last year when Steve Wynn announced he was joining sides with Adelson. It should be noted that Wynn actually had an agreement in place with PokerStars to set up online poker in Nevada (which by name only would have given them a huge edge in the online poker space) but Wynn had to cancel that agreement after Black Friday and since Wynn was unable to find a comparable partner it appears he now too believes online gambling is bad – but only to save the children of course!

With this new found revelation Adelson decided to do what he had to in order to ensure that the Las Vegas Sands casino profits wouldn't be cannibalized in any way, err sorry that little Johnny wouldn't be corrupted into wagering his newspaper money at an online casino. Adelson created a lobby group called the Coalition to Stop Online Gambling, hired on some big names to be its spokespeople and  threw out all the buzzwords in its launch of a six figure campaign to warn of the evils of online gambling: According to the coalition, online gambling would allow for terrorists to launder money in an effort to fund more terrorism in America, (something that could never happen at a land based casino of course); It would permit problem gamblers an easier way to get their fix; It would allow internet hacks to compromise systems and steal players' money; and of course it would allow underage people to play because age verification techniques are inadequate online (unlike land based casinos which guarantee that no underage people ever get in and gamble). Adelson convinced former New York governor George Pataki to get behind his motion along with Arkansas senator Blanche Lincoln and just last week South Carolina senator Lindsey Graham introduced a motion to repeal the DoJ decision and declare all forms of online gambling illegal unless it's affirmed by Congress. And Utah Congressman Jason Chaffetz introduced a companion bill in the house.

Chaffetz was quoted as saying "It should not be a single person in the bowels of the Department of Justice reinterpreting the law and fundamentally changing the landscape," when introducing his bill and Graham was quoted as saying "if you want to have online gambling, then come to the Congress."

The fact that Graham is running for re-election this year, the fact that Adelson gave a donation of almost $16,000 to Graham despite being at odds with him previously and the fact that Adelson has thrown more money than God at Republicans at election time, of course is just coincidental that Graham and Chaffetz introduced the bills now.

Regardless of the real motivation for the politicians to introduce these bills what is most frustrating is the notion that internet gambling is somehow more sinister than land based casinos. I have yet to walk into a casino in Las Vegas that doesn't have prostitutes sitting at the tables clearly looking for high rolling winners looking for a good time, cigarette smoke that could choke a horse or clearly addicted gamblers playing 5 slot machines at a time for max stakes and not even looking at the outcome of the spins before shoving another $20 bill into the next machine. And of course fake ID is much easier to obtain than it is for a 16 year old to get a credit card validated online for casino play. The whole notion that the internet is "the devil's technology" when it comes to gambling is laughable and absurd. If Adelson was a religious figure or a Gambler's Anonymous spokesperson that really hated gambling I would have no objections with his actions. But Adelson is a multi-billionaire thanks to gambling and Adelson certainly didn't care that other states prohibited online gambling for moral reasons when Nevada allowed it. So to use the morals clause as justification for opposing online gambling is just infuriating. In effect it's no different than when the USTR attempted to get out of its obligations to offer online gambling at WTO by stating it was morally opposed to gambling, when in fact the U.S. has the most legal gambling of any country in the world.

What also makes these new bills maddening is that these same Senators and Congressmen will cry out for state's rights when they believe federal legislation will hurt their cause but will also suggest that the states have no business introducing their own legislation for issues like this. And throughout the last century decisions relating to gambling have always been a state's decision. As an example of the hypocrisy consider this quote by Chaffetz in 2008 when legislation for education was being considered in Congress:

"I believe many programs currently run by the federal government--such as the Department of Education--should be left to state and local governments. I will seek to restrict the role of the federal government."

So education should be left to the states but gambling should be decided by the feds? How odd.

But all pro-online gambling legislation that was ever introduced was designed to satisfy both the federal government and the states. The UIGEA never tried to force states to introduce online gambling and other federal bills, like the one introduced by Joe Barton, have state's rights at the top of the list. Barton makes it clear that all states can opt out and if they do so geo-locating software will have to be used to ensure residents of those states cannot play at a neighboring state's casino.  So Utah can make it clear that they will have no part in any form of online gambling and it will be forever illegal to gamble in Utah in any form. Thus John, his four wives and children never have to worry about being corrupted by online gambling as long as they reside in Utah. The same holds true for Hawaii and Alaska, unless they decide as a state to change their laws.

Most important of all, this attempt to change the DoJ's opinion to satisfy one old, disgruntled man is undemocratic. In the United States the people elect politicians to represent their rights and objectives and in America the majority rules. The majority of New Jersey residents voted to legalize online gambling in their state; the majority of Nevada residents indicated they want online gambling in their state; and whether Adelson likes it or not the majority of people voted in Barack Obama and the Democrats the last two elections and that Democrat regime stated through its justice department that the Wire Act only applies to sports betting and other forms of online gambling are legal. There were many times that Democrats in Congress and many Americans were upset with decisions made by departments of the Bush administration but at no time were those decisions overturned because the opposition didn't like them. It would have been pointless. The Republicans were in power and they made those types of decisions.

So it's time for Adelson to take his ball and leave. It's not a fight worth waging and if he had any foresight Adelson would realize that the Las Vegas Sands could probably make money in the long run if it embraced online gambling. And if the Venetian's revenues do decline a bit because of online gambling it's safe to say that Adelson won't have to hold a garage sale to get money to eat. It's too bad that the same can't be said for citizens in some states who rely on government assistance to survive and that government assistance is derived from tax dollars made from activities like gambling.

Contact Hartley via email at hartley[at]osga[dot]com.

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