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US States May Force Federal Online Gambling Legalization

By: Joe Valentino, Monday March 11th 2013
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Quite a few US States are pushing hard for legal and regulated intrastate online gambling. Nevada has already legalized online poker, while New Jersey and Delaware have legalized a wider range of online gambling verticals. Illinois, California and Pennsylvania have made some headway. However, Iowa and Hawaii have tried to legalize online gambling but have failed. Perhaps motivated by the states scenario, Nevada Senator Harry Reid is said to be contemplating his third attempt at federal legalization. He has two failed attempts on his scorecard. One of them involved Republican political veteran Jon Kyl that last year sought to legalize online poker but specifically outlaw other forms of online gambling. The Reid-Kyl bill was opposed by many legislators, state governors, state lottery directors and others because it was seen as unfairly favoring Nevada by giving it too much regulatory clout and a cut of the fees.

Reports from the Reuters news agency indicate that said Senator Reid seems to be working behind the scenes to form a bi-partisan coalition in support of a federal solution and some consensus is emerging. Representative Joe Barton of Texas, who also dabbled in a failed federal online poker legalization initiative last year, supports Reid’s intent. He told Reuters that the moves by the states are provoking the federal legislators to act. Barton said, “Whether you’re for or against Internet gambling, you don’t want 50 sets of state laws. You want uniformity.” There seems to be a split between the federal and the state legislation supporters. While the supporters of a federal solution cite regulatory harmony as a major advantage, the second group claims that it is the right of states to decide on gambling law within their borders or by interstate compacts. According to them federal intervention will siphon off prospective revenues. Nevada Senator Dean Heller reaffirmed his support to Harry Reid. Heller was involved with the Reid-Kyl initiative. His spokesperson said that Senator Heller believed federal legislation for online gambling was crucial, and would continue to work with like-minded colleagues for a federal law.

Reuters cited American Gaming Association statistics that about 85 countries already have legalized online gambling and the online gambling market is worth an estimated $35 billion annually. This includes online gambling conducted illegally by millions of people in the United States amounting to $4 billion in 2011. The AGA estimates that the USA market will reach $10 billion a year by 2017. Gambling operators like Caesars Entertainment have always preferred a federal solution. But looking at the current scenario, Caesars’ spokesman, Seth Palansky, said, “We will be prepared with our offerings for Nevada and hopefully New Jersey. But there is still time for Congress to step in and provide a federal solution.”

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