A House panel voted on Wednesday to approve a measure that would
seek to regulate many forms of online gambling, in an effort to
overturn an existing law that bans the increasingly popular
Lawmakers on the House Financial Services Committee voted 41-22
to approve the legislation, meaning it could be brought to the
floor by House Democratic leadership.
Democratic aides said the most likely path forward for the
legislation would be its addition to a larger, must-pass bill later
in the year, rather than bringing it to the House floor as a
The bill aims to bring many of the online gaming websites onto
U.S. soil and regulate them, rather than banning them outright.
The main thrust of the legislation is aimed at legalizing online
poker, which is rapidly growing, but other forms of gambling
including bingo would also be allowed.
Placing bets online on professional sports leagues such as the
National Football League and Major League Baseball still wouldn't
be allowed under the bill.
Rep. Barney Frank (D., Mass.), chairman of the House panel, has
championed the cause of legalizing online gambling. Frank has
argued that while he's not a personal fan of gambling, he doesn't
believe it's the role of the government to prevent adults from
engaging in it.
The current law places the onus on credit card companies to
determine whether a customer's transaction is with an online
gambling firm. If it is, they are required to reject it.
The financial sector has strongly opposed it, saying it
effectively requires credit-card companies to play sheriff.
Despite the ban being enacted into law nearly four years ago,
the regulations implementing the ban only took effect on June
Advocates for online gambling have said that since the rules
were established, there has been little indication that the number
of U.S. online poker players has decreased.
Frank's bill would require firms that want to offer online
gambling services to American players to base much of their
operations in the U.S. Those firms that have continued to illegally
offer access to individuals in the U.S. since the ban went into
effect would be barred from participating.
State governments would be allowed to opt out of the new
While some casino companies remain opposed to Internet gambling,
the casino industry as a whole--through its trade association the
American Gaming Association--has recently shifted its stance.
The association said in March that after investigating the
issue, it had determined that technology allowed for a sufficient
regulatory structure of online gambling.
However, the association has not taken a stance on specific
bills. In interviews with poker websites, the association's chief
executive, Frank Fahrenkopf, has said that most of his members
prefer that states regulate the industry rather than the federal
government, as is the case for casinos.
The issue is of particular importance to gambling giant Harrah's
Entertainment Inc. (HET), which operates casinos in Las Vegas,
Atlantic City, and throughout the U.S.
While many of its Las Vegas-based competitors have seen massive
growth in Asia amid a declining casino market in the U.S., Harrah's
does not have a strong presence in Asia.
The company, therefore, is laying the groundwork for future
growth based on the prospect of legalization of Internet gambling
in the U.S.
In January, Harrah's began operating three gambling websites out
of the U.K. that allow gambling for U.K. residents. The websites
include two with the Caesars brand and one tied to the popular
World Series of Poker, which Harrah's owns.
"We've been supportive of this bill, it addresses the reality of
what is happening on the Internet," Jan Jones, senior vice
president of government relations for Harrah's, said in an
Some Republican members of the financial services panel remain
strongly opposed to rescinding the ban. They have argued that
legalizing the practice could lead to gambling by minors and that
it could result in an increase in addictive behavior.
There is a separate measure, sponsored by Rep. Jim McDermott
(D., Wash.), that would begin taxing the proceeds earned by online
That bill has yet to be approved by the House Ways & Means
Committee, which controls tax policy.
According to an estimate by the Joint Tax Committee, legalizing
and taxing online gambling could raise up to $42 billion in
revenues over the next decade.
Opponents of the measure have decried this estimate, saying that
several state governments would likely opt out, significantly
lowering the tax revenues that could be generated.
-By Corey Boles, Dow Jones Newswires; 202-862-6601;
(Alexandra Berzon of the Wall Street Journal contributed to this