The Corner


Here are some thoughts from a reader who tells me that he works on the Hill:”If you check with the current gaming establishment that you proclaim desired this protectionism, you will find some suprises.  The American Gaming Association, while publicly supportive, was actually very luke warm regarding this provision.  They had supported Senator Kyl earlier this Congress, but had stopped pushing for passage some time ago.  So what happened to change their mind?  One, the specific language of this proposal.  It doesn’t treat all forms of gambling in an equitable manner – specifically horse racing and lotteries.  This is a no-no for the AGA.  The second reason is much more interesting.  The knee-jerk reaction to online gaming from the US casino companies (and the Indian casinos) was to do everything possible to shut down the unregulated, offshore competition.  Once some of these offshore companies went public in London, their market values caught the eye of the US companies.  The US casinos (and the reservation locked Indian casinos) then began to see that this offshore market – if legalized and regulated – could create a significant new stream of revenue.  They essentially didn’t want to burn a bridge that they might someday want to cross.  They actually worked quite hard – through Harry Reid – to prevent this from passing this year.  Unfortunately, Frist was determined to get it done (the “Frist 2008″ train keeps rolling on).  This provision was passed in spite of corporate sentiment, not in reaction to it.  I doubt that you will find corporate casinos celebrating – or commenting at all – on the passage of this bill.  They may now sieze on the opportunity to buy into the offshore industry at rock-bottom prices and take a run at the legalization/regulation angle on down the road.  Now, this may create the perception that this was corporate protectionism, but I don’t think that’s who was pushing Frist.  More to the point, this was done without any significant debate in the Senate.  It was done in the middle of the night and attached to a vehicle that would not be stopped.  In summary, it seems clear that this bill/law is headed for the same type of resounding success that resulted from previous federally mandated prohibitions.  Regardless of the eventual outcome, I think that it’s dangerous to assign any significance to the passage of this bill beyond Frist’s pandering to his imagined Presidential voting base.  And trust me, Congressional offices are hearing from their constituents on this one.  Online gamblers tend to be quite email savvy. ”As my email in-tray reveals, the last line is certainly true… 


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