THE FIGHT: Problems, Problems Everywhere

If you thought things would get easier after New Jersey enacted online gaming legislation six weeks ago, you’re not going to want to read this week’s column. THE FIGHT remains as tough as ever.

Legislation to legalize and regulate online gambling in California and Massachusetts continues to sit on the back burner. The online gaming industry has instead set its sights on Illinois, as I mentioned last week.

Democratic Gov. Pat Quinn already has expressed skepticism about the idea of legalizing online gambling in Illinois as part of the state’s overhaul of its gambling laws. The horseracing industry added their voices to the fray late last week, expressing concerns that state tracks would be able to offer online gambling without making any contributions to horsemen’s purses. The horseracing industry’s lobbying group, the Illinois Thoroughbred Horsemen’s Association, thus has come out against the current proposal.

Time and again we’ve seen that this is the biggest stumbling block to online gaming legislation: competing gambling interests refusing to unify around a proposal. In Illinois, it’s the horsemen. In California, it’s the tribes. In other places, it’s the tracks.

There are rumblings of problems coming down the road in New Mexico, too, where the state is negotiating a gambling compact with the Navajo tribe. The Navajos have proposed adding a provision to the compact that would allow the tribe to withhold required payments to the state from the tribe’s slot revenues if the state legalizes any form of online gambling, including poker.

It’s hard to see how New Mexico will agree to such a provision. The state already has 21 tribal gaming venues operated by 13 tribes. The venues range in size from truck stops with video gaming devices to full-blown casinos. As a result, the Navajo tribe isn’t negotiating from much of a position of strength. The tribe wants and needs its gaming venues more than the state wants and needs the additional slot revenue payments.

The issue with the Navajos does point up larger issues surrounding the legalization of online poker and its impacts on the tribes, however. The tribes themselves have never presented a unified front on online gambling. Some are in favor of it; many are opposed. Many tribal leaders believe that the legalization of online poker will be a gateway for the broader legalization of all online gambling, which will siphon revenues away from tribal gaming operations and force the tribes – many of which enjoy local monopolies – to compete online with the deeper pockets and better-established brands of traditional casino companies.

There was even some legislative scuffling out in the heartland, where the Kansas Senate considered an overhaul to its byzantine gambling laws that would have included a provision criminalizing online gambling. Although the overhaul was ultimately defeated for other reasons by a 24-15 vote, there was strong support for the online gambling ban, which was added by amendment late in the process on the strength of a 26-11 vote.

Although Kansas was never considered a strong possibility to be a forerunner for online gambling regulation, the fact that the criminalization of online gambling made it that far through the legislative process before faltering at the end is concerning for the online gambling industry. It’s probably enough to flip Kansas from a blue state – “no substantial talks” – to a red state – “extremely unlikely” – on BLUFF’s map of U.S. online poker legislative efforts.

Enacting online gaming legislation in New Jersey in late February wasn’t the end of the THE FIGHT. It was only the beginning. There are many more battles to win before we’ll see a truly national rollout of online poker in the United States.

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Kevin McGrady

Legislative and Politics Beat Writer: Kevin McGrady practiced corporate law in New York City for eight years before moving to Las Vegas in 2008 to join the gaming industry. Kevin is a graduate of New York University and Columbia University School of Law.
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