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July 28, 2015

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Nevada politicians key to U.S. push for Internet gaming

Harry Reid

Harry Reid

John Ensign

John Ensign

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Silver Staters watched helplessly last December as legislation to legalize Internet poker, billed as a job-maker and a cash cow for casinos and communities nationwide, suffered a defeat in what some called its last stand.

But lobbyists aren’t ready to call their bets and cut their losses.

In fact, they’re quietly gearing up to push for a federal overhaul of the online gaming industry, and they’re banking on new momentum from two sources — proactive states and Republican legislators — to get it done.

“The industry feels that in the next 18 months, they’ll be able to bring this issue up again,” said Peter Ernaut, president of R&R Partners, which lobbies for the casino industry.

Local Internet poker legislation is on the agenda in several states, including Nevada, and was just approved in the District of Columbia, making the nation’s capital the first local jurisdiction to test online gaming.

There’s a sense that these intrastate endeavors are baby steps toward a national resolution on Internet poker.

“It’s a federal issue,” Gov. Brian Sandoval said this week, explaining why he didn’t support the Legislature moving forward on the Nevada bill. However, he did not say he would veto a bill if it passed. At the federal level, online poker is in the hands of Senate Majority Leader Harry Reid.

“Sandoval is right, it’s not something that can be done on a state level,” Reid said this week.

“We’re trying to work through it now ... we have new people supporting us who weren’t there before,” he said, listing Michael Gaughan and Wynn Resorts CEO Steve Wynn as new backers of legalizing online poker, and adding that Las Vegas Sands CEO Sheldon Adelson has said he wouldn’t block it.

“I would hope with this added help that we could get it done,” Reid said.

But the legislation rises and falls with the political fate of Reid — a recent but passionate Internet poker convert — and his remaining Senate majority leadership beyond 2012, which depends on Democrats keeping in their column at least 20 of the 23 Senate seats that are up that year.

The gaming lobby has put considerable faith in Reid to spearhead their cause, measurable in the dollars they threw behind his 2010 midterm contest against Sharron Angle. The casino industry donated almost $1 million to Reid’s campaign committees and PACs over the last congressional cycle, according to a breakdown by campaign finance watchdog site OpenSecrets.org.

But they didn’t leave other Nevadans out.

They ranked the No. 1 donor industry for Republican Sen. John Ensign in 2010.

The money kept coming long after Ensign’s political profile crumbled in the wake of an affair scandal, the fallout of which eventually led him to decide against running for his Senate seat in 2012.

Just because he won’t be needing that money to campaign, doesn’t mean gambling advocates aren’t expecting a return on their investment.

“There were serious overtures made,” said John Pappas, executive director of the Poker Players Alliance, which lobbies on behalf of gamers.

Last year, Ensign tried to help pressure Republican leaders such as Mitch McConnell to bend on the issue.

Ensign says he plans to keep working his side, acknowledging the chief challenge is getting fellow Republicans onboard.

“I think the odds are against it, but that doesn’t mean we’re not going to try,” Ensign said. “This is one of those things that’s going to take both sides.”

But the hurdle is higher now that Republicans hold the House majority, and the three committee chiefs with jurisdiction over a change in the law — Ways and Means, Financial Services and Judiciary — are adamantly opposed to Internet gaming. But sources in the gaming lobbying industry say their focus is on head Republican honchos in the House, who they think are susceptible to strategic pressure.

How? Well, Nevada has one inroad to House Speaker John Boehner, R-Ohio, in Rep. Dean Heller, R-Nev., for whom the casino industry is his No. 2 corporate donor, for about $160,000 last election cycle. Heller could gain a lot from bringing the casinos a big win: He is running for the Senate in 2012, and has to raise his profile in Southern Nevada, where casinos are a backbone of the economy.

Heller and his office did not respond to repeated requests for an interview for this article.

But the gaming industry isn’t all that concerned with him — they’re putting their stock elsewhere.

“I think there’s room to have a lot of buy-in from rank-and-file members,” Pappas said. “Particularly in the freshman class,” which is sympathetic to the Tea Party movement.

“We’ve been meeting with every freshman member on this issue, and we’re very encouraged,” Pappas said. “The attitude of this class is about less government and getting government out of the personal lives of Americans ... and really, to its core, our issue is about providing freedom to adults to play poker in a safe and regulated marketplace.

“They’re also very concerned about jobs and economic growth. And what we’re proposing would create jobs and economic growth,” he said.

Although the Tea Party platform includes social conservatism, its driving philosophy is fiscal conservatism.

It’s not like the Tea Party is clamoring for a gaming bill. But all the pro-Internet poker lobbyists need is votes.

“As more and more states legalize poker, the federal government is going to have to step in in order to avoid chaos,” said Nevada Rep. Shelley Berkley, who represents the district that covers Las Vegas and the highest concentration of casinos in the country. She’s been an especially staunch advocate of legalized Internet gaming as the basis for a new homegrown tech industry to support online poker’s expansion.

Click to enlarge photo

A woman who wants to remain anonymous plays poker online.

Nevada and California are weighing the idea of legalizing state-based industries. It has also been floated in Iowa, and vetoed out of consideration in New Jersey this year.

Last week, the nation’s capital became the first to approve a local, legal online gaming industry. It is expected to be marketed chiefly to tourists through the area’s many hotels.

“There is very effective software available which will manage to ensure that only people within a certain geographic location will be able to get access to the sites,” said David Stewart, a gambling expert and lawyer with D.C. firm Ropes & Gray who advises the American Gaming Association, the industry’s chief lobbying outfit.

Still, “there’s a lot of concern with liquidity,” Stewart said. “When you sign on the site at 2 a.m., are there enough people playing at your level that you can get the kind of game you want?”

That’s definitely a concern for a first experiment with Internet poker in D.C., where the population numbers only 600,000, and gambling isn’t an integral part of the culture.

It’s even a concern in Nevada, where gamblers form a higher-than-average percentage of the population than most other states, but where the pool of potential gamers is still relatively low, at 2.7 million.

The offshore Internet poker-playing audience is estimated to be about 15 million.

“The reality is that at some point, the federal government is going to have to address this issue,” Pappas said. “We can’t have a patchwork of state-by-state laws when it comes to this industry, from a business perspective, or from a state government and management perspective.”

That’s where lawmakers say state efforts — through legalization in Washington, and possibly California and Nevada, could help their federal push.

“If you show there’s some real revenue for the federal government in it,” Ensign said, “that might change things.”

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