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Harry Reid’s New Anti-Online Gambling Stance and the VegasInc Report

(Author’s note: The opinions offered here are solely those of the author himself, and do not necessarily represent the opinions or beliefs of FlushDraw and its owners.)

Welcome to FlushDraw’s Take 2 on one of the week’s best tongue-wagging tales, that being the apparent flip-flop of US Senate Majority Leader Harry Reid (D-NV) regarding federal online gambling legislation currently under discussion in the US Congress.  Reid recently announced that he would not seek reelection after serving as a Congressman for 34 years, and recently gave an in-depth interview to Nevada Public Radio about his decision to retire, his political legacy, and his hopes for what he’d like to accomplish during his last years in office.

Harry ReidAmong those, of interest to the online gambling world, was Reid apparently throwing in with his good friend Sheldon Adelson in supporting, in general terms, the RAWA bill recently reintroduced by US Rep. Jason Chaffetz earlier this year. Speaking on NPR, as detailed in a well-justified slam by FlushDraw’s Dan Katz in his own op-ed yesterday, Reid said, “Well, we will see what the legislation does — we will see what the House does,” regarding the latest edition of RAWA. “But I think, for the state of Nevada, online gaming is not the direction we should go.”

This brings us, indirectly, to a followup on Reid’s NPR interview, authored by Las Vegas Sun reporter JD Morris and published on the Sun’s online business portal, VegasInc.  We’ll return to this Morris piece in a bit, as it’s caused a bit of a stir on its own.

First and foremost, however, Reid — the consummate sleazy politician who manages to lower expectations for politicians in general, and that’s hard to do.  That Reid would switch his stance is not entirely surprising.  Reid has long been chummy with Adelson, the billionaire Las Vegas Sands CEO who has paid millions to have RAWA considered by Congress.  Adelson is Nevada’s richest man, in addition to being one of the largest — if not the single largest — GOP political donors over the last decade and a half.

Adelson was also formerly a Democrat himself, and it’s long been rumored in Nevada and national political circles that Adelson has tacitly continued to help Reid by keeping strong GOP candidates from running against Reid in recent years.  The two men often talk about their friendship with each other and their common interests in many matters, even if they are, officially and formally, on opposite sides of the political aisle.

That Reid would switch sides on the topic of online gaming, of course, deserves its own closer examination.  As of now, Nevada is an online-poker-only state; other forms of online gambling are not allowed.  However, the quote by Reid indicates that he might not fight too hard against the current form of RAWA, which would inflict a nationwide ban on online gambling, and would stomp out the nascent online-gambling industries in Nevada, New Jersey and Delaware as a part of becoming law.

What’s strange about all that is that Reid himself proposed what became the Reid-Kyl bill, which would have created a poker-only exemption in exchange for banning other forms of online gambling.  Reid-Kyl was a lousy bill, and it deserved to die the ignominious death that it suffered, but Reid’s latest comments suggest that he didn’t give much of a damn about it in the first place.

This writer believes that he sponsored what became Reid-Kyl only because he received a million dollars to do so in under-the-table money from the old owners of Full Tilt Poker, the Howard Lederer / Ray Bitar / Chris Ferguson crew.  Reid was accused of participating in two separate bribery-laden incidents by indicted Utah mass-marketer Jeremy Johnson, a central figure in 2011’s “Black Friday” affair.

A year ago, as part of a series looking at Johnson’s secret taping of a damning, hour-long conversation with then-Utah Attorney General John Swallow, Johnson also talked about two separate bribery episodes involving Reid.  One of those, and the one most germane to this piece, is Johnson’s claim that he forwarded $1 million to unidentified associates of Reid’s in exchange for the bill [Reid-Kyl] to be introduced.

Johnson was shown to be a lair and a manipulator in several other areas, but interestingly, his claims about his erstwhile political connections and influences have held up to closer scrutiny.  Johnson’s claims about his dealings with Swallow and his Utah AG predecessor, Mark Shurtleff, led directly to Swallow’s forced resignation and charges being brought against both now-former Utah AG’s.

Jeremy Johnson has been immersed in legal hot water for several years.  And he has shown no hesitation to share the dirt about politicians who he believes have betrayed him.  What Jeremy Johnson hasn’t been shown to do is to invent claims of bribery or malfeasance.

With that said, and with the full knowledge of Johnson’s own sordid background, I believe his tale of forwarding a million-dollar bribe from Lederer and Bitar to friends of Reid.  Enough circumstantial evidence exists — Reid and Johnson were photographed meeting at a funder in Las Vegas, for instance — to support the claims.  And no one has ever specifically refuted the claims, even if doesn’t seem as though the feds have been too keen to investigate the alleged political corruption.  The feds even attempted to stonewall the Shurtleff and Swallow investigations before two Utah county prosecutors dug into the mess themselves.

