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The Republicans are not to blame for anti-gambling laws and sentiment in the United States




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Though many in the gambling industry aren't in favor of Republican Supreme Court nominee Brett Cavanaugh, Democratic judges and lawmakers have been complicit for enacting and upholding gambling prohibitions in the U.S.

Democratic judges and lawmakers have been complicit for enacting and upholding gambling prohibitions

When Anthony Kennedy announced he was resigning as a Supreme Court judge, a couple of friends in the gambling industry said to me that a very right wing conservative choice by Trump would kill any chance at further gambling expansion stateside. In fact, they were convinced that a far-right wing judge may actually turn back the clock by working with other conservatives on the bench to push for cases that would bring back gambling prohibitions. While Anthony Kennedy was still a Republican, he was deemed different, since he was a moderate and voted his conscience. My initial reaction was that they were probably right and I started an article to suggest why Brett Cavanaugh was going to be a disaster for gambling interests in the U.S. But, as I started looking back at the history of gambling laws and at recent decisions, I came to realize that gambling opposition is not a partisan issue and in fact the Democrats and left-wing judges are almost certainly the reason why gambling expansion has been held back in the U.S. 

A Little Gambling History

The first laws to try and prevent gambling in the United States following World War II were in the late 1950s. Attorney General Robert Kennedy a Democrat, was looking for a means to try and stop illegal bookmaking in the United States, since he concluded that the main source of funds for the mob was through illegal gambling (particularly horse racing). He therefore introduced a series of eight bills, including the Wire Act, which was designed to give the police a means and reason to arrest illegal bookmakers. The logic behind the bills was that whenever someone was caught processing a bet by telephone or telegraph, the police could arrest them for a federal crime. Ironically, the UK was having the same problem with mobsters and illegal bookmakers and they decided the best solution was to simply legalize the activity and allow honest businessmen to process bets, thereby forcing out illegal bookmakers. It would also provide the country a needed source of taxes. So, the UK passed the 1960 Gambling Act. According to sources familiar with that period in history, this decision by Britain was deemed as a disaster for the United States as they wanted nothing to do with legalizing betting. So, Kennedy asked Congress to expedite the bills and considering 60% of the House at the time was Democrat and 63% of the Senate was Democrat it was simply a matter of writing something and getting President John F. Kennedy to rubber stamp it. The law, like others to follow in later years was deemed to be fraught with inconsistencies and confusing language, but apparently the only opposition to the bills were by a few Republicans in Congress at the time.

The next major law related to sports betting occurred in 1992 with the Professional and Amateur Sports Protection Act (PASPA). Many assign blame for this law to the Republicans since it was signed into law by George H. Bush, but the bill was actually introduced by Democrat Senator Bill Bradley, who was a former NBA player and had deep ties to NBA commissioner David Stern. Stern deemed the law necessary to curtail game fixing.  It was ratified because the Democrats dominated the Senate and the House. The 102nd United States Congress saw over 62% of the House controlled by the Democrats and 58% of the Senate controlled by the Democrats. Consequently, PASPA passed easily despite stated concerns by the Republican DOJ at the time, who issued an opinion that PASPA was unconstitutional. As we’ll see later they were right.

Democrats and gambling

Fast Forward to 1997

With the Internet now becoming a meaningful form of communication, one of the first types of industries that took off was online gambling and sports betting in particular. Companies set up shop offshore in countries like Antigua and Costa Rica and catered their products worldwide, including to Americans. Republican Senator John Kyl deemed this to be a threat to the values of Americans and said it could financially ruin families. He therefore introduced the Internet Gambling Prohibition Act, the purpose of which was to make it a crime to place or take a bet on the Internet and was punishable by jail time. Kyl famously over dramatized the danger with his famous comment that children would steal their parents credit cards and then “click the mouse, lose the house.” Kyl was indeed a right-wing zealot who along with some other Republicans set out an American Values agenda aimed at prohibiting gay marriage, stem cell research and other issues they deemed were harmful to the American family. However, while Kyl and his other cohorts like Robert Goodlatte and Jim Leach were declaring that they knew what was best for Americans, the Democrats were no better.

The first set of arrests for offshore gambling operators was issued by Janet Reno, the Democrat Attorney General under Bill Clinton, who said “you can’t hide online and you can’t hide offshore.” She issued warrants for the arrests of people like Jay Cohen, Steve Budin and Bill Scott who were arguably operating legally in jurisdictions that permitted Internet gambling. And while Kyl was the impetus for the Internet Gambling Prohibition Act, there were many Democrats who sided with him. The official stance of the Bill Clinton government was that they could not sponsor the bill because it prohibited online betting for horse racing and jai alai, which the DoJ under Bill Clinton believed was legal. They, however, issued statements that they agreed with Kyl that online sports betting and online casino gambling was illegal and needed to be curtailed.

