Dispatches from the Culture Wars

When Bill Frist pushed through the Unlawful Internet Gambling Enforcement Act in 2006, there were many questions asked about who was behind that legislation and why it was passed. Some blamed it on the brick and mortar casinos, assuming that they were opposed to internet gambling because it was competition for them.

But in fact, the American Gaming Association, which represents casino interests, was against the legislation. The casinos don't see online gambling as a competitor so much as an opportunity. They would like nothing better than to see online gambling made into a legally regulated enterprise in this country so they could establish online versions of themselves and add another revenue stream.

Others, like me, blamed it primarily on the religious right and the GOP's attempts to pacify them with anti-sin legislation. But Politico notes that the National Football League was lobbying in favor of the UIGEA as well and their lobbyist working on the issue has now joined the Bush administration to write the implementation rules for that law:

A Tennessee Democrat is charging a top Bush adviser with exerting "considerable political pressure" to benefit one of his former lobbying clients.

Rep. Steve Cohen asked White House Counsel Fred Fielding to investigate whether William Wichterman, a top political aide to the president, disclosed his "potential conflict of interest" in pushing the administration to enact new requirements to enforce an Internet gambling ban, according to a letter the congressman sent Friday.

As late as March, Wichterman was a registered lobbyist with Covington & Burling, where he represented the National Football League, according to the Senate lobbying disclosure database. In that role, he worked on the Internet gaming laws, one of the league's top legislative priorities.

The article also makes a statement that I think is false:

The Cohen letter marks the latest turn in a long-running fight over Internet gambling regulations. The online poker industry has partnered with a wide range of financial institutions to slow the administration from implementing rules Congress passed in 2006 as part of an unrelated bill.

This is false. The fact that there are no implementation regulations written yet is the fault of those who advocate the law, not those who oppose it. A few months ago, representatives from the financial institutions who have to comply with the rules went to Congress and virtually begged them to give them clear guidelines on how to implement that legislation and they were flat turned down.

The problem is that the bill says that financial institutions have to block all transactions to illegal online gambling sites, but it doesn't define what is and is not illegal online gambling. The Bush administration has taken the position that all forms of online gambling not explicitly allowed by law are illegal. But the courts have ruled the opposite, that the only form of online gambling that is illegal is sports betting, which is explicitly banned by the Wire Act.

So the banks and credit card companies are left in a bind figuring out which transactions they have to stop and the government, while demanding that they do so, actually refused in March to tell them which sites have to be blocked. This means the banks themselves have to figure out what sites to block and they're getting conflicting advice from the courts and the DOJ.

And the Bush administration has encouraged this ambiguity for two reasons. First, because they know that those companies will be forced to err on the side of blocking too much rather than too little in order to avoid too much government scrutiny. Second, because they know that if they write specific implementation rules saying that they have to block online poker sites, for example, then those online poker sites can sue in court and have those regulations overturned because online poker is not, in fact, against the law in this country (for a full explanation of why, go here).

The article notes that now the Bush administration wants to push through administrative rules, which I guarantee will still not comply with the actual law on unlawful internet gambling, before Obama takes over:

Wichterman and others backers of the bill, like Sen. Jon Kyl (R-Ariz.), have been pushing the administration to enact these changes before Nov. 17, in the narrow window before the new administration could make any changes, according to people familiar with these deliberations.

The Department of the Treasury and the Federal Reserve must sign off on the language of the law before the administration can implement these new rules. There is a 60-day review process, so current administration officials want their recommended language to take effect before the next administration takes over.

In his letter to the White House, Cohen suggests Wichterman "has been a source of considerable political pressure to speed this regulation through finalization."

Balko also notes that although the NFL was in favor of the UIGEA, they also demanded - and got - an exception for fantasy football leagues.