Americans will soon be placing bets on U.S. gambling websites from the comfort of their living rooms, and Congress may have a hand in determining the winners and losers.
The Department of Justice ruled last December that the 1961 Wire Act bans only sports betting, not other forms of online wagering, reversing its position of many years. That cleared the way for cash-strapped states to explore offering online gambling to their residents.
The DOJ’s decision “has, in effect, opened up what I think could be the largest expansion of legal gambling in this nation’s history,” said Frank Fahrenkopf, president and CEO of the American Gaming Association, a trade group representing the casino industry.
Nevada is expected to start offering online poker to residents by early next year. Delaware plans on going further by also offering online casino-style table games and slots to residents. New Jersey’s legislature is also poised to act in the coming weeks, and more states could soon follow.
But the states are setting up a patchwork of rules, none of which allows playing across state lines, increasing pressure for federal action and legislation. Fahrenkopf, for one, is skeptical that states will be able to effectively regulate online gambling.
“There’s a big difference between regulating a lottery and regulating online gaming,” he said. “We need someone up to the job.”
Advocates of online poker, which the Justice Department moved aggressively to shut down in April 2011, tend to agree.
“Online poker is on track toward regulation in the U.S., whether it’s done on the federal level or through the states,” said John Pappas, executive director of the Poker Players Alliance, which represents more than 1 million online poker players.
“If states do this on a state-by-state basis, we’re going to move toward the balkanization of Internet poker, with 50 states having 50 different rules and regulations,” Pappas said. “That’s why we prefer the federal bill.”
Both the brick-and-mortar casino industry — which could perceive a threat from a sweeping expansion of its trade on the Web — and poker aficionados have thrown their support behind narrow legislation that would legalize just online poker while banning all other forms of Internet gambling.
Majority Leader Harry Reid, D-Nev., and Minority Whip Jon Kyl, R-Ariz., are working on such legislation in the Senate, and Rep. Joe L. Barton, R-Texas, backs that approach in the House.
The Poker Players Alliance and the American Gaming Association support the federal regulation of poker, in part, because poker is played against other players rather than against the casino, or “house,” necessitating a critical mass of players. If the websites are regulated by the states, then only residents of a particular state would be allowed to play against each other. Pappas said states such as Nevada could sustain an online poker industry, but he doubts that Delaware would be able to do the same.