Campaign to legalize online gambling in U.S. worries tribal casinos in Washington, elsewhere
ROB HOTAKAINEN
After dropping out from Seattle Central Community College, Alex Fitzgerald says he has found the good life: winning more than $2.5 million as a professional poker player and quickly becoming one of the hottest young gamblers in the world.
Poker, says the 24-year-old Fitzgerald, is his passion and his profession, and he studies it every morning.
But he is doing it in Costa Rica.
He said he must play on foreign land because it’s illegal in the United States, after the Justice Department shut down the three largest online poker sites – PokerStars, Full Tilt Poker and Absolute Poker and charged their officials with bank fraud and money laundering.
The crackdown came April 15, 2011, a day known among gamblers as Black Friday.
“I can never live in my country of birth again without giving up the only job that has consistently fed me since I was a teenager,” Fitzgerald said.
One thing might change that: Congress could legalize online gaming, allowing the hundreds of U.S. poker players who have fled the country to return.
While the poker industry is lobbying hard to make that happen, it’s the ultimate nightmare for many U.S. Indian tribes, who fear it could destroy their $28 billion-a-year casino business.
While no vote has been set, poker lobbyists have lined up backing from the nation’s most powerful senator, Majority Leader Harry Reid, D-Nevada, who once headed his home state’s gambling commission. They’re banking on Reid to force a bill through by the end of the year, reversing the ban approved in 2006.
To help get the job done, the Poker Players Alliance, a lobbying group representing poker players across the country, is leading a national grass-roots campaign, urging its 1.2 million members to flood members with letters, e-mails, phone calls and tweets.
In May, the group joined nearly 20 members of Congress at a retreat for House Republicans in Florida, hosting a poker and casino night and posting photos on its website showing lawmakers crowded around a table learning the finer points of Texas Hold ‘Em.
U.S. Rep. Joe Barton, a Texas Republican and a respected poker player in his own right, is leading the House effort to pass a bill.
While Black Friday angered poker players, they scored a win in December when the Obama administration announced a move that could go a long way toward legalizing online gaming.
The Justice Department said it would apply the major anti-gambling statute, the Wire Act, only to sports events and races, clearing the way for states to begin legalizing online gaming without having to worry about federal laws.
Nevada and Delaware already have done so, and New Jersey could become the third yet this year.
Legalization of online gaming is inevitable now that the Obama administration has “opened the door,” said John Pappas, executive director of the Poker Players Alliance. He’s backing a plan that would allow the Commerce Department to certify states to regulate online poker, while allowing states to go beyond their own borders to accept bets from players.
“There needs to be some sort of clear statute: What is unlawful Internet gambling, and what is lawful Internet gambling?” Pappas said. “Even those who are opposed to gambling here at the federal level are recognizing that it’s happening, whether we like it or not.
“The question before Congress isn’t whether or not there should be Internet poker. The question is: Would you rather see it regulated or the status quo where it’s unregulated?”
WORRISOME TO TRIBES
Legalization is a worrisome prospect for many tribal officials, who predict most gamblers would be less likely to drive to a casino, often found on isolated tribal lands, if they could play for money on their home computers.
On Capitol Hill, where House and Senate committees have been debating the issue for months, tribes have been busy trying to line up votes to block online gaming.
“We see legalization of Internet gambling as a direct threat to the economic growth in Indian country and we do not support any proposals that legalize Internet gambling,” said Glen Gobin, an officer with the Tulalip Tribes in Washington state.
And Robert Odawi Porter, president of the New York-based Seneca Nation of Indians, said “a thousand flowers bloomed for Indian nations” after Congress allowed tribes to enter the big leagues of gambling in 1988.
At a Senate Indian Affairs committee meeting in February, he said online gaming threatens tribal sovereignty and the tens of thousands of jobs created by the casinos.
But Porter said that if Congress insists on approving online gaming, lawmakers must at least allow tribes to help write the rules and take the lead in running the enterprise.
Online poker, already legal in 85 countries, has the potential to forever change the rules of gambling, much like online shopping reshaped the retail industry.
