Senate Accused of Secret Plan to Legalize U.S. Online Gambling

Three U.S. House Republicans are objecting to what they call a “secretive, closed-door, undemocratic” effort in the Senate to pass legislation that would legalize and tax some Internet gambling before Congress adjourns this year.

Representatives Spencer Bachus, Dave Camp and Lamar Smith, all in line to be committee chairmen with oversight of online gambling when Republicans take control of the House in January, said they have learned that the Senate may attach a measure to “must-pass” legislation during the current lame-duck session.

“Creating a federal right to gamble that has never existed in our country’s history and imposing an unprecedented new tax regime on such activity require careful deliberation, not back- room deals,” the lawmakers said in a Dec. 1 letter to Senate Majority Leader Harry Reid and his Republican counterpart, Mitch McConnell of Kentucky.

Internet gambling has provoked heated debate in Congress over the past few years. Proponents say regulating online poker and other games would bring billions into federal coffers, while opponents contend that it would encourage Americans to make poor financial choices and could open the market to children.

A House committee in July approved legislation that would legalize some Internet gambling, allowing U.S. residents to place online wagers with companies the Treasury Department has licensed. It has not been taken up by the full House or in the Senate.

Processing Payments

The House measure, sponsored by Massachusetts Democrat Barney Frank, chairman of the House Financial Services Committee, would override a law designed to block such betting. That law, which was enacted in 2006 and took effect in June, bars banks from processing payments to offshore gambling websites.

The Senate legislation is similar to Frank’s bill. The House proposal requires licensed gambling companies to have safeguards to protect against underage and compulsive gambling and to prevent people from placing bets online in states that prohibit it.

Reid, of Nevada, has large gambling interests in his state. A spokesman for Reid, Jim Manley, said in an e-mail that he had no comment.

The three House opponents -- Bachus of Alabama, Camp of Michigan and Smith of Texas -- are in line to be chairmen of the Financial Services Committee, the Ways and Means Committee and the Judiciary Committee, respectively. Each panel would have some jurisdiction over the measure.

“We also are concerned that this new rush to embrace Internet casino gambling might be partially motivated by one of the gravest sins that afflicts this Congress: desperation for more tax dollars to pay for ever-increasing federal spending,” the lawmakers said in the letter. “Congress should not take advantage of the young, the weak and the vulnerable in the name of new revenues.”

Approving such controversial legislation by attaching it to another bill would be “a secretive, closed-door, undemocratic process,” they said.

To contact the reporter on this story: Catherine Dodge in Washington at cdodge1@bloomberg.net; Robert Schmidt in Washington at rschmidt5@bloomberg.net;

To contact the editor responsible for this story: Mark Silva at msilva@bloomberg.net

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