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Changing His Tune?

Is Harry Reid working to get an i-gaming bill passed?


ince the Obama administration clearly defers to Harry Reid on

Senate Majority

any issue that impacts the gaming industry, it was unlikely that any of the various bills that would legalize or decriminalize online gaming would pass the Senate without his support—which was, until recently, lacking. But recent rumors and reports of Reid’s new dal- liance with a comprehensive online poker bill may mean there is a window of opportunity in the United States. H2 Gambling Capital, a U.K. group,

issued a report in April that suggested Reid is negotiating a bill that would legalize, regulate and tax online poker. The activity is currently illegal, and the Unlawful Internet Gambling Enforce- ment Act, which prohibits banks and credit card companies from processing any payments to or from online gaming sites, is set to go into effect in June. Rep. Barney Frank (D-Massachusetts),

the chairman of the House Financial Services Committee, has sponsored a bill that would legalize online gambling and set up a regulatory system. Rep. Jim McDermott (D-Washington), a member of the House Ways and Means Committee, has authored legislation that would tax online gambling. And Senator Robert Menendez (D-New Jersey) has proposed a bill that would permit online poker. Senators Ron Wyden (D-Oregon) and Judd Gregg (R-New Hampshire) have proposed an internet gaming taxa- tion bill as part of the federal stimulus package. Reid’s views on internet gambling

may have been influenced by a change in policy at the American Gaming Association. At the organization’s last board meeting, the policy was shifted from neutral to positive after many of the major members—MGM Mirage, Harrah’s Entertainment, Wynn Las Vegas and others—spoke in favor of internet gambling legalization. Reid’s bill is reportedly limited to

online poker, and would not include any


Leader Harry Reid (D-Nevada)

of the other casino games at this point because there is less opposition and more support for poker. According to H2, “A Reid-sponsored

bill with wide approval should also have lim- ited opposition, without the need for last- minute political intervention.” The report also says the bill would allow

individual states to opt out of online gam- ing.

But the bill is upsetting some Native

American tribes, since there seems to be no provision in Reid’s rumored bill for them. Many tribes had been coalescing behind the Frank bill, which includes clear carve-outs for tribes that the Reid bill reportedly lacks. The California Tribal Business Alliance,

which represents nine tribes in the Golden State, recently sent a letter to Frank, chair- man of the House’s banking committee, saying the group no longer opposes such a bill as long as gaming tribes don’t suffer by it. This is similar to a position taken recently by United South and Eastern Tribes, which represents 20 tribes, and which has called for a study of the effects of internet gaming on tribal operations. “The legalization of internet gambling

in the United States could be a disaster for tribal government gaming, or it could be a wonderful new avenue for tribal economic development,” said the letter written by Chairman Leslie Lohse of CTBA. Lohse worries that Frank’s legislation

might conflict with rights established by the Indian Gaming Regulatory Act, which grants tribes exclusive rights to operate casi- nos when they have compacts with the state. She said her group would happily work

with Frank to write a law that would protect Indian rights, and yet open the way for another source of gaming revenue. Frank has previously offered assurances that he doesn’t want his legislation to affect Indian gaming or compacts.

Grand Jury Probes Full Tilt

Money laundering the issue, not UIGEA violations


ull Tilt Poker is under the gun as a federal grand jury in

Manhattan investigates the site for catering to American gam- blers. Online gambling is current- ly illegal in the United States, though many U.S. residents gam- ble online anyway. Celebrity poker players Chris Ferguson and Howard Lederer, who reportedly control Full Tilt Poker, also are under investigation. “They are waging this war of

intimidation,” gambling legal expert Nelson Rose told the Financial Times. “There are not a lot of good statutes, so they go after high-profile targets and try to intimidate everybody.” Eric Jackson, a Los Angeles-based attorney representing Lederer,

Renowned players Chris Ferguson and Howard Lederer (above) are under investigation for reportedly taking bets from American gamblers.

Ferguson and a Full Tilt-related software company, told the newspaper his clients “are not going to comment about a speculative grand jury investigation that we are not aware of.” Full Tilt Poker is currently involved in a civil case in Los Angeles

related to its U.S. activities, but Lederer and Ferguson filed a motion to have the case dismissed. Significantly, the investigation charges Full Tilt with violations of

the money laundering laws rather than relying on the Wire Act, under which previous online gaming operators were charged, or the Unlawful Internet Gambling Enforcement Act, whose penalties and jurisdiction have been questioned.

France Opens Online Market

French media companies now prized partners of foreign online operators


he parliament of France has passed the bill that will end the national online gaming monopoly. The bill is expected to

become law in time for the 2010 World Cup soccer matches, which start in June. Operators will need a license from the

state and be taxed at a rate of 7.5 per- cent on sports betting and horse racing and 2 percent on poker. The govern- ment will have the power to block ille- gal sites, and financial transactions between those sites and French banks. In the run-up to the opening of the

French market, the existing monopolies have closed deals with media platforms and private companies with products that will enhance their ability to compete

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