US State Legislators Hear I-Gaming Argument

13 January 2004

For the second time in four months, representatives from the Interactive Gaming Council (IGC) met with the National Council of Legislators from Gaming States (NCLGS) in an effort to convince policymakers that regulating the online gaming industry is the right approach.

"These are the legislators from the key states, and if we are able to get the support of the group it could go along way in the effort of the industry."

- Frank Catania
Interactive Gaming Council

The ongoing dialogue started in September 2003, when former Indiana Attorney General Jeff Modisett and Frank Catania, the former assistant attorney general and director of New Jersey Division of Gaming Enforcement, addressed the NCLGS board.

The board agreed at that meeting to ask for submissions from various industry groups on how it should approach gambling on the Internet.

The IGC was subsequently invited to address the board again at the NCLGS's member meeting in Las Vegas over the weekend.

Catania, who spoke again on behalf of the IGC, felt his presentation was well received, although he isn't taking anything for granted.

"It is a long process, and I don't want to guess on what will happen," Catania said. "They are looking at the issue closely and seem to be receptive to regulatory ideas."

Catania spoke in front of nearly 100 attendees, including 25 legislators from gaming states. A major focus of his presentation was the U.S. Senate's inability to pass a law that would have banned the use of credit cards and other "instruments of banking" for online gaming transactions.

The bill stalled over whether state-licensed entities would be exempted from the legislation.

"It makes more sense to develop a strict regulatory structure in the U.S. and let our gaming companies lead the world and individual states preserve and protect revenues," Catania said to the group.

He added that developments in the United Kingdom impact what happens in the States. "The United Kingdom is now preparing to revamp its gaming laws," he said. "U.K. gaming officials have publicly stated they would not preclude their licensees from taking bets from the U.S."

Regulation has been a touchy issue for policymakers, but Catania pointed out that wagering on horseracing across state lines has been legalized in 17 different states. If more and more companies feel competitive pressure to go online, he said, a change in the tide could be on the horizon.

"The United States policy with regard to online gaming continues to restrict the world's most respected casino gaming companies from being competitive in the industry," Catania said during his presentation. "With the new technologies that have and will be developed and greater acceptance by the public, legislators working together with ... state gaming regulators and industry leaders could address these public policy issues and, in my opinion, resolve them."

No matter what course of action is taken at the federal level, Catania said, states should be given the right to decide for themselves whether Internet gambling should be legal.

Washington is not giving states that green light under current law. The Nevada legislature passed an enabling bill that allowed its gaming regulators to set up guidelines for interactive gaming. A condition of the bill, however, was that the Nevada Gaming Commission couldn't move forward until it received an assurance from the U.S. Department of Justice that no federal laws are being violated. The commission sought approval, and the DOJ responded with a letter informing them that any online system would be violating the federal Wire Act of 1961.

Keith Kizer, a former advisor to the commission now representing the state's attorney general's office, said the movement in Nevada to regulate the industry will go nowhere until things change at the federal level.

"Short of some sort of clarification of the Wire Act, we're pretty much at a standstill," he said at this weekend's meeting. "Internet gaming is either illegal or it's unclear, and we'll just have to wait for the federal law to be enacted."

Catania feels that if enough states enact enabling legislation, the federal government would be forced to comply or enact federal regulations as well.

"Going through the NCLGS is the right way to go about this," he said. "These are the legislators from the key states, and if we are able to get the support of the group it could go along way in the effort of the industry."

Related Links
National Council of Legislators from Gaming States (NCLGS) 2004 Winter Meeting