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updated: 10/3/2012 6:49 AM

Gambling exec: Time short for U.S. online regs

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  • With billions of dollars at stake, the head of the gambling industry's main lobbying group sounded a pessimistic note Tuesday about the prospect of Congress passing Internet regulatory laws this year.

      With billions of dollars at stake, the head of the gambling industry's main lobbying group sounded a pessimistic note Tuesday about the prospect of Congress passing Internet regulatory laws this year.
    Associated Press

 
Associated Press

LAS VEGAS -- With billions of dollars at stake, the head of the gambling industry's main lobbying group sounded a pessimistic note Tuesday about the prospect of Congress passing Internet regulatory laws this year.

American Gaming Association chief Frank Fahrenkopf Jr. cast online wagering hosted by sites overseas as "the next frontier of our business," and one of the biggest threats to the casino industry in the United States.

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But Fahrenkopf told reporters in Las Vegas that passing a measure such as one backed by Senate Democratic Majority Leader Harry Reid of Nevada and Republican Sen. Jon Kyl of Arizona would need quick action during the post-election congressional session.

"We will need plenty of hard work and a little gambler's luck to see a federal bill pass this year," Fahrenkopf said during his annual state-of-the-industry media briefing at the Global Gaming Expo. "Obviously, nothing is going to happen before the election. That means a lame duck (session) is our last chance."

Fahrenkopf, a former Republican party national chairman, said about 85 countries have legalized online gambling, and some estimates say almost $35 billion is being bet worldwide online each year, including millions by people in the U.S.

"These are numbers generated with only minor participation by players in the U.S.," Fahrenkopf said, citing figures from a United Kingdom-based industry researcher, H2 Gaming Capital.

The number compares with gross commercial gambling revenues in the U.S. of some $35.6 billion for all of 2011. It does not include American tribal gambling, which the Senate Indian Affairs Committee reported topped $27 billion in 2011.

Meanwhile, casino revenues have increased so far this year in 17 of the 21 states that allow commercial gambling nationwide, and are up almost 6 percent overall, according to association data compiled from state regulators. The numbers include Ohio, where two casinos opened this year, and compare with the first nine months of 2011.

No matter which party wins the U.S. elections on Nov. 6, Fahrenkopf promised his association will keep lobbying Congress to create a legal framework for regulating online poker. Otherwise, he said, states will adopt a patchwork of rules and regulations that will make oversight difficult and put customers at risk.

"No matter what Congress does, based on the growth trends ... and the actions of the various states, it's no longer a matter of if online gambling will be legalized in the U.S., but when, where and how."

David Schwartz, director of the Center for Gaming Research at the University of Nevada, Las Vegas, called passage of online betting regulations "inevitable at the state level" in the U.S.

"At the federal level, it's a toss-up," he said.

Several local Las Vegas casinos have been licensed by Nevada regulators and are within weeks of beginning to accept online bets from state residents.

Nevada and Delaware began taking steps to allow online betting after the U.S. Justice Department last December narrowed the application of the federal Interstate Wire Act of 1961 only to sports wagering. Several casinos have been licensed in Nevada to offer online poker to residents within the state. Meanwhile, Illinois has begun selling lottery tickets online.

"We know there will be more states to come," Fahrenkopf said, including California and New Jersey.

Massachusetts is developing a regulatory structure for gambling, he said, and new properties are opening in other states, including Illinois. Voters in Oregon, Rhode Island and Maryland will decide gambling initiatives Nov. 6.

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