Feds, States May Be On Collision Course

Another year has gone by without any action from the federal government regarding online gaming. Senate Majority Leader Harry Reid, a Democrat from Nevada, and Sen. Jon Kyl, an Arizona Republican, worked on federal legislation that would regulate and legalize online poker. Unfortunately online bingo players would be left out because the bill would only legalize poker and all other forms of gambling would remain illegal. Because of the inaction of the federal government several states want to offer online casino games to residents. In most cases online gambling would be regulated and licensed by lottery officials and in other states state lotteries would run all online gambling operations. Several states want to offer a variety of games such as online bingo, keno, roulette and other casino games.

This could put state governments and the feds on a collision course. Last summer Reid and Kyl told attorney general Eric Holder that they opposed state efforts to legalize online gambling.  The senators even oppose the sale of lottery tickets on the internet. In a letter the senators asked the Justice Department to “consult with Congress before finalizing a new position that would open the floodgates to Internet gambling.” The Department of Justice has taken the position that states are not won’t be violating federal laws if they set up their own intrastate online gambling operations.

At stake is the future of the online gambling industry in the United States. The industry is swiftly evolving as states plan their own operations. Nevada has already licensed several online poker operators. The New Jersey legislature approved an internet gambling bill but Governor Christie has been stalling on the issue for almost two years. Given the massive damage done by Hurricane Sandy in New Jersey the state could use every dollar it can raise and online gambling could easily generate millions. The legislation proposed by Reid and Kyl has rattled several statehouses although few actual details of the bill have been made public.

The Reid Kyl bill would set up a federal system for online poker. Many believe the legislation is likely to prohibit states from offering other forms of gambling such as online bingo and casino games. Many backing the federal bill want to stop state lotteries from providing instant win games, slots and traditional casino games online. Maryland Gov. Martin O’Malley wrote “Historically, states have had the right to make their own decisions about whether to offer gambling and how to regulate the industry.” O Malley also said that the proposed federal law “would strip states of those rights.” So far the White House has not weighed in on the legislation.

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