Washington — The U.S. economy is losing billions of dollars annually to unregulated underground and offshore poker websites that can prey on compulsive and underage gamblers with impunity, proponents of legalized Internet gaming argued Tuesday before a House panel.

But huge questions remain about whether proposed federal legislation to legalize online poker might harm state governments and Indian tribes — including several local ones.

With the stakes high, Rep. Mary Bono Mack, R-Palm Springs, whose Riverside County district is home to seven tribal casinos, called advocates and experts on all sides of the thorny issue to testify before the Subcommittee on Commerce Manufacturing and Trade.

Should Internet gambling be legalized?
 
Following 2½ hours of testimony, Bono Mack, who is the subcommittee chairwoman, said she believes it would be a mistake for the government to attempt to stand in the way of the power of the Internet. But she said she wants more information before formally considering a bill to legalize and regulate online poker.
“There are clearly a lot of questions and issues,” Bono Mack said. “I think to rush it would be a mistake.”

The bill, penned by poker aficionado and Republican Texas Rep. Joe Barton, follows 2006 legislation that effectively outlawed Internet gambling for money. Barton on Tuesday said the law is unenforceable and has only led Americans to sites that are foreign-based and illegal.

“People are playing poker on the internet in the United States for money today,” Barton said. “It’s not regulated, and so these sites are offshore, overseas and, consequently, outside of the ability for us to tax the winnings.”
Americans, including hundreds of thousands between the ages of 14 and 22, spend as much as $6 billion annually on Internet gambling sites — some of which are rigged or otherwise fraudulent, said Parry Aftab, an advisory board member for FairPlay USA. That group, made up of law enforcement officials, consumer protection experts and poker players, is among several organizations that sided with most lawmakers on the panel calling for congressional action to address the issue.

But while there appeared to be general agreement in support of legal, regulated online poker, concerns over how it would work cloud any path forward for the plan.

Among the concerns is how congressional action might affect efforts to legalize Internet gambling in California and other states. The federal legislation comes amid a continuing impasse in Sacramento on creating a state-licensed online poker system.

The Legislature adjourned last month without taking up either of two competing bills dealing with online gambling: one backed by a group of tribes and card clubs that would legalize online poker, and another that would legalize poker as well as other types of gambling.

The Morongo Band of Mission Indians near Cabazon and the San Manuel Band of Mission Indians near San Bernardino are the leaders of the group pushing the state-wide poker-only legislation.

Senate President Pro Tem Darrell Steinberg, D-Sacramento, has said the state Senate would take up the legislation after it returns in January. But even as California and other places consider legislation, the U.S. Justice Department has remained silent on whether it views intrastate online gambling as legal under the 2006 law.

Bono Mack said she is considering holding another hearing to take testimony from state officials and federal agencies not represented Tuesday.
California tribes are among those warily monitoring the federal legislation and its potential impact on tribes’ bricks-and-mortar casinos.

The association representing California tribes with casinos opposes the federal measures unless there are changes allowing states to opt out of a federal system and license their own games. Barton’s bill contains an opt-out provision, but states that choose to take advantage of it would be barred from passing a law to legalize intrastate online gambling, Barton spokesman Sean Brown said.
“Intrastate internet poker could be much more controlled in California as opposed to federal legislation, which would be much more open-ended,” said Jerome Encinas, director of government affairs for the California Nations Indian Gaming Association.

The Tribal Alliance of Sovereign Indian Nations, comprised mostly of gaming tribes in Riverside and San Bernardino counties, in March 2010 adopted a resolution opposing federal online gambling measures. The federal bills, it said, would break with a tradition of deferring to “tribal and state government policies concerning the authorization and regulation of gaming within their respective jurisdictions.”