Harrah's Supports Online Gambling Legislation

(Bloomberg) -- Harrah's Entertainment Inc. and Youbet.com Inc. have joined professional poker players in helping support legislation to be introduced today to legalize online gambling.

The measure is being proposed by Representative Barney Frank, a Massachusetts Democrat who failed in the last session of Congress to repeal a ban on the gambling.

Supporters "have been mobilizing," Frank said in an interview last week. "This is a grassroots thing."

Along with Harrah's and Youbet, Frank's allies include the Poker Players Alliance, headed by former U.S. Senator Alfonse D'Amato, a New York Republican. London-based UC Group Ltd., an online payments provider, hired former U.S. Representative Thomas Downey, a New York Democrat, to lobby for the bill.

The legislation would allow licensed gambling operators to accept online wagers from people in the U.S. The bill would revise the Unlawful Internet Gambling Enforcement Act of 2006, which made it a crime for banks or other institutions to process financial transactions used to place illegal bets online.

Regulations implementing the law took effect in January, and some payment processors have until Dec. 1 to comply.

Online gambling operations, banks, state lotteries and some poker aficionados opposed the 2006 law. Some critics said the law makes no distinction between legal and illegal online wagering. For example, some states such as California allow lottery tickets to be purchased online. In addition, the ban doesn't affect online betting on horse racing.

Foes Mobilize

Opponents of online gambling are mobilizing to keep the 2006 law in place.

"You're going to have all the pro-family groups, all the anti-gambling groups out there rallying together," said Chad Hills, an analyst for gambling research and policy at Focus on the Family, the Colorado Springs-based group founded by James Dobson. "The Internet these days is being used as a public library. I don't think any public library would be open to hosting a poker tournament inside."

To support online gambling, Las Vegas-based Harrah's registered to lobby for the first time. It spent $405,087 from January to March on its own staff's efforts and help from lobbyists who included Tony Podesta, a Washington-based Democratic fundraiser and the brother of John Podesta, a chief of staff to former President Bill Clinton and an adviser to President Barack Obama.

Woodland Hills, California-based Youbet hired its own lobbyist to push for legalized online gambling, according to Chief Executive Michael Brodsky.

Poker PAC

The Poker Players Alliance boosted its lobbying expenses to $430,000 in the first quarter of 2009, up from $346,750 during the same period a year earlier. The group began a political action committee last year that contributed $51,165 to congressional candidates.

To help the push for online gambling the alliance has enlisted poker pros such as Howard Lederer, who have become celebrities due to their appearances in the World Series of Poker and other tournaments televised on cable channels.

Lederer was in Washington last month to participate in a tournament that raised more than $200,000 to fight cancer. Several lawmakers attended, including Frank, Representative Joe Barton, a Texas Republican and Senator Mark Begich, an Alaska Democrat. Lawmakers also joined poker pros at charity tournaments staged at both parties' national political conventions last summer.

‘Hugely Positive'

"Being able to interact with members of Congress at the poker table is hugely positive to our cause," Lederer said. "Anyone who has played the game can't declare it all chance. Adults shouldn't be prevented from playing a game of skill just because it's on the Internet."

Youbet takes online bets solely on horse racing. Brodsky said the company would expand into online poker and other gambling if Congress permitted it.

"Our customers would love to do more and we would love to offer our customers more," Brodsky said. "There's a big opportunity to do something that makes sense for everyone. It's a very nice revenue-raiser at a time when everyone is looking to plug in the holes."

Harrah Vice President Jan Jones said regulating and taxing online gambling might swell government coffers by $2 billion to $6 billion annually. "This is a thriving industry," said Jones, who is in Washington this week to meet with lawmakers and staff members. "They can put in a regulatory structure and they can tax it."

Hills of Focus on the Family said "a perfect storm for addiction" would be created by legalized online gambling.

"We've got anonymity, we've got secrecy, we've got availability 24-7" in online gambling, Hills said. "I liken it to somebody with an alcohol addiction coming home every night and the fridge being full of beer, wine and vodka."