One of the defendants that chose to fight the charges was Jay Cohen from World Sports Exchange. His attorneys argued that Cohen did not operate illegally because he had safe harbor in Antigua, residing and operating in a country outside the United States where his activity was legal. Cohen lost the case in the 2nd Circuit Court of appeals after Judge Pierre Leval, a Democrat judge appointed by Bill Clinton, said that Cohen’s argument was not relevant and told the jurors effectively to ignore his defense. Cohen was found guilty and sentenced to four years in prison. Some jurors even said after the trial that they wanted to acquit Cohen, but the judge (who again was Democrat) made it impossible to do so with his instruction.

The next main law that was aimed at curtailing betting was the UIGEA in 2006. The Unlawful Internet Gaming Enforcement Act was actually a watered down version of John Kyl’s original bill and it only passed after it was attached to the Safe Port Act, which was a guaranteed-to-pass piece of legislation. The Republicans have been blamed for this law and rightly so, since it was a last ditch effort to stop online gambling and it never passed any prior votes. But the law provided exemptions for fantasy sports, horse racing and lotteries, which is what the Democrats under Bill Clinton wanted all along. The only real opposition to the law after it was passed was by Democrat congressman Barney Frank who called it the stupidest law ever passed and by the banks who were left to do the government’s dirty work, when the Attorney General at the time failed to give them specific directions in determining what constituted a legal transaction and what didn’t. Most banks simply chose to block all online gambling transactions. The UIEGA killed offshore gambling as a result and many companies left the U.S. market such as The Greek and Pinnacle, while other public companies sold their business to competitors, such as WWTS. But make no mistake, with the changes in the UIGEA from the Gambling Prohibition Act, it is likely most Democrats in Congress would have supported it anyways. There certainly was no outcry by Democrats complaining they’d been duped. Republican Congressman Jim Leach felt the wrath of poker players after the passage of the UIGEA when he lost the 2008 midterm elections thanks to a push by the Poker Player’s Alliance to have him ousted. In regards to poker, most of the motions introduced to exclude the game from the UIGEA after its passage were introduced by Republicans, including Peter Sessions and eventually even John Kyl. The UIGEA rules opened the door for the introduction of Daily Fantasy Sports and the only prosecutions ever laid against DraftKings and FanDuel were by attorney generals in Democratic controlled states.

"While online gambling moved forward, New Jersey’s attempts to introduce sports betting were quashed."

The first big push for changes sports betting laws occurred in 2011, when two out of every three New Jersey residents voted to ignore PASPA and legalize sports betting at racetracks and casinos to help drive traffic to those venues. The suggestion for the referendum was by Republican governor Chris Christie and he urged citizens to vote yes. At approximately the same time the DoJ under Barack Obama gave an opinion that the Wire Act only applied to sports betting, which opened up the door to online gambling. Almost immediately New Jersey and Nevada started offering online casino games and poker, realizing they could no longer be accused of violating the Wire Act. However, while online gambling moved forward, New Jersey’s attempts to introduce sports betting were quashed in the Circuit courts when judges there claimed the states didn’t have the right to enact their own gambling laws. The prosecution that wanted to prevent sports betting consisted of the sports leagues and the U.S. government which was Democrat. The judges that presided at the circuit courts which twice ruled against New Jersey were Democrats.

Things finally changed for sports betting when the U.S. Supreme Court asked to hear the New Jersey sports betting case. SCOTUS previously refused to hear the case but agreed to hear arguments after Neal Gorsuch was sworn in as the last Supreme Court justice, when the House successfully blocked Barack Obama’s choice of Merrick Garland to succeed Antonin Scalia after his sudden death. This seemed to indicate that the Republican judges were more supportive of overturning PASPA than the Democrat judges and this proved true after SCOTUS overturned PASPA by a 6-3 margin with the three dissenting votes being Ruth Bader Ginsburg, Sonia Sotamayer and Stephen Breyer, all Democrats. Only Elena Kagan voted with the majority although she almost certainly would have voted with the other Democrats and shot down New Jersey had Merrick been on the bench instead of Gorsuch.

All of this is not meant to suggest that Republicans are the heroes that allowed gambling expansion and saner gambling laws. Indeed, most Republicans in Congress are Bible thumpers that fight any activities they deem oppose “family values”. But the facts are there, and the majority of laws to hold back gambling in the United States were introduced and passed by Democrats and the majority of arrests against gambling operators both onshore and offshore were conducted by Democrats. Other than David Carruthers (BETonSPORTS), it’s hard to remember any gambling operators that were charged under any Republican government and he was only charged because he effectively dared the government to arrest him. And the latest Supreme Court decision to allow sports betting was solely thanks to the Republicans on the bench. So, I have to vehemently disagree with my colleagues that Trump’s pick of Brett Cavanaugh will be bad for gambling interests! Because the facts say otherwise. Certainly, it could prove devastating for other social and human rights issues like abortion and same sex marriage, but the crusade against gambling expansion in the United States can not be laid at the feet of right-wing conservatives or the Republican Party.

Read insights from Hartley Henderson every week here at OSGA and check out Hartley's RUMOR MILL!