Reid Rallies for New Online Gambling Legislation

Senate Majority Leader Harry Reid has quietly been shopping around a draft of a new bill aimed at undoing at least part of the UIGEA. Unlike the other online gambling bills currently circulating on Capitol Hill – namely Representative Barney Frank’s HR 2267 and its attached tax bill HR 2266 – Reid’s potential legislation is less comprehensive and would only open online gambling up to existing operators of live American establishments with special licensing terms for foreign operators that have been in business at least five years.

A copy of the draft was leaked to the Associated Press, which in turn revealed a number of intriguing details. Shortly thereafter, the entire draft became available online. It’s clear that Reid is hoping to gather support before the big power shift next month. It’s also clear that Reid’s comparatively passive-aggressive legislation is designed to be more palatable to anti-gambling conservatives in struggling states. The legislation’s concession to allow states and Native American tribes to control the regulation of approved operators is another smooth move.

Unfortunately, three key Congressmen have already called Reid’s semi-bluff. Rep. Spencer Bachus of Alabama, Rep. David Camp of Michigan and Rep. Lamar Smith of Texas sent Reid’s office a letter earlier in the week informing him that all three would strongly oppose any efforts to legalize online gambling in any form. It is their belief that while the influx of profits from such legislation might fill the deficit in the short-term, in the long-term online gambling would do Americans more harm than good.

Seeing as Senator Reid’s home state is Nevada – a state almost exclusively supported by gambling-related revenue – such an argument will no doubt fall on deaf ears. Still, Reid is facing some very formidable foes in Bachus, Camp and Smith. Next month Bachus will replace Frank as the chair of the Financial Services Committee while Camp will head the Ways and Means and Smith will lead the Judiciary Committee. Even if Reid’s legislation could pass a vote in the Senate or House, it would need the approval of all three of these committees to get there. Rumor has it that Reid may try to float the legislation through Congress by attaching it to a larger and less controversial bill.

There’s no denying that even a small piece of the multi-billion dollar online gambling industry could fill a lot of budget gaps for the U.S. government, but the new conservative majority will likely make progress in that sector impossible. What remains to be seen is how many states simply take matters into their own hands, as New Jersey is already attempting to do and as California is expected to do next year.

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