Federal On-line Wagering Legislation May Pre-Empt States’ Efforts

The Wall Street Journal reported on April 25, 2012, that U.S. Senate Majority Leader Harry Reid, (D) Nevada, and Sen. Jon Kyl, (R)-Arizona. are preparing legislation which would legalize online poker but outlaw many other forms of online gambling, including the type of internet wagering currently being contemplated by states such as New Jersey, Nevada and California.

The Journal reported that the federal legislation being drafted is “rattling state governments, even though few details have been made public.” The draft legislation purportedly would not only create a federally controlled internet based wagering system for online poker, but it will prohibit individual states from allowing many other forms of online gambling.

As previously noted here, states such as New Jersey, Nevada and California, have passed, or are close to passing legislation which would legalize intra-state internet wagering. This push was prompted after the U.S. Department of Justice issued an Opinion to both the Illinois and New York Lotteries in late 2011. In that Opinion the DOJ narrowed its prior stance on the Federal Wire Act, now taking the position that the Wire Act only prohibited sports betting and not other forms of on-line or internet wagering. As a result State legislatures, lotteries and gaming agencies have begun to move forward towards legalization of on-line wagering in varying forms. The states’ efforts could be cut short if federal legislation pre-empted the area.

Of course having a federal on-line poker bill introduced certainly does not mean on-line poker will become law anytime soon. Internet gambling interests have thought they were close to passing legislation several times in recent years only to see the bills get bogged down in Washington politics for many different reasons. However this recent legislation could be the on-line interests’ best bet to date and is the latest twist in the quickly changing landscape of the future of internet wagering in the United States.

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The opinions expressed on this blog are those of the author and are not to be construed as legal advice.

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