Arguments for Federal Control of In-State Gambling Fail at Capitol Hill Hearing

The case for RAWA made by Jason Chaffetz failed in yesterday's House Oversight Hearing on the issue
The case for RAWA made by Jason Chaffetz failed in yesterday’s House Oversight Hearing on the issue

With strong support from Las Vegas casino magnate Sheldon Adelson, Rep. Jason Chaffetz (R-UT) has been on a zealous crusade to pass legislation to federally ban in-state regulated gambling, that would benefit the gambling industry in Las Vegas and Atlantic City. Chaffetz, chairman of the House Oversight Committee, held hearings this week titled “A Casino in Every Smartphone – Law Enforcement Implications,” to generate support for his Restoration of America’s Wire Act (RAWA), which seeks to ban in-state regulated gambling in all states.

Strongly backed by Adelson, who has quite hypocritically funded an AstroTurf group “Coalition to Stop Internet Gambling (CSIG)” to campaign for banning internet-based gambling that he views as competition for his brick-and-mortar casinos in Las Vegas, RAWA has failed to generate much support on Capitol Hill outside of Chaffetz and a few other members of Congress, including Sens. Marco Rubio (R-FL) and Lindsey Graham (R-SC), who have also received campaign donations in the past from Adelson.

The committee’s ranking member, Rep. Elijah Cummings (D-MD) quickly highlighted the reason for the push for RAWA, in his comments, stating about the hearing, “it’s all about money” and add that, “if we outlaw online gambling, the bricks and mortar (gambling) people would make more money.”

Perhaps the most convincing case for the idea that states can legalize and regulate in-state online gambling without violating the rights of other states, that may choose to prohibit it, was made by former New Jersey General Assembly member and Congresswoman Bonnie Watson Coleman (D-NJ), who voted in favor of in-state online gambling in New Jersey as a state legislator.

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The evidence clearly demonstrates, with proper regulation, in-state online gambling poses no more challenges to law enforcement or risk to consumers than brick-and-mortar casinos,” Watson Coleman stated, “According to the Department of Justice, in-state online non sports gambling is not prohibited by the Wire Act or other federal gambling laws, so states may regulate online gambling within their own borders.”

Rep. Ted Lieu also addressed the issue of technology enabling states to legalize and regulate online gambling without imposing it on other states that choose to prohibit, saying there is “no basis in reality” for the claims that such technology doesn’t exist. Lieu showed the committee a video profiling geolocation technology from GeoComply that allows the locations of users to be determined by servers hosting online gambling sites.

Former Nevada state gaming board member Mark Lipparelli testified on the technological issues involved with in-state regulated online gambling, refuting the contention that citizens of states that prohibit online gambling cannot be prevented from participating in gambling via online casinos hosted in states where it’s legalized and regulated. The technology that allows states to allow gaming in their states and prohibit it from other states is rapidly improving, and allows the very “borders” to be created on the internet that Chaffetz says do not exist.

Lipparelli explained how the technology works, and emphasized, “ the regulated market model does work,” and regarding the use of online regulated gambling sites for criminal activity, he said, “If you were going to try to launder money, a legal regulated site would probably be the last place you would want to try to do that.”

From a regulatory and law enforcement prospective, Nevada, New Jersey, and Delaware have been successful. Where there were concerns,” Lipparelli stated, “these states have had good success.”

South Carolina Attorney General Alan Wilson echoed Chaffetz’s arguments about the inability to prevent online gambling in states that prohibit it, and testified in favor of RAWA.

It is not a violation of the Tenth Amendment when Congress has the authority to regulate online gambling under the Commerce Clause,” Wilson told the committee, “removal of the online gambling provision of the Wire Act (by the OLC) has eroded the states ability to prohibit or regulate, however they want, gambling in their states.”

Mulvaney cited Wilson’s support of state authority on a list of other issues, as well as his support of RAWA before the House Oversight Committee, and said he “can’t square those two things,” in reference to Wilson’s contradiction.

That sounds like you’re for federal control…(the reinterpretation of the Wire Act) should not legalize gambling activities that states make illegal,” Mulvaney asked, “should the federal government also make illegal that which others states have made legal?”

Mulvaney pointed out that states will lose their ability to legalize and regulate in-state online gambling if RAWA is enacted, and asked Wilson, “Isn’t there perhaps another way to prevent kids in South Carolina from accessing legal gambling sites New Jersey, Nevada, or Delaware other than federal regulation?”

The hearing did little to advance support for RAWA and very strongly showed the information available, and the experiences of the three states that have legalized instate regulated online gambling – Nevada, New Jersey, and Delaware – prove that states can legalize and regulate online gambling and while doing so, prevent any interference with the others states that choose to prohibit online gambling within their borders. While Rep. Chaffetz quite snidely opined at the opening of the hearing that the internet has “no borders” that would keep online gambling out of the states that choose to prohibit, the hearing proved he was wrong. If RAWA was on trial in this hearing yesterday, it was soundly defeated.


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