Finally, New Jersey may be known for something in the popular culture other than skanks and drunken self-absorbed idiots on a MTV reality TV show (to be fair, I’m sure there are a lot of great things about the Garden State; we just don’t hear about them). Late last night, the state Assembly passed online gambling legislation that, if signed into law, will make New Jersey the first U.S. state to regulate the activity.

During a late-hours emergency session, the state Assembly passed Ray Lesniak’s online gambling bill by a margin of 63-11. The bill would create an intrastate online gambling industry in New Jersey, with the existing Atlantic City casinos able to obtain licenses from a new regulatory authority to offer Internet gambling. Only residents of New Jersey could legally wager at the online casinos.

Lesniak states that the legislation, which would regulate both online poker and casino games (unlike Harry Reid’s failed federal bill), will generate approximately $350 million in revenue every year for the state. In order to avoid problems with the federal government (such as the banking rules of UIGEA), the online casinos have to be located within the state of New Jersey and only residents who are physically located in the state can play at the casinos. In that case, no interstate or international commerce is involved, so it is outside the authority of the federal government.

Last November, the state Senate passed the same bill by a margin of 29-5. The final stage for the bill before it becomes law is for it to be signed by Governor Chris Christie, a fiscally conservative Republican with a platform focusing on reviving the state’s economy. He is expected to sign the bill within the next couple weeks.

Harrah’s seems a little desperate right now. With chances of online gambling legislation passing in the U.S. continuing to dwindle, Harrah’s threw one last Hail Mary. The move is unlikely to do anything but throw some of their money away, but in desperate times, you have to try something, even if it isn’t likely to work.

Harrah’s Entertainment has contributed $75,000 to the Patriot Majority Political Action Committee, a group dedicated to getting Senate Majority Leader Harry Reid re-elected. Harrah’s hope is that the money will help do two things: help Reid keep his job and convince him to approve of online gambling in the U.S. If the money only does one of the two things (or neither), then the money will have been wasted.

While most Las Vegas casinos oppose online gambling, feeling that it is a competitor that would take money away from them, Harrah’s was the first to come around. Taking an “if you can’t beat them, join them” approach, the casino chain decided to open their own online casinos. Those online gambling websites are not available to American customers and only operate in regulated online gambling jurisdictions. Harrah’s is hoping that the passing of regulation in the U.S. would drastically increase their online customer base. With millions already invested in online gambling, they have a lot to lose.

There are three major problems facing them, though. Firstly, Harry Reid, who is both Nevada’s representative in the Senate and the Majority Leader, opposes online gambling. He has said many times that he does not support any gambling regulation bill present on Congress. Being a sleazy politician, it only takes money to change Reid’s mind on a subject he has a “firm” stance on, but I’m not sure if $75,000 is enough. The second major problem is that there’s a good chance Reid will be unemployed soon. Polls show that he is deadlocked with conservative Republican Sharron Angle, who is sure to hit even harder on Reid’s liberal record on the tail end of her campaign. The third and biggest problem is that, with Congress in recess, the only chance for the gambling legislation to pass this year is for it to pass during a lame duck session, which seems unlikely. With all of that working against Harrah’s, it makes you wonder why they don’t wait until January and start trying to influence the winner of the election.

It’s getting harder and harder to find people who aren’t mad at Harry Reid. The U.S. Senate Majority Leader, elected by Nevada, seems to be unpopular with everyone. People on the right hate him because of his radical leftist policies. People on the left feel that he hasn’t gotten enough done for them. People in the middle realize that he’s incompetent and possibly senile. After all, several times he has accidentally voted against his own bill and had to be reminded by a colleague that he wants to vote for it. “Hey, Harry, you sponsored and wrote this bill. I think you meant to vote yes.” And then there are the Las Vegas casinos.

A large part of Nevada’s economy is based on tourism and a large part of that is in Las Vegas. For that reason, Reid has always tried to keep the casinos happy. Therefore, when the topic of legalizing online gambling came up, Reid tried to walk the tightrope. Some of his colleagues in Congress have been trying to overturn UIGEA ever since it passed in 2006, but Reid held out as long as he could and avoided giving his opinion on the issue. The reason is simple. Some Las Vegas casinos are against online gambling and others want in on the market. There is also the issue of tribal casinos to deal with.

