Deficit Debate May Bolster Chances for Federal Online Gaming

The federal government's commitment to reducing the federal budget may provide the much needed opening for federal discussions about legalizing online gaming, reported Connecticut's The Day.

When the new Congress reconvenes this month, debate about the online gaming proposal submitted last fall by Senate Majority Leader Harry Reid (D-Nevada) and Senator Jon Kyl (R-Arizona) is expected to resume. Their bill allows only online poker and off-track betting on horse races, excluding all other types of online gambling. Although it would permit online lottery sales by individual states, the bill also prohibits international player pools.

If the federal government passes a law allowing online gaming under the terms of the Reid-Kyl bill in all 50 states, British consulting firm H2 Gambling Capital estimates its market hit about $2.82 billion in the first year and $4.57 billion by the third year. That means, by year three, roughly $91 million would funnel to federal government coffers in new taxes. H2 acknowledges that number could go down, if many states opted out of online gaming through a provision in the bill.

In December 2011, when the U.S. Justice Department issued a ruling clarifying the Federal Wire Act of 1961 prohibits intrastate transmissions strictly on sports betting, online gaming proponents hoped the new opinion would clear the path for states to start permitting and regulating Internet gaming. Throttled by the federal deficit, gaming advocates hope a federal bill now stands a chance.

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