Sen. Harry Reid, the majority leader from Nevada, is pushing ahead with his efforts to legalize Internet poker before Congress adjourns this year, despite new criticism from state lottery officials, including a former Democratic National Committee chairman, that Reid's plan was an “outrageous” reward for big Las Vegas casino interests that heavily backed his campaign for re-election.
After declining to comment for nearly a week, Reid’s office released his first public statement on the matter late Thursday, saying his proposal would bring in new tax revenue and “protect U.S. consumers” by allowing “reputable operators with proven track records” to offer poker over the Internet to American card players.
But in the last few days, Reid’s efforts have triggered a storm of criticism from state lottery directors, Indians tribes and others who say the Senate majority leader’s last minute effort would freeze them out of the action, while benefitting big Las Vegas casino operators — such as Caesars Entertainment and MGM Resorts International — that heavily backed Reid in his recent successful campaign for re-election.
“This appears to be designed to give an advantage to established gambling interests — many of them in Harry Reid’s home state,” said Steven Grossman, the treasurer elect of Massachusetts and the chairman of the Democratic National Committee between 1997 and 1999, in an interview with NBC News. “For him to deal us out of the action is outrageous.”
Grossman said he is only one of many state lottery officials who this week have strongly objected to Reid’s bill, especially a section that would guarantee that, for the first two years after it passed, initial licenses for online poker could go only to well-established gambling operators. This would effectively cut out state lotteries from offering their own online games, and drain revenues away from competitive products, such as instant games and keno, Grossman wrote in a letter to Reid this week.
“We could lose $100 million from this,” Grossman said. When you consider the 40 or more other states that would be similarly disadvantaged, the revenue loss for state governments would be in the billions, he added. “There’s been a lot of e-mail traffic in the last few days in which lottery directors all over the country are expressing their deep concerns.”
Reid had first circulated his proposal last week in an effort to attach it to the massive bill that would extend Bush era tax cuts. (See the earlier story from NBC: Reid's 'Net betting bill would benefit his casino backers.) But objections from senior Republicans appears to have made that move impossible. A Reid spokesman noted there other vehicles still before this year’s Congress — such as a continuing resolution to fund the government and the Dream Act. “Sen. Reid will continue working to find a way to get it done,” said the senator’s press secretary Tom Brede.
There has been a legal cloud over setting up online gambling sites inside the United States ever since 2006 when Congress, at the behest of anti-gambling conservatives, passed a law called the Unlawful Internet Gambling Enforcement Act, which banned the processing of credit card transactions for Internet gambling transactions. At the time, Reid and some gambling companies supported the measure because of concerns that Internet gambling would compete with big Las Vegas casinos.
But in recent years, a booming offshore Internet gambling industry has popped up and many casino operators — and now Reid — have concluded that it is preferable for U.S. operators to get in on the action. In his statement Thursday, Reid noted that “Internet poker is played by millions of American every day in an essentially unregulated environment” and “neither federal nor State governments collect a dime of revenue from this multibillion dollar Internet poker industry.”
As for the idea that Reid was acting to benefit big casino operators that backed his campaign, his press secretary Brede responded: “Sen. Reid has a long track record of fighting for the largest industry in the state, and he will continue to do so. Look at what the top industry in the state is. Would anyone criticize a Senator from Michigan for fighting for the auto industry?”
As noted by NBC News and others in recent days, two of the biggest potential beneficiaries of the Reid proposal would be MGM Resorts International and Caesars Entertainment (formerly Harrah’s.) Both firms heavily backed Reid’s re-election, spending more than $650,000, including $300,000 that was pumped into Patriot Majority PAC, a so-called “super PAC” set up by a former Reid communications director that ran attack ads against Sharron Angle, Reid’s Republican opponent. Caesars/Harrahs, according to critics, would be particularly well advantaged to move into the online Poker market because the casino already hosts the “World Series of Poker.”
Related: American University's Invesstigative Reporting Workshop reported on msnbc.com about Reid's support of a Chinese wind farm project seeking $450 million in U.S. stimulus money.