US Land Casinos Keep Eye on Online Casinos

 Major American media, including the International Herald Tribune and Bloombergs started the week with some interesting reportage suggesting that U.S. land casino companies were increasingly considering online casinos as a new alternative for revenue growth. The reports came after the American Gaming Association’s recent call for a congressional committee to study online casinos rather than imposing the immediate ban on online casinos that some legislators would like to see. The reports named MGM Mirage, Harrah's Entertainment Inc. and other U.S. casino operators and said that there is increasing pressure on Congress to consider legalizing online casinos. The online casinos industry has reported healthy profits in the past few years, but online casinos are untaxed by the government, and of the thousands of online casinos, many are set up in offshore tax havens like the Caribbean.

Lobbyists and spokesmen for the big brands in land gambling are quoted as saying that the best way to control the $12 billion online casinos business, based offshore while drawing more than half its revenue from the U.S. - is to regulate and tax it. "The argument the industry is making is, if it is being done offshore, why not bring it in to the U.S. so it can be regulated?" says Sen. John Ensign, a Nevada Republican who has discussed the online casinos issue with representatives of Las Vegas-based Harrah's, the world's largest casino owner. "It doesn't look like you can ban it."

The companies, which according to Federal Election Commission records have so far contributed more than $900,000 to congressional candidates in this fall's elections, are pushing lawmakers to take a first step toward legalization of online casinos by creating a federal commission to study it. Ensign and Senate Minority Leader Harry Reid, a Nevada Democrat, say the online casinos proposal has a chance of clearing the Senate this year. Meanwhile, Republican representative Bob Goodlatte and Democrat Rick Boucher, are pursuing legislation to force U.S. financial institutions to cooperate with federal law-enforcement authorities in shutting down the flow of cash to online casinos based outside the U.S. The House Judiciary Committee is scheduled to take up the online casinos measure this week, and Majority Leader John Boehner says he intends to bring it to a floor vote later this year.

Even if the measure passes the House, it would face long odds in the Senate, says Matthew Gerard, an online casinos industry analyst at Investec Securities in London. "Ultimately, we think it will be very, very difficult to get any prohibitive legislation through the Senate,'' he says. The Justice Department continues to investigate and prosecute online sportsbooks that accept funds from U.S. customers. On May 17, prosecutors in Washington announced money-laundering charges against two people who operated an Internet betting parlor in Antigua. In addition to making campaign contributions, the U.S. casino operators have reportedly retained some of Washington's top lobbying firms, including Patton Boggs LLP and Barbour Griffith & Rogers, to promote their interest.