Unable to ban Internet gambling, lawmakers try for moratorium

Opponents of online gambling in Congress have tried to ban it repeatedly, and failed every time. Now they’re back with a new tactic—a two-year “study” bill and online gambling moratorium. But if you want to place bets on that moratorium ever being “temporary,” you may find better odds in Vegas. And the bill’s biggest supporter couldn’t be happier about that.

Proposals to ban online gambling have failed to gain traction in Congress and met significant backlash from state lawmakers and prominent libertarian and conservative groups that see a federal ban as an infringement on state sovereignty. So will a moratorium succeed in imposing a stealth ban? According to sources on Capitol Hill, a proposal is being floated in Congress to impose a two-year moratorium to prevent states from legalizing Internet gambling while a federal study is conducted. It would not interfere with the online casino-style games currently legal in New Jersey, Delaware, and Nevada, but it would obstruct the legislative efforts currently underway in seven states considering legislation to legalize the activity. (It isn’t clear how the proposed moratorium would affect lottery sales that are currently legal in at least 13 states.) 

{mosads}The online gambling prohibition, titled Restoration of America’s Wire Act (RAWA, S. 1668), is the brainchild of casino magnate and GOP mega-donor Sheldon Adelson, who told Forbes in 2013 that he’d spend “whatever it takes” to stop the spread of online gambling. As The Hill uncovered in March 2014, a lobbyist connected to Adelson authored the original draft of RAWA. 

“An Internet gambling moratorium is nothing more than prohibition in sheep’s clothing,” said John Pappas, executive director of the Poker Players Alliance. “They can’t get RAWA through the front door so they are trying to squeeze it through the back.” 

During the midterm elections in 2014, Adelson gave $5 million to the Congressional Leadership Fund and at least $20 million to groups that don’t disclose funding sources, including Crossroads GPS, which poured money into successful campaigns against Democratic Sens. Mark Udall (Colo.), Mark Begich (Ark.), Kay Hagan (N.C.), and Mary Landrieu (La.). Still, Adelson was unable to convince leadership to attach the ban to the 2014 omnibus spending bill. 

The Congressional GOP leadership should note the vocal opposition to RAWA at the state and national level. The National Governors Association, National Conference of State Legislatures, and Fraternal Order of Police all strongly oppose the federal government usurping state authority to regulate gambling within their borders. Conservative groups like Americans for Tax Reform opposed the bill on for the same reason. The idea of a two-year moratorium will likely face similar opposition, for good reason. 

“A moratorium is even more troubling for the notion of states’ rights and the 10th Amendment,” said Pappas. “It would give favored status to those states who already offer regulated iGaming and put the brakes on others who want to provide these consumer protections to their citizens. Of even greater concern, a moratorium does nothing to stop the unlicensed, unregulated overseas operators from continuing to flourish in the U.S. marketplace. It only tells states they can’t exercise responsible oversight.”  

Will a moratorium fare better in Congress? It’s unlikely that members will risk bogging down the legislative process with a niche issue that has minimal support. On the other hand, that minimal support is from a major GOP donor whose right-hand man said in April that online gambling could be “the destruction of [the gaming industry].” 

A moratorium deserves to face the same kind of opposition from state interests and conservative and libertarian groups as a ban. After all, a temporarily violating the 10th amendment is still a violation—one that could cost states millions of dollars in lost revenue and open the door for the feds to meddle in other controversial intrastate activities.

Minton is a fellow at the Competitive Enterprise Institute.