Last week, I commented on the reports that Harry Reid had been secretly conducting back-room deals to regulate online gambling at a federal level. The idea is to attach the gambling legislation onto a must-pass bill, such as the tax cuts.

New Jersey is well on their way to passing a law to legalize and regulate intrastate online gambling within its borders. California is considering following that same path. Reid, long in the pocket of the Las Vegas casinos, has always been opposed to online gambling because of the thought that it would hurt the gambling industry on the Vegas Strip. However, recently Reid seems to have taken the position of if you can’t beat them, join them. Of course, if you join them, make sure you also beat them.

There isn’t a whole lot of information on Harry Reid’s proposed online gambling regulation, partly because the bill is so secretive and, despite Obama’s promises of transparency, most people (including members of Congress) don’t find out what’s in a bill until after it passes. One thing that is said to be in the bill, though, would give Vegas casinos an advantage in the online gambling market.

It is being reported that Reid’s bill would make online gambling legal in all 50 states. However, it comes with the stipulation that for casinos to offer online counterparts, they must have been in operation for at least five years. That would give the casinos in Las Vegas and Atlantic City an advantage over casinos that have recently opened in other states.

The problem, and the question about whether or not Reid’s bill would be unconstitutional, has to do with states’ sovereignty. Most U.S. states don’t have any laws specifically regarding online gambling, but a few states, such as Washington, specifically ban the action. It seems that Reid’s bill would attempt to override Washington’s ban, though from a constitutional standpoint Washington’s state law trumps federal law. Because it doesn’t involve interstate activity, the federal government has no jurisdiction. That problem could be solved if Reid’s bill has an opt-out clause, though, where individual states can opt out of legalizing online gambling.

The other problem is the five-year rule. That rule is for the blatant purpose of putting some states at a disadvantage for the benefit of other states. For example, Pennsylvania, who only recently allowed full casinos, would be ineligible for online gambling. If Pennsylvania wanted their casinos to offer gambling websites where U.S. citizens in any state can play, the federal government would have jurisdiction, because it would fall under the interstate commerce clause of the Constitution. However, if Pennsylvania aims to simply allow intrastate online gambling, the federal government has no say in what they do. Therefore, if Reid’s bill attempts to restrict the state from that activity, the bill is unconstitutional.

None of this comes as a surprise. It certainly wouldn’t be the first time that Harry Reid has pushed for and passed a law that flagrantly violates the Constitution. You can always give Reid the benefit of the doubt and assume that he doesn’t know what the Constitution says. After all, a lot of his actions, such as accidentally voting against his own bills, suggest that he is senile. If Reid’s bill does pass, it will be interesting to see if other states fight back.

Tags: Harry Reid, U.S. online gambling, UIGEA

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