Earlier this year, Reid – whose approval rating has been listed as low as 8%  –  finally gave in and decided to support a federal legalization of online poker. As a compromise, he opposes any other form of online gambling and only wants to allow poker. It is a stance that was meant to give him more support but instead it guarantees that he will have none.

The Vegas casinos who oppose online gambling are furious, stating that legalizing online poker puts the foot in the door for a wider online gambling expansion that they believe will hurt their businesses. Eric Dale, general manager of Baldini’s Sports Casino, says that legalizing online poker will not only hurt the casinos in Nevada, but it will also hurt the rest of the tourism industry. He says that such legislation would “take money out of the hands of those who play online, money they won’t have to go out to a restaurant, to a movie, to gamble or eat. They won’t need to come out to a physical box (like a restaurant or casino) that employs people and that scares me.”

I suppose it’s the same problem that brick and mortar stores have had with the popularity of Amazon.com and other e-commerce websites. Like those stores, Nevada businesses will have to adapt to online poker. One such adaptation would be to get into the online gambling business themselves, something Harrah’s Entertainment is already doing.

While those who oppose online gambling are mad at Reid for supporting online poker, those who support it are mad that he wants to draw the line there. Barney Frank’s bill in the House, which passed the Financial Services Committee, would legalize all online gambling except sports betting. If Reid developed a Senate bill that only allows online poker, the two bills would be incompatible and no online gambling bill could be passed. In fact, it’s hard to find anyone who agrees with Reid that online poker is fine but all other games need to be banned. So who is he pleasing? Seemingly 8% of his voters. Good luck with that reelection campaign, Harry.

In the worst decision in South Africa since allowing vuvuzelas in the stadium during the World Cup, online poker is now banned in the country. A ruling by the North Gauteng High Court on August 20 banned online poker and all forms of online gambling in South Africa. The decision protects the Gauteng Gambling Board’s monopoly on gambling in the nation by removing online gambling as competition.

The Gauteng Gambling Board (GGB) has been fighting for a ban on online gambling for a while to protect the interest of their brick and mortar casino industry, with us worth $2.2 billion. Last week, Judge NB Tuchten ruled in favor of the GGB and banned online gambling. As a result, anyone caught gambling online or playing online poker in South Africa can face a penalty of up to 10 years in prison and a $1.36 million fine.

The new anti-online gambling ruling would punish not only players, but also online casinos, financial institutions and internet service providers involved in online gambling transactions. Advertising for online gambling in the country is also now illegal.

Though the GGB is excited by the ruling – warning that they will have any violators arrested – not everyone is ecstatic. Piggs Peak, for instance, intends to fight the ban and appeal to a higher court. Piggs Peak runs both a brick and mortar casino in Swaziland and an online casino website. Lew Saul Koor, Operations Director of Piggs Peak, stands in defiance of the GGB, stating that “until the appeal has been heard and the outcome determined, our business will continue as usual as agreed with the Gambling Boards.”

The most common sense solution to the dispute would be for the South African government to legalize online gambling but require the casinos to pay a fee or a tax for operation in the country. After all, South Africa needs more money and generally they are all for anything that generates an income for them. The online gambling ban seems to show that they think they lose more money to online casinos than they would earn by regulating them. Only time will tell.

If The Barney Frank/Ron Paul online gambling bill becomes law, UIGEA will be repealed and online casino gambling will be legalized and regulated in the United States. Sports betting, though, would still likely be left out.

Yesterday, the Internet Gambling Regulation, Consumer Protection and Enforcement Act (HR 2267), which was concocted by Democrat Frank and Republican Paul, cleared the House Financial Services Committee. By a 41-22-1 vote, the bill to license and regulate online gambling in America passed the committee, paving the way for it to be voted on by the full U.S. House of Representatives.

There are already compromises in the bill, though. Republican Peter King inserted an amendment that emphasizes that sports betting would remain illegal online and offline. King did so to protect the interests of powerful and loved sports leagues in the country, particularly the NFL. King admitted that “the NFL has concerns about gambling.”

To be honest, so do I. Sports betting scandals are terrible for the leagues, the teams and America (just ask the Chicago White Sox or Tim Donaghy). Concerns over game fixing don’t necessarily mean that sports betting should be banned, but it is a legitimate concern.