Reid has always been an opportunist.  The money source that funded Reid-Kyl is gone now, and ol’ buddy Sheldon Adelson is much richer anyway.  The only difference between RAWA and Reid-Kyl, if one digs into it, was the specific online-poker exemption.  Reid-Kyl would also have done away with Internet-based state lottery sales.

Harry Reid is no friend of online gambling.  It’s high time the gaming industry stopped deluding itself into believing that he is.

ScreenHunter_48 Apr. 05 17.36And all that leads up to the VegasInc feature, “Reid Striving to Add Ban on Online Gaming to His Political Legacy,” mentioned in the title.  Authored by JD Morris (@thejdmorris on Twitter), the story was a somewhat straightforward summary of Reid’s NPR interview.  Morris was able to buttress his retake on Reid’s shifted position by getting a quote from LV Sands veep Andy Abboud, for instance, to give it a new feel.

“I think (Reid) hears Mr. Adelson’s position, and I think the fact that they share that position speaks volumes about where he is on the issue,” Abboud told Morris.

I don’t disagree with Abboud at all on that individual point.  But that’s not the greater issue.  Instead, it’s a shooting-the-messenger tale involving Morris and his piece.

One of the questions quickly raised on social media was how sympathetic the Las Vegas Sun and Morris in particular were in assembling this report.  Shortly after pimping the piece on Twitter, Morris followed up by noting the personal attacks had started:

I had some mild issues with the story as well, and was disappointed by one passage in it as well, even though the above is way, way out of line. Oddly enough, I discovered moments after reading the piece and the above stuff from Morris on Twitter that he followed me on Twitter.  (Silly man.)  So I Tweeted at him:

.@thejdmorris Well, it would have been nice to see your piece avoid the factual inaccuracies and regurgitated CSIG bullet points.

There is a subheader and a paragraph in the Morris piece that is equal parts factually wrong and politically misleading, and I wondered at first read if the piece was a paid-for plant.  But I quickly followed Morris on Twitter myself, he DM’d me, and we had quite the civil chat in which he assured me that he was striving to as balanced a take as possible on the issue, noting that both pro- and anti- forces regarding the issue are often quite emotional in their claims.

I’m not going to quote Morris’s texts to me directly as that wouldn’t be fair to him in a professional sense, but there was absolutely none of the standoffish haughtiness that marked Leah Goodman McGrath’s terrible NewsDay piece a few months back.  Goodman McGrath eventually blocked everyone (yep, me too) on Twitter and Facebook that dared to reveal how dreadful her cover feature actually was, which might be good for the digestion but is lousy for the long-term reputation.

Morris — a totally different story.  He asked me to explain exactly what in the story drew my ire, and I pointed him to this excerpt:

Momentum against online gaming in Congress

The ban, proposed in legislation called the Restoration of America’s Wire Act, would essentially reverse a 2011 Department of Justice opinion that opened the floodgates to legal online gaming. The legislation also was introduced in the last Congress.

The deck, regarding momentum, is little more than conjecture, and the phrase “opened the floodgates” is a touch of pandering and fear-mongering that caters to RAWA supporters.   Then there’s the factual inaccuracy in the above: Eric Holder’s 2011 DOJ opinion did no such “opening of the floodgates” regarding online gambling.  Rather, it verified the growing and factually supported belief that the 1961 Wire Act was intended to police rackets-dominated illegal sports betting only, as it existed in that era.

Such a clarification from Holder and the DOJ was requested by several state-lottery groups in 2010 and 2011, and was made necessary by the real-world effects of the 2006 UIGEA (Unlawful Internet Gambling Enforcement Act).  The ridiculously vague code contained within the UIGEA essentially deputized the Umited States banking industry, and made its member institutions secondarily liable if illegal gambling activities were conducted through Internet banking streams.

Problem was, nowhere was there a list of what activities were or weren’t allowed.  And many banks blocked state-lottery sales online out of fear of risking their own corporate hides.

Since sports betting was the only activity specifically mentioned in the ’61 Wire Act, that meant that in his clarification, Holder had to tell the DOJ to stop over-prosecuting various grey-area forms of online gambling.  That came way too late for companies such as PokerStars, where the games themselves were actually legal, or at least not specifically outlawed, which is the general US standard.

Morris’s piece erred in this and several other areas by not fully exploring the framework under which RAWA was submitted.  Morris might sup too deeply from Abboud’s dish of rhetoric-laden candy, but given the chance to air some of those claims was probably part of the deal for offering the quotes.  And when crap is all one receives for quotes, sometimes you just have to hold your nose and pick something.

Morris admitted to me that he didn’t follow up on the UIGEA overblocking angle as well as he should have, agreeing that it was indeed an important step in the chain of events that has led to RAWA’s creation and submission. Still, after reading his texts to me and comparing them with what was published, I’ve become convinced that the excerpt I cited and the piece in general was more subject to bouts of laziness and writerly inexactitude than it was to intentional skew.  It’s not a great piece; it’s just a whiff that’s drawing more attention than it should.


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