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Congress

Expansion of Net Gambling Worries Indian Tribes

February 9, 2012

A Senate committee on Thursday debated a controversial Justice Department opinion that some legal experts and gambling supporters say has opened the door for states to begin offering online gambling within their borders and could harm Indian gambling operations.

The Senate Indian Affairs Committee examined how any potential expansion of Internet gambling within states could affect Indian tribes that also offer gambling on their reservations.

The issue has come under more scrutiny in recent months following the release in December of a Justice Department opinion that reversed the department's opinion on the scope of the Wire Act, a federal law prohibiting some gambling activities. The department now says that the Wire Act only applies to sports betting. Some states are moving quickly to take advantage of the department's opinion and begin offering some online gaming within their states.

"The short answer to the DoJ opinion is that states are now free to do whatever they wish with respect to Internet gambling, except for, of course, sports betting," Patrick Fleming with the Poker Players Alliance told the committee. "This opens up an entire Pandora's box of possibilities."

Congress enacted legislation in 2006 aimed at barring online gambling in the United States by prohibiting financial institutions from processing payments for online bets. Critics of the law say it has not stopped Americans from gambling online using offshore sites. They argue that these players lack consumer protections and that the United States is losing out on potential tax revenues.

Witnesses told the committee Thursday that the Justice Department opinion puts more pressure on Congress to act on an issue that had already gained some steam in the last year. Bipartisan legislation was introduced in the House last summer that would legalize online poker. And in the Senate, Majority Leader Harry Reid, D-Nev., and Senate Minority Whip Jon Kyl, R-Ariz., are working on Internet gambling legislation that may involve legalizing online poker. Kyl authored the Senate version of the 2006 anti-gambling law. Kyl recently told National Journal that the Justice Department opinion may force Congress to clarify the law.

"Quite possibly something will be done. As a result of that, there is probably a need to tighten up the law to address all forms of Internet gambling and in that context things like Internet poker, so I am involved in it because I am the author of the original legislation," Kyl said. He added that "Reid has supporters in Nevada" who want to deal with online poker. "And obviously the two of us therefore are talking."

Legal experts and the head of a New York tribe said that without intervention by Congress, Indian tribes, particularly smaller tribes with little political influence, could be harmed by the spread of online gambling at the state level. They urged lawmakers to ensure tribes will have equal access to licenses that might be given out by state or federal regulators to offer online gambling.

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