Legislation to ban online gambling that was written with the help of lobbyists for Republican super-donor Sheldon Adelson will soon be introduced in Congress.
But the bill will face a firestorm of opposition from state lotteries, poker players and major casinos who see a bright future for the gambling industry online.
Charlie McIntyre, executive director of the New Hampshire Lottery, said state lottery directors would oppose the draft bill.
“The way it's written now, no question. We have grave concerns about this legislation and we would share them with our senators,” McIntyre said.
On Capitol Hill, legislation that would legalize online gambling has gone nowhere. Andy Abboud, senior vice president of government relations for Las Vegas Sands, said there is no public pressure to bring gaming online.
“There is no appetite for that,” Abboud said. “Gaming needs to be done in a limited way. It needs to be like alcohol. It needs to be like tobacco. It cannot be accessible to everyone.”
Draft legislation to ban online gambling was obtained by The Hill last year. The document’s metadata revealed that a lobbyist for Las Vegas Sands wrote the bill.
Darryl Nirenberg, then of Patton Boggs, was identified as that draft’s author. He is still registered to lobby for Adelson’s company at his new firm, Steptoe & Johnson.
An updated draft obtained by The Hill this week has similar legislative language to the earlier draft. The documents are both titled the Internet Gambling Control Act.
“Of course we have been working with members of Congress on the way the bill looks,” said Abboud of Las Vegas Sands. “There is a draft of the legislation that Darryl wrote, and there are 25 other drafts out there. ... We have been 100 percent clear that we want to restore the Wire Act.”
The rush of lobbying on Internet gaming was triggered by a 2011 Justice Department finding that found the Wire Act only prohibited online betting on sports. That allowed states to legalize online gambling, which some are already doing.
The biggest lobbying battle over online gambling will take place outside of Washington as states consider legalization. The American Gaming Association (AGA) — the casino lobby that backs online gambling — has bulked up its staff and brought on Jim Messina, President Obama’s campaign manager for his reelection bid, as a consultant.
An AGA spokeswoman directed questions about the draft bill to the Coalition for Consumer and Online Protection, which rejected it.
“This type of sweeping ban would only ensure that the current overseas black market continues to thrive, forcing online gaming further into the shadows where there are no consumer protections. It is impossible to stand in the way of the Internet; instead, we should embrace and shape these new technologies in a way that is safe for consumers,” said former Rep. Mary Bono (R-Calif.), a co-chairwoman of the coalition.
The Coalition to Stop Internet Gambling, a new group launched with Adelson’s support, cheered the draft bill.
“We support and applaud all efforts to restore the long-standing interpretation that the Wire Act prohibits Internet gambling. It’s common sense that putting a virtual casino in the pocket of every American with a smartphone is bad public policy,” said the coalition in the statement.
Sen. Lindsey Graham (R-S.C.) is expected to introduce the Senate version of the bill.
A Graham spokesman confirmed that the senator is working on the legislation and will introduce it “when we’re ready.”
In the House, Rep. Jason Chaffetz (R-Utah) is preparing to introduce companion legislation. An aide to Chaffetz said the congressman would introduce the bill next week.
Graham and Chaffetz both represent states where most forms of gambling is illegal — the lottery is the only form of legal gambling in South Carolina. Opponents of the bill accuse them of trying to curry favor with the powerful GOP donor.
Adelson, his wife Miriam, daughter Shelley and Las Vegas Sands’s PAC have given more than $20,000 in campaign contributions to Graham’s Senate campaign so far.
A lobbyist who represents lotteries and state interests said the gambling bill is a threat to more than 40 states that have lotteries, and the huge sums of money that they provide to charity each year.
“I get that Mr. Graham and Mr. Chaffetz feel that they have to pay back Mr. Adelson. That's how politics works. But I don't think that Mr. Graham and Mr. Chaffetz realize that they are about to start a war with 40 plus states, and we welcome that war,” said the lobbyist.
Graham has been relatively silent about online gambling until now. Abboud said that the bill was not about political payback, but is a genuine cause for Adelson.
“We have always been active in the political process in Washington and we have an issue now. ... We have made the case to several people and it has not been an easy task,” Abboud said. “Sheldon Adelson has probably the largest untapped political capital of anyone because he doesn't ask for much.”
Lottery directors fear that the bill as written could ban their games. Lottery machines often communicate over the Internet, crossing state lines to reach a data center to record that a bet has been made, and this legislation could ban that action, they say.
“The majority of lotteries communicate with a data center, whether it's primary or backup. One of those centers is usually in another state,” McIntyre said. “The bill has such a broad scope that it's possible that it bans that communication. My fear is of the bill's unintended consequences.”
In addition, there are carve-outs in the draft bill for horse racing and fantasy sports. That calls into question whether the lawmakers only want to shut down some forms of online gaming.
One online gambling advocate said the biggest concern for industry is whether Senate Majority Leader Harry Reid (D-Nev.) will throw his weight behind the bill.
While Reid has supported online poker measures in the past, he has not supported a broader legalization of Internet gambling.
“I think the concern with Reid is that he’s not a big fan of Internet gambling,” which could pose a threat to the casinos in his state that are smaller or not located in Las Vegas, one online gambling advocate said.
Supporters of online gambling are already moving to stop Graham's bill. This month, the Poker Players Alliance has encouraged its members and supports to push back on Graham's bill.
The bill "is a new prohibition, plain and simple," John Pappas, executive director of the group, said in a statement.
“This bill is a gross misinterpretation of a federal statute that was established in 1961, long before there was an Internet" and "should be viewed expansion of the Wire Act, not a restoration," Pappas said.
Adelson and Las Vegas Sands are not backing down.
“We could make money in this bargain. But we believe it is bad for the industry. We believe it is bad public policy,” Abboud said.