Gambling legislation proposal step in the right direction

**Moderator**

Gambling legislation proposal step in the right direction
http://cei.org/news-release/2009/05/06/barney-frank-internet-gambling-bill-aims-legalization

The first decade of the 21st century has seen some dramatic shifts in the sports betting marketplace. In the first few years, the offshore betting industry was in its “Wild West” phase, with sportsbooks rising to prominence, then falling just as rapidly. Many bettors were hurt during a string of highly publicized sportsbook collapses, like Aces Gold and Millennium. Meanwhile, the books continued to aggressively advertise to the US clientele, drawing the ire of federal regulatory agencies.

As the Bush justice department began to shift their focus towards the offshore betting world, the federal government got involved on several levels. Offshore advertising was banned from the airwaves. Sportsbook directors were arrested the day they set foot on US soil. The draconian Unlawful Internet Gambling Enforcement Act (UIGEA) was attached as a rider to a “must pass” Port Security bill by Senate Majority Leader Bill Frist after midnight on the final day of the 2006 congressional session.

The passage of that act ushered in a very difficult period for bettors from the USA. Big players like Party Poker and Pinnacle decided to abandon the US market entirely. The biggest issue involved getting money in and out of the offshore books, with banking entities now responsible for policing their own clients. PayPal had already banned gambling transactions and their primary replacement, Neteller, left the US marketplace as well.

The pendulum has clearly started to shift in the other direction since Barack Obama was elected president and the Democrats took over the leadership in both the House and the Senate. Just about every state in the country is facing a significant budget deficit this year, and the federal government faces the biggest deficit in the history of world governments. Suddenly, gaming looks like an increasingly attractive source of revenue to tap.

In the past few weeks, we’ve seen two major steps towards an expansion of legalized, regulated gambling – including sports betting -- here in the USA. In Washington DC, Congressman Barney Frank (D-Mass) has introduced legislation to repeal the UIGEA, specifically carving out a place for poker players in the online gaming world, while making it much easier to send deposits and collect withdrawals from offshore.

Meanwhile, in the state of Delaware, new Governor Jack Markell has pushed aggressively to legalize “Las Vegas-style” sports betting at the local horse racing tracks. Delaware was one of four states that were grandfathered in when the federal government outlawed sports betting in the other 46 states.

Oregon has never been an aggressive player in the market, and they’ve backed off in recent years in order to get NCAA business in the form of bowl games and NCAA tournament sites. Montana has been a non-factor in the sports betting marketplace. Nevada, of course, is the only state with those aforementioned “Las Vegas style” sportsbooks. Delaware has been looking to join Nevada, becoming the only state on the East Coast to offer this service for their residents and visitors.

Thirty-three years ago, Delaware experimented with a sports lottery. The experiment did not fare well. Bettors were required to pick the outcomes of multiple games; a parlay system. But the payouts on those parlay bets were low, mirroring the public’s interest. When the state regulators made a few mistakes setting pointspreads early in the week for the parlay cards, sharp bettors cleaned up, nearly bankrupting the system. The brief experiment was quickly discarded.

Markell had little trouble steering his current bill through the Delaware state legislature. The state house and senate passed the bill into law last week, despite strenuous objections from both NFL and NCAA administrators, and Markell signed it right away. But the details of the Delaware plan remain rather murky, to put it politely.

Corey Marowitz, an Atlantic City based gambling consultant, was quoted in the Philadelphia Enquirer saying this about the recent bill: “The shape it will take, that’s not really clear at this point.” Until the Delaware State Supreme Court rules on the issue, we have no idea what type of betting we’re actually going to see in Delaware.

We could see a football pool type lottery. We could see bettors restricted to parlays, similar to the Canadian Lottery system in place in many Canadian provinces. Or, we could see the same type of sports betting that you can currently find both in Vegas and offshore, with standard pointspread and single game wagers.

Officials at Delaware Park, one of the three racetrack-slot casinos in the state, is making a strong push towards the Las Vegas approach. Andrew Gentile, Delaware Park’s general manager: “These people tell us they’d be more inclined to make a straight bet, say, putting $100 against the spread on the Eagles over the Giants, than play some sort of parlay or lottery-type game.”

Ed Sutor, CEO of Dover Downs: “I think if you polled the people in our industry and our customers, the closer we get to what Las Vegas does, the better it will be for everyone involved.” If the court rejects single-game bets, however, most observers believe the next most likely scenario would be parlay bets, a system experts predict would generate far less revenue.

Delaware’s aggressive stance towards legalizing and regulating sports betting is a clear sign of the pendulum swinging towards freedom from government oppression. And with New Jersey currently suing the federal government for the ability to set up their own sportsbooks, the possibility for a significant expansion of legal, regulated sportsbooks here in the US is very real. But the Barney Frank legislation in DC has the potential to produce far greater gains for sports bettors, despite the fact that Frank’s legislation clearly and specifically prohibits online sports betting.

As chairman of the House Financial Services Committee, Frank is in a position of power and authority, something he lacked during the Bush years. Frank is an avid poker player and his legislation is primarily aimed at the poker community: “No one will be betting on professional sports games.”

Frank’s legislation is a long way from passing in Congress and being signed into law. But despite his lack of enthusiasm for sports betting, the end result from a repeal of the UIGEA will be of enormous benefit to offshore sports bettors, creating a much easier system for the free flow of money to and from the sportsbooks. Any bill that works for the benefit of gamblers in general is certain to help sports bettors, which is why Frank’s bill offers a rare real chance at genuine reform from the federal level.