“Anybody who’s in the gaming business today and isn’t seeking to take their business online is really going to be left in the dust, just like the book sellers were, and just like the music industry was,” Pappas said. “Gaming is going to be the next wave.”
Tribes worry that they could face a flood of competitors, from states to non-Indian casinos, even from media giants such as Facebook, Yahoo and Google.
“Those are big companies, and that’s pretty serious competition,” said Chris Mercier, tribal council member with the Confederated Tribes of Grand Ronde in Oregon. “Nobody really knows what’s going to happen with it.”
Poker players say the tribes already carry too much influence. They’re particularly irked with Washington state legislators and Democratic Gov. Chris Gregoire for approving a state law in 2006 that imposes criminal penalties on those who play online poker or place any kind of wager on the Internet.
The law, the only one of its kind in the nation, is a sore spot with Steve McNulty of Bothell, the state director of the Poker Players Alliance, who has been playing poker since he was 5.
“Frankly, I think it’s unfair, as do many, many other poker enthusiasts in the state,” he said. “It’s a Class C felony in the state of Washington to play poker online.”
With his job and family, he said he often doesn’t have time to go to a casino and he misses the convenience of playing online.
Art Reber, a retired professor and author from Point Roberts who co-wrote the book “Gambling for Dummies,” called the law “one of the stupidest things on the planet.”
He said that while it’s clearly aimed at protecting the tribes, Indians do not deserve special protection in the gambling industry, regardless of how they were mistreated in the past.
“We marched across this country and just slaughtered them and just devastated them, but in the current circumstances there still has to be a balance between special interests and the general welfare across a population,” Reber said. “The tribes are doing fine. They’re not hurting. They don’t need to have a monopoly on online gambling.”
John Lane, an executive policy adviser who handles gambling issues for Gregoire, said the law has had overwhelming support in the state, passing in the Senate 44-0 and in the House 93-5. But he said the state has not prosecuted anyone for Internet gambling.
THE LAW
Critics say it would be a big mistake for Congress to scrap the 2006 federal law, called the Unlawful Internet Gambling Enforcement Act.
“Online gambling is the very worst case scenario, and the reason is because if you open online gambling, there are no rules anymore, there’s no stability,” said John Kindt, a gambling researcher and professor of business and legal policy at the University of Illinois.
Kindt, who testified before Congress in 2006 when members approved the ban, said electronic gaming is particularly addictive, calling it the “crack cocaine” of gambling.
He said tribes are hedging their bets by opposing online gaming in Congress but predicted they’re unlikely to take a financial hit and will be on the leading edge of the movement if it’s approved.
“It would be huge for every gambling establishment,” Kindt said. “And whoever gets to the table first is going to get the cream.
“Here’s where it’s going: If you do this, then you’re going to have the very worst form of gambling in every living room, at every work desk, and at every school desk and on every mobile phone – so it’s literally click your mouse, lose your house.”
The issue will force Congress to confront questions of whether tribes should be allowed to accept bets from gamblers who are not physically on Indian land.
Many tribes are pushing to buy new property and open casinos off of their reservations, taking advantage of looser rules approved by the Obama administration last year. But critics say the 1988 passed by Congress and signed by President Ronald Reagan intended to allow gaming only on Indian land as a way to promote jobs and economic development.
Some say that’s an outdated idea.
“Such a limitation would be ludicrous and incompatible with the very nature of the Internet,” said Alex Skibine, professor at the S.J. Quinney College of Law in Salt Lake City. “The Internet is not land-based. It does not have geographical boundaries.”
The issue is causing sharp divisions in Congress.
At a House subcommittee hearing, U.S. Rep. Frank Wolf, R-Va., said the spread of gambling has led to “ruined families, bankruptcies, suicides and official corruption.” And he scolded members of his party for advocating legalization only six years after Congress approved the ban.
“I never thought I would see that day that a Republican House would even consider weakening this law,” he said. “For a party that champions families and traditional values, I assure you that Internet gambling is contrary to family values.”
U.S. Rep. Barney Frank, D-Mass., called the ban “an inappropriate interference on the personal freedom of Americans” and said it should be scrapped.
