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One of Sen. Harry Reid’s priorities in his remaining months in office is to outlaw online gaming.
Asked in a radio interview last week about a proposed ban in Congress, Reid said “online gaming is not good for our country” but he thought online poker would be good for Nevada. If the House of Representatives were to pass the ban, Reid said, the Senate would "give it a good hard try.”
In the past, Reid has supported exempting online poker, which is legal in Nevada, from a broader online gaming ban. But in the interview on KNPR's "State of Nevada" talk show, Reid wasn’t clear about whether he would try to carve out a poker exemption in the current bill, which is backed by Las Vegas Sands CEO Sheldon Adelson.
“Well, we will see what the legislation does — we will see what the House does,” Reid said when asked if he supported Adelson’s push for a complete ban. “But I think, for the state of Nevada, online gaming is not the direction we should go.”
The Senate minority leader’s comments give momentum to a federal ban moving through the House, although much of the casino industry is fighting back. Meanwhile, some states are continuing to look at expanding online gaming.
Momentum against online gaming in Congress
The ban, proposed in legislation called the Restoration of America’s Wire Act, would essentially reverse a 2011 Department of Justice opinion that opened the floodgates to legal online gaming. The legislation also was introduced in the last Congress.
This time around, with Republicans now in control of both chambers, the ban has made more progress. The version introduced in the House by Rep. Jason Chaffetz, R-Utah, picked up more co-sponsors than it did last year. And last month, some members of the House conducted a hearing on the legislation.
With the support of Adelson, a major Republican donor, the bill has a powerful force behind it. Support from Reid, the Senate minority leader, could take it even further.
“I think (Reid) hears Mr. Adelson’s position, and I think the fact that they share that position speaks volumes about where he is on the issue,” said Adelson ally Andy Abboud.
But opponents of an online gaming ban have their own strong supporters, including casino giant Caesars Entertainment and the Poker Players Alliance. John Pappas, the executive director of the alliance, said he hoped Reid was still favorable toward online poker.
“Sen. Reid has been a vocal supporter of Internet poker and the regulation of Internet poker, and I certainly hope that position has not changed,” Pappas said. “I think there’s clearly one casino interest in the state that opposes this, but Mr. Reid does have a lot of other casino interests and home-state employers that are very interested in seeing Internet poker be prosperous.”
The three states with existing online gaming industries — Nevada, New Jersey and Delaware — aren’t the only ones that stand to be affected by the legislation. Pappas said states that allow some form of lottery activity online would also be impacted, widening the scope of business interests that stand to be hurt by a ban.
Given the political and logistical complications, Morgan Stanley said in a report this week that while the ban “could be gaining momentum,” it probably wouldn’t pass Congress, according to the Associated Press.
“We believe a federal ban of online gaming is unlikely given legislators’ split views,” the firm said. “While the bill may advance out of committee, we believe it faces long odds of passing, especially without carve-outs for online lotteries and existing online gaming states.”
Momentum for online gaming in the states
In states where it’s legal, online gaming has not been much of an economic boon.
At its peak, online poker brought in a little more than $1 million in Nevada last June, but the state’s overall gaming revenue that month was nearly $907 million. State gaming officials stopped reporting revenue for the game after Ultimate Poker, then one of Nevada’s three legal sites, shut down.
In New Jersey — which isn’t limited to poker like Nevada — the situation is better, but it’s still not a huge economic driver. There, online gaming brought in $10.4 million in February, compared to total monthly gaming revenue of $178.4 million.
Morgan Stanley also slashed nearly in half its estimate of how large the nation’s online gaming market could become. It said the online gaming market could reach $2.7 billion by 2020, instead of the $5 billion it predicted earlier.
In addition to moral arguments against online gaming, Abboud believes the unimpressive revenue figures support a ban that includes poker.
“It is very clear from the performance in Nevada as well as New Jersey ... that online poker is not an economically viable market, and has not provided any true economic benefit,” he said.
Nonetheless, online gaming has grown some — and may grow more — at the state level. Last week, a network allowing gamblers in Nevada and Delaware to play online poker with each other went live. Gov. Brian Sandoval had nothing but praise for the development, proclaiming in a statement that Nevada and Delaware were “at the vanguard of Internet gaming.”
“The gaming industry is evolving, and Nevada is evolving with it,” Sandoval said.
Other states, notably California and Pennsylvania, have toyed with the idea of legalizing online gaming, which would help expand the nationwide market. It could also help the existing state markets if they were to pool players like Nevada and Delaware.
Morgan Stanley’s report expects that online gaming won’t expand to any more states this year, but anticipates that it will eventually become legal in California, Pennsylvania, New York and Illinois.
While Congress — boosted by Reid — considers going in the opposite direction, Pappas said he didn’t think that would hold back state-level progress.
“I think states actually would say, if the federal government is going to act, then maybe it’s appropriate for us to get out in front of that,” he said.
I guess Harry Reid is now a paid stooge of Sheldon Adelson.
