More Questions, Fewer Answers from U.S. State Regulators

17 June 2008

State legislators have a lot of questions they want answered before considering changing their position on Internet gambling, but one former gaming industry regulator says some of the answers have already been made available.

The National Council of Legislators from Gaming States, or NCLGS, opposes Internet gambling. More broadly, however, the council stands against any gambling activity that prevents states' abilities to collect taxes and protect consumers.

"NCLGS has not changed its position formally as of yet, but we recognize that it may need to be changed," Florida Senator Steven A. Geller, a Democrat from Hallandale, told Interactive Gaming News.

Mr. Geller, chair of the council's state-federal relations committee, told IGN in May 2007 that NCLGS was beginning to discuss changing its position on Internet gambling.

Currently, the council is having a difficult time reconciling its own position with the changes in United States policy that have resulted from international law disputes.

One example is the cross-border trade dispute between the United States and Antigua and Barbuda at the World Trade Organization.

"I can say with a great deal of authority that we don't know where we're going to be in six months," Mr. Geller said. "This whole W.T.O. thing was confusing enough when all we had to do was discuss the policy of what should be done. Now, in addition to the policy of what we think should be done, we have the added burden of trying to figure out what we legally can do."

The council, a non-profit organization founded in 1995, is comprised of legislators from 11 states who meet biannually to discuss gaming public policy.

In its summer meeting last week, in Napa Valley, Calif., the council discussed the issue of Internet gambling in a panel discussion titled "Internet Gambling Regulation & the WTO: Building to a Perfect Storm?"

Frank Catania Sr., past director of New Jersey's Division of Gaming Enforcement and president of Catania Consulting Group, spoke on the panel -- five of its six members, including he, urged state legislators to regulate Internet gambling.

"It's always been my position that it's a states' rights issue and that the states should regulate it," Mr. Catania told IGN.

The other members of the panel that pushed for state regulation included Bruce Zagaris, a partner in the law firm of Berliner, Corcoran & Rowe and expert in international law; Ken Kirchner, former senior vice president of the National Thoroughbred Racing Association who now owns FalKirk International, which handles simulcasting for the Breeders' Cup; John Pappas, executive director of the Poker Players Alliance; and Ted Teruo Kitada, senior counsel for Wells Fargo Bank.

Reverend James Butler of the California Coalition Against Gambling Expansion was the only panel member to oppose the regulation of online gambling, according to Mr. Catania.

Mr. Catania, who is also a lawyer with Catania & Associates in New Jersey, said state legislators are still naïve about Internet gambling, as shown in a question from an audience member during the session.

"A gentleman from Kansas got up and said: 'Well, we're just starting casino gaming and if Internet gambling is growing so much, maybe we shouldn't get involved because they are going to go to the Internet casinos,' " Mr. Catania paraphrased.

"But I and other panel members told him that there is a difference between an Internet gaming person and a person who goes to a casino, and it's really not going to affect it," he added. "In some instances online poker has actually brought more people into the casinos for poker."

Legislators are also unsure about the technological possibilities surrounding Internet gambling regulation.

"We feel that it may not be possible, technologically, to protect what's going on in our states," Mr. Geller said. "If there is illegal gambling that's going on right now maybe we lack the ability to prevent that from occurring."

But, according to Mr. Catania, state legislators are just not aware of the full range of precautions that could be taken to keep online gambling safe.

"They still think that anybody can get on -- it doesn't matter who it is -- and it's not regulated," he said. "But it is regulated. It's regulated from the jurisdictions that allow it now."

Related Links
National Council of Legislators from Gaming States (NCLGS) 2008 Summer Meeting

Emily Swoboda is the senior staff writer at IGamingNews. She lives in St. Louis, Mo.