He wants Congress to approve an online gaming system that would allow “any suitable person” to apply for a license for online gaming. Frank said it would allow the U.S. to collect more than $42 billion in new taxes over 10 years and to capture revenue and jobs that are going overseas.
“Some adults will spend their money foolishly, but it is not the purpose of the federal government to prevent them legally from doing it,” he said.
POLITICAL FUTURE
While many players are pessimistic that Congress will act, Pappas of the Poker Players Alliance said the stars might be aligning for the industry to win. He predicted a bill will pass the House but said its passage is less certain in the Senate.
That’s where Reid comes in.
He has been working with U.S. Sen. Jon Kyl, R-Az., this year to write a bill. And backers say the best chance to pass it might come during a lame-duck session, after the Nov. 6 election, if Reid can attach it to a broader piece of must-pass legislation.
Reid has not offered any specifics on his legislation, but at a recent press conference, he told reporters he needs backing from more Republican senators to advance a bill.
Others are already moving to make sure the tribes will have the upper hand in running online poker.
On Thursday, U.S. Sen. Daniel Akaka, D-Hawaii, chairman of the Senate Indian Affairs Committee, unveiled a draft of the Tribal Online Gaming Act of 2012, which would allow federally recognized tribes to apply for licenses to operate online poker.
Akaka, regarded as a close ally of the tribes, is seeking reaction from tribes and other senators before deciding whether to formally introduce it.
Proponents of a federal law say it’s important for Congress to act before too many states muddy the waters by passing different laws of their own.
After the Justice Department issued its opinion in December, I. Nelson Rose, an attorney and law professor from Encino, Calif., told a Senate panel it represented “a gift of hundreds of millions of dollars and thousands of jobs to the states from President Obama.”
He predicted the result will be “an explosion of poker, instant lotteries and casino games on the Internet, run or licensed by the states.”
Some tribes are getting ready.
In May, as California lawmakers considered a bill to approve online gaming, the United Auburn Indian Community signed an agreement with Bwin.party digital entertainment to have the online gaming giant provide online poker services if a law is approved.
David Keyser, chairman of the tribe that runs the Thunder Valley Casino Resort near Sacramento, said the tribe wanted “to maximize the revenue opportunity” by getting on board early.
Studies show that while casinos have appealed most to older gamblers, online gaming could be a powerful draw for younger gamblers who grew up playing Internet games.
And Reber, the Washington state professor, said other studies involving millions of players have shown most gamblers prefer small stakes, which is why he said it should not be illegal.
“If you take a look at what goes online, you will find that it is overwhelming, and I mean crushingly overwhelming, like 99 percent of all online play is 5 cents, 10 cents,” he said.
If Congress approves online gaming, Reber said it’s sure to lure in new gamblers who will see it as a novelty.
“They’re going to give it a shot, they’re going to play for a little while because they’ve read these stories about people winning millions and millions, and they’re going to lose their 10 bucks and then they’re going to go away,” he said.
‘BATTLE OF WITS’
Fitzgerald has no such plans.
Fitzgerald, who attended Inglemoor High School in Kenmore, first played poker in his high school cafeteria at age 15, when his family depended on food stamps and faced the possibility of foreclosure on their home.
He said he never had the money to pay anyone if he lost, so he had to learn how to win quickly. And he said he decided to drop out of college after one semester when he discovered he could easily earn more than his professors by playing cards.
Of the $2.5 million he has won in the last six years as a pro, Fitzgerald – known in poker circles as The Assassinato – claimed his biggest single prize in 2009, hauling in $222,000 at an event in Italy.
He said he’s happy to be in a business that does not discriminate, where the harder he works, the more money he makes, and “there’s no one holding me back but me.”
“The best poker player in the world can be any color, any sexual orientation or of any religion,” he said. “Nobody wins millions of dollars at poker because their dad is the president of a casino.
“Poker is a battle of wits, minds and heart. You may have a doctorate, you might be a titan in your field, you may be rich, you may outgun me in every other facet in life – but I will break you at a poker table.”
rhotakainen@mcclatchydc.com
