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Online gambling fight now about when, who — not if

By Oskar Garcia

Associated Press

Published: Tuesday, Jan. 3 2012 11:31 p.m. MST

LAS VEGAS — The fight to fully legalize online gambling in the U.S. is now less about whether Americans will be able to play and more about who will bring the action to them — and when.

A recent U.S. Justice Department opinion opened the door for cash-strapped states and their lotteries to bring online gambling to their residents, as long as it does not involve sports betting.

The DOJ memo also enflamed a battle within the industry over how to legalize online gambling that once generated an estimated $6 billion yearly just from poker: Should each state have its own system, or should there be a nationwide law?

While the opinion sent gambling stocks rising, many players who've been shut out from top online poker sites since April just want games to restart and don't care who profits.

"I don't like this legal limbo. Is it legal, or is it illegal?" said writer Brian Boyko, who plays poker as a hobby.

Boyko of Austin, Texas, has been using a small offshore site since executives and others at PokerStars, Full Tilt Poker and Absolute Poker were accused of illegally getting banks to process gambling funds.

Most of the U.S. games disappeared after the indictments.

One lawmaker in New Jersey is pushing to make online gambling legal, citing the DOJ memo. State Sen. Raymond Lesniak said he'll try to get a bill to Gov. Chris Christie's desk by next week.

"We can be the Silicon Valley of Internet gaming," he said. "It's the wave of the future."

Online poker boomed in the U.S. over the last decade, but a 2006 law made it illegal to run most online gambling businesses by forbidding financial institutions from processing transactions related to illegal online gambling.

The law, however, didn't clearly specify what kinds of gambling were illegal.

Some forms of gambling, like fantasy sports and horse racing, got explicit carve-outs, while many poker games kept going online as some operators got differing legal opinions about whether the Wire Act of 1961 applied to them.

Since then, poker proponents have argued that the game is different from other casino games like blackjack or slots because it involves significantly more skill.

Even casino companies — which make far more money from luck-based games than poker — began pushing for poker-only legislation under the assumption that poker regulations would be easier for lawmakers to stomach than other games.

Meanwhile, New York and Illinois officials asked the DOJ in 2010 whether the Wire Act or the 2006 law prevented them from selling lottery tickets online to adults within their states.

Last week, the DOJ answered: The Wire Act only prevents players from wagering on sports outcomes — other bets are OK.

The commercial casino industry's top lobbying group in Washington, D.C., believes the DOJ's interpretation of the Wire Act was correct, but added more confusion than solutions.

"There's probably some staffers at work on (Capitol Hill) now taking a real hard look at this as they figure to bring some sanity," said Frank Fahrenkopf, chief executive of the American Gaming Association.

Fahrenkopf said his group will keep pushing Congress for online poker legislation that establishes baseline rules for Internet poker operators.

Within the gambling world — which includes lotteries, private and publicly-traded companies, American Indian tribes, software manufacturers, offshore sites and others — there are differing visions for ideal online gambling laws.

Mark Hichar, an outside lawyer for the company that runs the Texas lottery, said the memo removes uncertainty and will prompt lotteries to begin running as many different kinds of games as are allowable under state laws.

"This helps lotteries, which are ... determined to remain relevant and to attract a new generation of players," said Hichar, who represents Rhode Island-based GTECH Corp.

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