Will the Super Committee Legalize Online Poker?

Online poker enthusiasts are betting the house (or insert other painful pun here) on the possibility that Internet poker legislation will be added to the congressional super committee as a means of coming up with revenue that will help to achieve the $1.5 trillion in deficit reduction the committee is required to come up with by November 23. Internet poker legislation is, in this case, a subset of Internet gambling which would include games like blackjack, roulette, online slot machines, etc.

The evidence for passage via super committee is mostly circumstantial, but there is quite a bit of it:

1. Senate Majority Leader Harry Reid (D-Nev.) and Senate Minority Leader Jon Kyl (R-Ariz.) recently co-wrote a letter to the Department of Justice asking them to “reiterate the Department’s longstanding position that federal law prohibits gambling over the Internet, including intra-state lotteries.” Speculation continues over the purpose of this letter, but the smart money is that Reid and Kyl have reached a deal whereby Kyl will not stand in the way of some form of regulated online poker, as long as it excludes other forms of online gambling as Kyl still hates freedom. Kyl has been a historical enemy of online gambling, though he has recently weakened his stance on online poker. It’s also worth noting that Kyl is serving his last term in the Senate, so he might view a deal that he has control over as better than a deal written without him after his retirement.

2. Reid was recently quoted as telling the Las Vegas Review-Journal that Internet poker legislation “will get done” and that it will be “good for Nevada.” Harrah’s Harry Reid is earning those campaign contributions. There aren’t comprehensive estimates of the potential revenue to be gained by gambling legalization, but the estimates I’ve seen place revenue somewhere between $20-40 billion over the next decade. Not a huge dent by any means, though it might be preferable to $40 billion in spending cuts that will be highly contested by a variety of interest groups. (Side note: Internet poker players across the nation are looking desperately at the Las Vegas Review-Journal reporters for a more substantive article on that giant tease of a tweet.)

3. A recent New York Post article shined light on a number of behind the scene lobbying that makes passage look likely:

* Large Republican donor and Las Vegas Sands CEO Sheldon Adelson is now on board with such a federal move, Gross said. Adelson, he said, sees the move as a window of opportunity to grow sales. Adelson is close to House Majority Leader Eric Cantor, who will be important for gambling advocates to win over. Adelson did not return calls for comment.

*House Speaker John Boehner is another important Congressional leader to get on board, and his long-time aide, Lee Askew, earlier this year became vice president of government affairs for the American Gaming Association.

Boehner’s support (as well as Cantor’s) is critical, and the revolving door here is a likely sign that he will support it, and get the rest of the Republican members of the House to support it.

4. Former New York Senator (and current lobbyist) Al D’Amato predicted legalization for online poker in a recent appearance on Fox Business, estimating it could easily bring in $2-3 billion per year and that if the federal government doesn’t jump on this, the states will (as many are in the process of attempting to legalize state online poker).

5. Online gambling is definitely a touchy issue for many Americans. It’s an issue quite susceptible to fear-mongering, ala the “Stop Predatory Gambling” group or a multitude of socially conservative groups that want it to remain quasi-illegal. The super committee might be a vehicle for politicians to support the legislation without attaching their names to it by truthfully asserting that there wasn’t much that they could to do stop it as they had to support the super duper committee’s bill.

6. Nevada (Reid’s home state) has passed legislation directing the Nevada Gaming Commission to license online poker upon federal legislation approving of it.

Only time will tell, but those who enjoy online poker should definitely follow the activities of the super committee, as passage via the committee is much more likely than via the traditional route of passing legislation. Here is a more pessimistic take on the chances of legalization via the super committee.