Could this be the year for a Federal Bill on online gaming?

October 20, 2011 - Change may be in the air for the US Congress when it comes to online gaming.

There are at least two proposals before Congress:  The first, H.R. 1174, would give the federal government the power and authority to allow the licensing of Internet casino games and poker. The second, H.R. 2366, would delegate most power and authority to state and tribal regulators, and allow the licensing of Internet poker only.

During the last Congress, the House saw only one proposal, which was similar to H.R. 1174. The bill, sponsored by Rep. Barney Frank, was sent to the floor of the House after the House Financial Services Committee approved it 41-22, but a vote on the floor never occurred.

One sign that Congress members may be seriously considering the legislation this time around is a letter sent from key U.S. Senators to Attorney General Eric Holder this past summer. The letter, cosigned by Arizona's notoriously anti-gaming Senator Jon Kyl and Nevada's notoriously pro-gaming Senator and Senate Majority Leader Harry Reid, asked Holder and the Department of Justice to aggressively pursue those offering illegal Internet gambling in the United States.

The letter also requests that Holder "reiterate the Department's longstanding position that federal law prohibits gambling over the Internet, including intra-state gambling (e.g., lotteries)." The Senators do not address the intrastate Internet exception Congress included in the Unlawful Internet Gambling Enforcement Act (UIGEA).

While the letter could be interpreted as an indication that any form of Internet gaming is not likely to occur before the November 2012 national elections, it might also be seen as an indication that the federal government is getting ready to take action before states decide to pass their own intrastate legislation.

In fact, New Jersey Senator Raymond Lesniak responded to the letter by reiterating his support for online gaming in New Jersey, and his intention to reintroduce new gaming legislation in the state in the fall. 

"Under existing federal law, there's simply no basis to deny New Jersey or any other state from establishing and regulating intrastate online gambling," Lesniak said in a statement. "In fact, such operations are expressly exempted under the 2006 law on unlawful Internet gambling. New Jersey should be allowed to pursue online gaming, so long as we conform to the provisions set forth in the 2006 law."

Whether enough support exists in Congress to regulate Internet gambling on a federal level before individual states pass their own legislation is the biggest question. Now that Rep. Barney Frank has been replaced as chairman of the House Financial Services Committee by Rep. Spencer Bachus, who was one of the lead sponsors of prohibition legislation leading up to UIGEA, the issue may not even be scheduled for serious discussion in the Committee. In addition, the introduction into the mix of a second proposal, H.R. 2366, may elongate the process of establishing one bill that the House can vote on.

Still, the tide may be turning for at least a few key Congressmen. Large Republican donor and Las Vegas Sands CEO Sheldon Adelson is now on board for federal legislation regulating Internet gaming. Adelson is close to House Majority Leader Eric Cantor, who will be important for gambling advocates to win over.

In addition, the long-time aide of House Speaker John Boehner, Lee Askew, is now vice president of government affairs for the American Gaming Association. Even Senator Jon Kyl seems to have dialed down his rhetoric.

The Senator, who in 2006 likened the addictiveness of e-gaming to "crack cocaine," said in April that "efforts to carve out an exception for games like poker, which many believe is a game of skill, may be considered later this year."

Whether or not this will be enough is anyone's guess, but at the very least the signs point to serious consideration of the topic on a federal level. "I think there is becoming a feeling in Congress that this is something that needs to be regulated and be done," a source close to the discussions said."I believe there is a possibility a bill will pass towards the end of the year."