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April 23, 2014

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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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  1. And when you win big on the screen but there is NO PAYMENT, where do you go to get paid - the Cayman Islands? Bermuda? Taiwan?

    With Internet gambling, the Wynn Corp can create a large number of subsidiaries that are NOT in Nevada and will never create jobs or tax revenues in Nevada. Taking the operation and money flow OFFSHORE is how corporations shield taxable income because offshore profits are not taxable.

    Another phony line: "it will create jobs" - yes, but just a few and somewhere else. What it is guaranteed to do is eliminate jobs in Nevada because these Internet gamblers will not be flying into Las Vegas. Wynn does know that.

    John Ensign uses his status as Senator to work for Internet Gambling, getting tax reductions for his family or pushing his Religion and Dean Heller is taking notes and Nevada pays the bills. By leaving politics, Ensign can make a lot more money in full time Lobbying.

  2. JOB KILLER FOR NEVADANS!

    Legalizing internet gambling will be the cancer that with hurt land base casinos. We all know it's out there, legalizing it will not tame it!!!

    Finally, our casinos found a way to stop land base casino growth. This is a job killer!!! You doubt it, check back in 10 years, we will see a 30% drop in casino hiring and staffing. I don't want to be right, however, anyone with half a brain, anyone not chasing the dollar for more dollars will know legalizing internet gambling is a Job Killer for Nevadan and other state that offer land base casinos.

    Any Nevada politician that support a internet gambling bill will be doomed, as will the politicial party they represent.

  3. Bring gambling directly into the homes of USA citizens will doom US productivity!!! We do not need Legalized Internet Poker or any form of internet gambling. Too difficult to regulate!

    REPOST:
    Just one point: What will stop 15 year old Jimmy in Kansas from signing-up and logging-on 4:00am on a school day to play poker using Dad's atm, Visa, or Master Card??? Please, don't come up with some diagram showing how one can prevent this from happening---because you can't!!!

    There is no way to identify a person's age on the internet!!! Every hear of Identity Theft??? Just another big problem we cannot control. MGM or anyone else in a legal gambling state should oppose this measure, and oppose any measure that support legalized internet gambling in the USA!

    It's like legalizing Marijuana throughout the USA! This leads to bigger problems. At some point the buck has to stop somewhere. You can't be a little pregnant! Pursuing the dollar at the expense of our children's future would be National suicide, if not global!

    People will spend more time in seclusion, in the room, not interacting with other, in front of the computer screen sweating out a bet! The sure bet is legalizing any form of gambling is bad for the USA and bad for Nevadans. For sure a Job Killer for Nevadans. For Sure!!!

  4. Millions of people withing the United States already play, and bet on on line poker.

    Make it legal, it gets taxed and yes, there will be some jobs. If they do it right they will only let those that have land based casinos have a license to run on line poker sites within the United states. That way they have a great deal to lose if they try to cheat someone on line and not pay them.

    Right now Billions are going out of the country as U.S. Citizens play on line poker. You can let the money keep leaving the country or you can tax it and regulate it here in the U.S. Your choice.

    Anyone that thinks that it not happening now is living in the dark ages. There are many right here in Vegas that play on line poker yet they can play right down the street from their house.

    Many that play on line around the country also now come to Vegas to play live because they got the taste of it on line. You can see that each year when Thousands come to Vegas for the poker tournament.

    Opinions are great but the facts show it is happening already and does increase the number of people that come to play live poker here in town.

  5. The Feds sent a strong message to anyone thinking about making it legal with that bust today.

  6. The religious ayatollahs khamenis of the republican party will never allow the legalization of internet gambling,they believe they have a moral obligation to protect us against SIN.This explains the sodomy laws in various states,if the right wing can control our behavior in our marital bedroom,why in gods name would they give us free choice to play poker on the internet.

  7. Online gambling is a JOB KILLER FOR NEVADAN!!!