US lottery

The Reid-Kyl Online Poker Bill Fight That’s Not About Poker

If you’ve been checking in on the prospects of the Reid-Kyl online poker bill, formally called the “Internet Gambling Prohibition, Poker Consumer Protection, and Strengthening UIGEA Act of 2012,” you’re likely aware that the proposed measure has encountered choppy waters in recent weeks.

US lottery sales are more than $50 billion annually, and could be negatively impacted if Reid-Kyl becomes law.

These days the Reid-Kyl measure is probably an odds-against bet to even be introduced, much less attached to a larger piece of legislation.  Not only has it been mired in a partisan squabble between co-author and Democratic Majority Leader Harry Reid and his Republican opponents, the intractable nature of the ongoing budget debates has shoved virtually every matter off the stage.

And yet the budget’s only one of the factors working against Reid-Kyl as December begins.  The fact that the online-poker legislation has gotten wrapped up into a larger battle involving state lotteries may be the final nail in the coffin for this proto-bill’s slim chances.

The latest war over other aspects of Reid-Kyl involves state lotteries doing virtually everything they can to nuke the bill, resulting in a split between these states and the National Association of Convenience Stores (NACS).  The states are stridently against the banning of lottery tickets over the Internet, which was recently introduced in my home state of Illinois and is on track to be offered in several other states very soon.

As for NACS, they don’t want to lose the virtual monopoly they’ve had over the sale of lottery tickets, which could be adversely affected by widespread online sales.  It’s the typical turf war, over nothing but money.

As The Hill reported recently in a piece called “Convenience Stores, Lotteries Face Off Over Reid’s Online Poker Bill,” Reid-Kyl’s lottery-blocking provisions have a major opponent in these state lotteries, so much so that six or seven states’ officials, all members of the North American Association of State and Provincial Lotteries (NASPL), are descending on Washington DC this week.

Accordimg to the piece, Arch Gleason, president and CEO of the Kentucky Lottery Corporation, said, “I think it’s the first time that we have come as a group.  There is a sense of urgency. If this attached to legislation, this can have a negative impact on state lotteries and how their funds are raised for public benefit.”

While NACS has joined groups such as the PPA in supporting Reid-Kyl, the lottery officials join such groups as the National Governors Association and the National Conference of State Legislatures in coming up against Reid-Kyl, with every one of the groups blasting the measure for its attempts to infringe on states’s rights regarding gambling revenue.

What the Hill piece doesn’t delve into is how one-sided this tussle is likely to be, and why it spells likely doom for Reid-Kyl.  Lotteries, available in 42 states, are at least a $55 billion business annually in the US, a good chunk of which is regularly earmarked within state budgets.

Online poker at most represents a few million in revenue for even the largest states, which means it’s no better than an afterthought to all these state officials, and is of little relative consequence.

What the PPA’s backers on forums haven’t understood is that the supposed “free money” available to states who implement online poker is the equivalent of getting a $5 bill, but being told that you can’t have the hundreds of dollars that might be available via online lottery ticket sales.  That’s the relative size of the two arguments, and when you start talking about tens or hundreds of millions of dollars, it’s easy to see that the lotteries are Goliath, and David is online poker… without a sling.

Attaching Reid-Kyl to other legislation, in the same way the original UIGEA was enacted?  With these dollars at stake, people will be watching.  That’s why it won’t happen, and why their won’t be this massive recruitment of federal legislation to support the bill.

So, mark it down: Reid-Kyl is toast.  On the plus side, it was a pretty bad bill anyway.




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