Nevada Senator Dean Heller is showing support for a federal law that would ban casino games spread over the Internet, according to a Las Vegas Review-Journal report. Heller has reportedly been discussing a bill with Senate Majority Leader Harry Reid that would carve out online poker while banning house games. The bill would attempt to restore some portions of the Wire Act after the Department of Justice changed its opinion in 2011.
While Heller likely has the best of intentions, there are several flaws with a Nevada senator supporting a bill that carves out online poker and bans other forms of betting over the Internet.
Potential Bill is Terrible for Nevada Industry
Nevada does not offer online casino games. It does, however, regulate mobile and online sports betting. The bill would need a grandfather clause or these forms of gaming might be outlawed. Making the legislation interstate only would also allow Nevada’s online sports betting industry to continue operating.
William Hill is a provider of mobile sports betting in Nevada. It already lost its sports kiosk market when a protectionist law was passed to prevent these devices in restricted gaming locations, a technology acquired during the American Wagering takeover. Taking away mobile betting would be removing the use of other assets obtained through that deal.
A law forbidding online house games would affect at least four Nevada companies that provide online casino content in New Jersey and hope to expand it to other states. Bally Technologies, IGT, SHFL and Ultimate Gaming are all involved in the New Jersey online casino market. Closing that industry could have impacts on these companies’ bottom lines and job growth, something Nevada cannot afford during the slow economic recovery.
Brick and mortar casino companies could also be affected. Boyd Gaming, Caesars Entertainment, Golden Nugget and MGM Resorts all operate online casino products in New Jersey and hope to expand.
Likely Exemptions from Proposed Bill
Horseracing would be unaffected by any change in law due to the Horseracing Act of 1978 and a revision to the statute in 2000. Fantasy sports would probably survive any proposal. Both are given exceptions in the 2006 Unlawful Internet Gambling Enforcement Act. The failed 2012 Reid/Kyl bill allowed online lottery sales, something likely to be included in any future proposal.
Wire Act Misinterpretation
Heller appears to be making the same mistake others have when discussing the Wire Act opinion reversal. The Wire Act never covered intrastate gambling. This is evidenced by Nevada’s online sports betting industry that was live before the opinion changed in 2011.
There is no need to outlaw interstate casino games because these games do not cross state lines or require player liquidity. Most online casino products are player versus house and have no need to network multiple players to the same table. This may be the point though. A ban on interstate online casino games serves no purpose at all, however, it may make anti-gambling groups that are not educated happy to support it and feel like something was accomplished.
Maybe the intent of the bill would be to ban online casino games at the state level. This runs into a multitude of issues.
States’ rights have become a big issue. Even states that have no interest in gambling may not support this bill because it could take their rights away to expand gaming, even if there is no immediate intent to do it.
One example of this is the current legal battle where New Jersey is appealing the Professional and Amateur Sports Protection Act, sometimes referred to as the Bradley Act, to the Supreme Court. This law forbids 46 states from offering sports betting. Four states – Georgia, Kansas, Virginia and West Virginia – filed joint amici curiae briefs supporting New Jersey’s position in the case. These states stressed that they “take no position on the wisdom of the State and federal sports wagering laws at issue in this case”, according to Northjersey.com. Expect this opinion to be reaffirmed if a federal law attempts to dictate state gambling policies.
The National Governors’ Association opposed a similar bill in 2012. It is hard to imagine that position has changed. State lotteries are also likely to oppose any bill of this nature, even if the sale of lottery tickets is exempted.
Potential Bill Probably DOA
It is hard to imagine this bill has any chance of passing. It appears that it would originate from two Nevada senators as a way to prevent the expansion of gambling. That immediately gets it tagged as hypocritical legislation. Reid may be able to get it to the floor of the U.S. Senate, but it would still have trouble passing. Its chance of passage in the Republican controlled House is about zero, where Reid’s name associated with it might make it automatically dismissed. There are also states’ rights issues and the fact many social conservatives will see this as an expansion of gambling since online poker is given an exemption.
Lawmakers in Delaware and New Jersey are not likely to support a bill of this type for two reasons. First, they may lose the ability to offer the casino games if not grandfathered. If existing gaming is exempted, it still prevents the states from profiting off the expansion of gambling by offering their experience and services to other states in the future.
The truth is that any bill sponsored by Nevada politicians that tells other states how to run their gambling businesses while at the same time giving the appearance of legalizing online poker has enough reasons for both sides of the issue to hate it.