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Reid Backs Legalizing Web Poker

By ALEXANDRA BERZON

Staffers for Senate Majority Leader Harry Reid are circulating a bill to legalize poker playing on the Internet that's backed by large casino interests.

The Nevada casino companies pushing the measure were among the Democrat's biggest donors during his fierce re-election fight. They argue the bill would provide consumer protection for poker players and would provide some tax revenue for federal and state governments.

On Wednesday, three Republican lawmakers sent a letter to Mr. Reid and Minority Leader Mitch McConnell (R., Ky.) opposing any efforts to pass Internet poker legislation during the lame-duck session.

"Congress should not take advantage of the young, the weak and the vulnerable in the name of new revenues to cover more government spending," Rep. Spencer Bachus (R., Ala.), the ranking Republican member of the House Financial Services Committee and others wrote.

Jim Manley, a spokesman for Mr. Reid, declined to comment.

Mr. Reid, who has opposed online gambling in the past, is holding his cards close to his vest regarding plans to move forward with the legislation. Passing such a measure is highly uncertain as the heated session winds down, given the sensitive nature of the subject.

Previous attempts at online-gambling legislation haven't moved forward, but casino interests believe that given Mr. Reid's powerful position atop the Senate, he might be able to push the poker measure into another bill, according to people familiar with the discussions.

The legislation would overturn a bill passed in 2006 that bans financial institutions from processing online-gambling transactions. That led publicly traded companies to pull out from operating online sites in the U.S. In their place, offshore sites have gathered an estimated 10 million U.S. poker players, according to the Poker Players Alliance.

According to the draft of the bill reviewed by The Wall Street Journal, Mr. Reid's office is considering language that would allow only existing casinos, horse tracks and slot-machine makers to operate online poker websites for the first two years after the bill passes, which could limit the ability of other companies to enter the market.

The bill would also outsource oversight to state regulators, another move supported by existing casinos that don't want to see the federal government become overly involved in regulating their industry.

The bill as drafted would send taxes on wagers to both federal and state governments.

Alan Feldman, a spokesman for MGM Resorts International, a large Las Vegas-based casino company, said he hoped such a bill had a possibility of rushing through in the next few weeks. "A lot of things happen in this kind of time frame," he said.

Internet gambling has been a top priority for the Las Vegas-based Caesars Entertainment Corp., which recently changed its name from Harrah's Entertainment Inc. and is the largest casino company in the world by revenue. The company owns the popular World Series of Poker brand that it hopes to parlay into online success to make up for anemic growth in its U.S. casino markets.

—Janet Hook contributed to this article
Write to Alexandra Berzon at alexandra.berzon@wsj.com


Eric D. Schwerin
Rosemont Seneca Partners, LLC
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