Is the AGA now open to internet gambling?

Is the AGA now open to internet gambling?

March 25, 2010.

The respected online publication Card Player published an interesting interview exchange between writer Stephen Murphy and the chief executive of the American Gaming Association, Frank Fahrenkopf, this week, and the tone suggests a slight positive shift in the land casino trade body's traditionally neutral approach to online poker.

Fahrenkopf said the trade association has modified its neutral stance on online gaming. "We are open to the concept of legalized Internet gambling, so long as there is a regulatory regime that is put in place that protects the consumer and protects the integrity of the game," said Fahrenkopf

Murphy asked Fahrenkopf to clarify the AGA's current position on online gaming, wo which the exec responded:

"We are open to the concept of legalized internet gambling, so long as there is a regulatory regime that is put in place that protects the consumer and protects the integrity of the game.

"We're at this point in time open to the question of whether it's a federal or state regulatory regime, although I must tell you I think a majority of the board would favor the states. But until we have something that we're really going to look at, we can't get to that question.

"Now Harrah's, as you know, has been working very hard along with others in pushing the Barney Frank bill. The Menendez bill has been sitting there. We don't know where it's going. Barney at the last hearing had indicated in response to the request by the ranking Republican Spencer Bachus that there would be another hearing where Justice Department would come and testify.

"The word is, and it's rumored, because Barney has not said it and his staff is not saying anything, if anything they are going to mark the bill up.

"They'll mark the bill up and try to get it out of committee and onto the floor - or attach it to something that is a guaranteed pass, very much how like UIGEA passed, where they put it on a port security bill.

"So that's where it is. At this point in time in the Senate, we don't see any movement on the Menendez bill, but we understand that there is a lot of effort being made now, saying, "Maybe we ought to just go with a poker carve out. It's too much to think that we're going to get everything, so why don't we focus on the Menendez bill?"

Murphy asked the AGA chief why the regulatory preference would be for state rather than federal involvement.

Fahrenkopf replied: "Anyone who has been in the gaming industry for the last 30 years, we have an old saying - ‘We don't want the camel's nose under the tent,' in terms of the federal government and their regulatory regimes and taxes.

"There's the fear that the federal government, if it starts regulating and taxing internet gambling, they're going to say let's just make it a federal system and tax everything."

Murphy then pointed out that a state-by-state legalization could result in much more confined and constrained pools of players, adversely affecting liquidity and prizes. He asked Fahrenkopf whether he thought online poker could be regulated at the state level, but still be open for players to compete against others outside of their individual states?

Fahrenkopf appeared to agree, saying: "I think so. If I were doing this - and I'm not - but one of the ways it could work would be if there were a federal oversight with minimal standards, which would be delegated to the states. Therefore, to be a state regulatory agency, you're going to have to have a lot of experience. The net result would probably be that Nevada and New Jersey are the places where regulatory control would take place, but it would be done in a way where each state didn't have to deal with it.

"Let's say a state like Alabama said they wanted internet poker. Well, they don't have a regime that could regulate it. They don't have the law enforcement, they don't have the experience. I think it would be natural that the regulatory controls and licensing would be done by experienced jurisdictions, like Nevada and New Jersey.

"The question is going to be - and this is an unanswered question - but one that we are concerned with: what about those offshore companies that have been taking sports betting and other bets that is in violation in what is perceived to be U.S. law? Could they come in? I think there's going to be some real questions as to what the legislatures provide in terms of that."

Murphy picked up on the reference to illegal offshore gambling companies, asking Fahrenkopf how the AGA views their position and whether it would want those companies in the market.

Fahrenkopf responded: "The board has not made that decision, but that's my assumption. If they're blatantly violating the law, why would you invite them in? It's not like people don't know. There have been a number of executives who've been arrested and fined. But there are still people in spite of that who are continuing to take wagers, knowing that it's the official position of the United States government that it is illegal."

The interview goes on to discuss the chances for Barney Frank's attempt to federally legalise online gambling in the United States, and the political perspectives surrounding that.