Harry Reid issues statement on legalization of Internet poker

By Karoun Demirjian

Thursday, Dec. 9, 2010 | 5:36 p.m.

After 24 hours of swirling speculation as to whether a bid to legalize online poker has any prayer of passing during the lame-duck session, Senate Majority Leader Harry Reid is finally issuing his first lengthy statement on the proposal.

“The online poker bill I am working on is good for the country and for Nevada,” Reid said in a statement late Thursday. “Internet poker is played by millions of Americans every day in an essentially unregulated environment, meaning no protections for minors, no respect for state law, no assurance that games are fair and honest, and no one to turn to if you’re defrauded.”

True. And online poker likely would generate huge revenues for the federal government and states that license companies to operate approved gaming sites. The industry is now valued at about $25 billion and is only expected to grow if made legal.

But while Reid said his bill is a chance to "get our collective heads out of the sand," he didn’t indicate whether he thought that actually stood a chance of happening during the lame-duck session.

Most of the casinos in Nevada — which as an industry were one of Reid's biggest financial backers during his 2010 re-election — have been pushing for a legalization of online gaming.

But come Jan. 1, they’re pretty convinced it doesn’t stand a chance.

The GOP has been largely against the notion of legalizing any form of online gambling. It was the last GOP Congress that passed the Unlawful Internet Gaming Enforcement Act, which made it roundly illegal to process financial transactions for gambling on the Internet.

This month, top GOP Republicans in the House committees of jurisdiction — Spencer Bachus of Financial Services, Lamar Smith of Judiciary and Dave Camp of Ways and Means — have been pressuring Reid and Minority Leader Mitch McConnell to drop the bill.

Right now, it’s just a letter. But in a few weeks, they become the majority in the House.

Given the urgency of the situation, it seemed the best possible mechanism to carry the measure would be the tax bill currently being negotiated by lawmakers from both houses of Congress. But while Reid remains in charge of the Senate procedure, he doesn’t seem to be the final word on the tax bill, which right now is taking the form of a framework unveiled by the president earlier this week.

Jon Kyl, the Senate’s minority whip and the GOP’s pick to represent the Senate in negotiations with the White House, has said there is “zero chance” of a gambling bill passing under the tax bill.

Despite winnowing chances -- “pretty slim” if this trickles into next year, as John Ensign put it — there are those in the gaming industry who continue to push to see more done.

“We remain hopeful that Congress will address the issue,” Boyd Gaming spokesman David Strow said, adding that while the company supports regulating all forms of Internet gambling, “poker would be a very positive first step.”

But Reid hasn’t been willing to push for anything more than a legalization of poker.

“I still have serious concerns about legalizing the broad range of casino-type gambling through the Internet,” he said.

His bill, as detailed in a summary Reid’s office released along with his statement, would strengthen the general ban against online gambling except for Internet poker, and force sites servicing U.S.-based customers to shut down within 30 days of the bill’s passage or forever be blacklisted from licensing. That blacklist would be registered with the Department of the Treasury.

Those applying for licenses would be vetted, with initial preference going to states and native American tribes “with an established track record of providing a well-regulated gaming market.” The first licenses would be issued 15 months from the date of passage.

The bill also would require operators to establish consumer protections against fraud and money-laundering, and underage and compulsive gambling.

But will it ever come to the floor — or does it have the votes? Reid’s still not saying.