Friday, Dec. 3, 2010 | 4:20 p.m.
Senate Majority Leader Harry Reid is pushing behind the scenes for lame-duck legislation that would allow poker games over the Internet but restrict initial licenses to casinos and racetrack operators that have been in businesses at least five years.
Some of the biggest casino operators in Reid's home state of Nevada are eager to get a piece of the online gambling industry, which generates an estimated $5 billion a year for offshore operators.
A congressional aide familiar with the issue said Reid aides were circulating the draft legislation, and a copy of it was obtained by The Associated Press. The aide was not authorized to speak publicly about the matter and did so only on condition of anonymity.
Four years ago, Congress effectively banned online gambling, passing legislation that prohibits banks and credit card companies from making payments to gambling websites. Supporters of online poker face less opposition with Democrats in charge of both chambers for another month. The House Financial Services Committee this year approved a bill that established a regulatory structure for online gambling.
Reid's office would not answer questions about the legislation.
But sensing that supporters are in a hurry to lift the ban, three leading Republicans in the House wrote to Reid and Senate Minority Leader Mitch McConnell, R-Ky., this week to say they oppose any attempt to legalize Internet gambling during the current legislative session.
They said using online gaming to generate revenue for the federal government would bring social and economic harm to many families.
"Congress should not take advantage of the young, the weak and the vulnerable in the name of new revenues to cover more government spending," Republican Reps. Spencer Bachus of Alabama, Dave Camp of Michigan and Lamar Smith of Texas said in the letter. Bachus is in line to become chairman of the Financial Services Committee next month, Camp will take over the Ways and Means Committee and Smith is expected to head the Judiciary Committee. The three committees have jurisdiction over Internet gambling matters.
Most of the legislative work this year concerning online gambling has taken place in the House, where supporters say that prohibition didn't work with alcohol and it's not working with online gambling. People continue to participate but in an underground, unregulated market.
"We are not talking about an activity that harms others where we properly step in," Rep. Barney Frank, D-Mass., the current Financial Services chairman, said at a hearing this year. "We are talking about a decision by adults to do what they want with their own money."
Under the draft legislation circulated to various Senate offices, states and Indian tribes would oversee regulation of the online poker license-holders.
Casino companies were among Reid's biggest campaign donors in the last election. MGM Resorts International, through its employees and political action committee, donated $192,000 to his campaign, the most of any single company, according to the Center for Responsive Politics. Meanwhile, employees and the PAC at Harrah's Entertainment chipped in an additional $83,100. Harrah's recently changed its name to Caesars Entertainment Corp.
Poker's popularity has soared in recent years, with casinos around the country regularly sponsoring poker tournaments, some of which are shown on television. The winner of this year's World Series of Poker in Las Vegas won nearly $9 million. The tournament featured more than 7,300 players willing to pay a $10,000 entry fee.
With online poker, players generally deposit money into an account through their credit card. They join a table with other players following along on their computer. A software program deals cards to each participant. And when it's time to bet, the program automatically prompts a player to bet, hold or fold. The program also keeps a running tab of how many chips a player accumulates or lose. When players have finished their game, they click on a cashier tab that shows how much a player's account has increased or decreased.