Iowa Congressman Jim Leach and Senate Majority Leader Bill Frist have scheduled a field hearing in Iowa as they try to build momentum so that the Goodlatte/Leach Bill also gets passed by the US Senate. “The hearing has no substantive effect on the legislative process,” a source close to the situation told iGaming News. “However, it will probably serve to strengthen Frist\’s commitment to advancing the bill, and that is a bit worrisome.”
Opponents to the bill, including the Poker Players Alliance, say it would make more sense to license, regulate and tax companies that provide online gambling. A recent economic analysis commissioned by the PPA revealed that more than $3.3 billion in tax revenue could be raised by the federal government by simply regulating internet poker.
“While there are concerns with underage gambling and problem gambling, the prohibition bill sponsored by Rep. Leach and supported by Majority Leader Frist is shortsighted and will do nothing to address those concerns. As it stands the bill makes exemptions for Internet wagers on horse races, lotteries and fantasy sports. This fact is inconsistent with the supposed desire to ban online gambling. Moreover, Americans learned long ago that prohibitions don\’t work. In fact, prohibiting online poker will only drive the industry underground, essentially creating unregulated online \’speakeasys\’ for people to play this game of skill,” said Michael Bolcerek, President of the Poker Players Alliance.
The current version of the legislation to prohibit online gambling is also being opposed by the Independent Community Bankers of America. The advocacy group, which represents 5,000 community banks, said it would be difficult, if not impossible, for banks to police payments between US residents and online casinos.
“It\’s very tempting to think the banking industry can stop this kind of stuff because people pay for it through banks, but the fact is the system just wasn\’t really designed to do it,” said Steve Verdier, a lobbyist for the ICBA in Washington.
The American Bankers Association, which represents the nation\’s biggest banks, said that any decision to require the blocking of electronic payments and checks would be onerous. “You are talking about manually checking 40 billion checks a year for the payee and making an assessment of whether it\’s for an Internet gambling site or restaurant,” said Laura Fisher, a spokeswoman for the ABA.
In the meantime, Dianne Wilkman, President of Springboard, a non profit credit counseling firm based in Southern California, said with the start of the football season, credit card companies are bound to see a spike in credit card cash advances that will finance gambling.
Research shows that most online gambling accounts are opened with cash advances from credit cards. Banks typically charge interest rates of 20 per cent or more for such loans and there is no grace period. This type of credit card abuse is a fast track to bankruptcy. “With cash advance interest rates as high as 20%, it’s not surprising that 20% of all bankruptcies filed were gambling related,” said Wilkman.
A National Academy of Science Research Council study, using information provided by bankruptcy attorneys and court appointed trustees, showed that the average gambler owed more than $40,000 in unsecured debt and possessed an average of 8 credit cards with balances of $5,000 to $10,000 each.
“Many consumers don’t fully realize what the actual costs of online gambling are to them, but with high interest rates and no grace period, cash advances are the number one way that gamblers get into financial trouble with their credit cards,” declared Wilkman.
Elsewhere, Greek betting company Intralot has signed a $30 million contract with the Idaho Lottery to supply a central online gaming system. For Intralot is the third lottery contract in the US after the ones with the Montana and Nebraska\’s Lotteries.
In New York, the first bids for the state franchise to operate racing in New York for the next 20 years were submitted by the New York Racing Association, which has held the franchise since 1955, and by Saratoga Empire Racing Associates, a group that includes Churchill Downs and Magna Entertainment.
Also expected to bid is Excelsior Racing Associates, which is led by New York Yankees partner Steve Swindal and casino developer Richard Fields.
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