US Land Casinos Eye Online Gambling

Published: Tuesday, May 23, 2006 Online-Casinos.com

US LAND CASINOS EYE ONLINE GAMBLING

Increasing pressure on politicians to consider regulation as an alternative

Major American media, including the International Herald Tribune and Bloombergs started the week with some interesting reportage suggesting that U.S. land casino companies were increasingly considering the online gambling business as a possibility.

The reports come on the heels of the American Gaming Association's recent call for a congressional committee to study online gambling rather than imposing the immediate ban that some legislators would like to see.

The reports named MGM Mirage, Harrah's Entertainment Inc. and other U.S. casino operators and said that there is increasing pressure on Congress to consider legalising online gambling. Lobbyists and spokesmen for the big brands in land gambling are quoted as saying that the best way to control the $12 billion Internet betting business, based offshore whilst drawing more than half its revenue from the U.S. - is to regulate and tax it.

"The argument the industry is making is, if it is being done offshore, why not bring it in to the U.S. so it can be regulated?" says Sen. John Ensign, a Nevada Republican who has discussed the issue with representatives of Las Vegas-based Harrah's, the world's largest casino owner. "It doesn't look like you can ban it."

The companies, which according to Federal Election Commission records have so far contributed more than $900,000 to congressional candidates in this fall's elections, are pushing lawmakers to take a first step toward legalisation by creating a federal commission to study it. Ensign and Senate Minority Leader Harry Reid, a Nevada Democrat, say the proposal has a chance of clearing the Senate this year.

Meanwhile, Republican representative Bob Goodlatte and Democrat Rick Boucher, are pursuing legislation to force U.S. financial institutions to cooperate with federal law-enforcement authorities in shutting down the flow of cash to Internet gambling sites based outside the U.S.

The House Judiciary Committee is scheduled to take up the measure this week, and Majority Leader John Boehner says he intends to bring it to a floor vote later this year.

Even if the measure passes the House, it would face long odds in the Senate, says Matthew Gerard, a gaming industry analyst at Investec Securities in London.

"Ultimately, we think it will be very, very difficult to get any prohibitive legislation through the Senate,'' he says.

According to AGA president Frank Fahrenkopf, U.S. casino companies are "neutral'' on the House measure, "Right now, the online gambling industry is just the wild, wild West,'' he says. "Why not take a hard look at it?''

That's what the U.S casinos are seeking with their proposal for a federal study. Fahrenkopf, a former Republican national chairman, says the study's purpose would be to determine if legalisation, regulation and taxation of online gambling would reduce the risk of fraud and abuse and increase government revenue.

Fahrenkopf is reported to have said that the "big boys'' like MGM and Harrah's want to get into the online gaming business if Congress eventually decides to legalise it.

Fahrenkopf's association projects that the online betting business will double to about $24 billion a year in global revenue by 2010, and that a study conducted recently showed that as many as 15 million American players logged on to more than 2,600 Web sites last year.

The Justice Department continues to investigate and prosecute online sportsbooks that accept funds from U.S. customers. On May 17, prosecutors in Washington announced money-laundering charges against two people, including an American, who operated an Internet betting parlor in Antigua.

In addition to making campaign contributions, the U.S. casino operators have reportedly retained some of Washington's top lobbying firms, including Patton Boggs LLP and Barbour Griffith & Rogers LLC, to promote their interest.