In any case, the bill passed the House with King’s anti-sports betting amendment. However, that doesn’t mean the amendment will say in the bill. During the full House mark-up, it can still be removed. Another amendment was added by Republican John Campbell and Democrat Brad Sherman. That amendment ensures that online casinos that target U.S. customers would have to be based in America, thus ensuring that the country would profit from the legislation and not lose revenues overseas. Other amendments were added for the protection of players, requiring the online casinos to post the odds of the games, have loss limits and verify the players’ age and location.

The online gambling bill is not yet scheduled for a floor debate and is not expected to be brought to the floor earlier than early September.

It’s not often that I agree with Shelley Berkley, or any Democrat for that matter, but she had a rare moment of common sense this week. In a Roll Call article, the U.S. Representative from Nevada criticized the Unlawful Internet Gambling Enforcement Act (UIGEA) of 2006.

Berkley stated that the UIGEA does nothing to protect the American people from dangerous online casinos and is also ineffective in preventing online gambling. She also pointed out that the “law doesn’t even make clear what is illegal gambling and what is not when it comes to the Internet.” She said that the law takes enforcement out of the hands of the correct agencies and instead pins “a cyber ‘tin star’ to the chest of the financial industry with the idea that these companies would become the new ‘virtual sheriff’ in town.

UIGEA never defines what online gambling is illegal and there is no federal law that does so, either, though the Department of Justice considers the practice to be against the law. Of course, the DOJ often invents new rules and laws like that, despite a lack of authority to do so. The UIGEA simply places the burden on the financial industry to make sure no “unlawful” online gambling payments are processed, without even defining what is unlawful. It is an unfair burden on an already hurting industry and it is bad for online gamblers throughout the country.

In the article, Berkley compares UIGEA and the de facto ban on online gambling to the prohibition of alcohol during the 1920’s and 1930’s. It’s always funny when liberal Democrats use Prohibition as an example, considering that the law was passed during the Progressive Era, when big government took unprecedented control over industry and the private lives of American citizens all in the name of the “greater good.” Progressives of that time period are heroes of the big-government liberals of today, yet they’re happy to denounce Prohibition. I guess they’re fine with the government controlling everything else, but they also enjoy their booze.

Ideology aside, Berkley is right. During the Prohibition, the government tried to keep Americans from drinking, but instead it just made them more secretive about their drinking. It also had the added bonus of giving power to gangsters like Al Capone. UIGEA and the unlawful de facto ban on online gambling does not prevent Americans from gambling at online casinos, but it makes them hide it and it keeps those casinos away from the watchful eyes of regulators.

Of course, government regulation isn’t necessarily a good thing. The two most heavily regulated industries in the United States are the oil and financial industries and we’ve seen a bit of damage to those lately. Additionally, government regulation of online casinos would most likely result in the players being charged more, such as the poker rake increase we’ve seen in France.

Whether the U.S. government should regulate online gambling is a question open to debate, but one thing is certain: The government needs to stop trying to prevent people from spending their own money as they please. Like during Prohibition, this is a case of the government thinking they know better than the people and we have seen time and again that nothing could be farther from the truth.

Some members of the U.S. House of Representatives are trying to get a federal legalization of online gambling so they can regulate and tax the industry. Such initiatives would overturn the Unlawful Internet Gambling Enforcement Act of 2006, which – though it didn’t outlaw online gambling – does allow the feds to go after financial institutions used in “unlawful” online gambling transactions. There is currently no federal law that bans online gambling, though it is banned in a few states.

The push to overturn UIGEA and regulate online gambling in America has been led by Democrat Barney Frank (D-MA) and Republican Ron Paul (R-TX). My personal opinion is that Paul wants online gambling legalized because the government has no business telling people what they can and can’t do with their money and Frank wants it regulated because he loves the government controlling and taxing businesses.

Since the Frank-Paul bill was introduced – but not yet brought to the floor –Jim McDermott (D-WA) introduced a companion bill called the Internet Gambling Regulation and Tax Enforcement Act. It has been co-sponsored by Earl Blumenauer (D-OR), Frank and John Larson (D-CT).

Last week McDermott’s bill was brought before the House Ways and Means Committee, which is the chief tax-writing committee in the House. Strangely enough, several members of this tax-writing committee – such as Charlie Rangel (D-NY) – have used ignorance of the tax code as defense for tax fraud.

Anyway, last week the committee looked at McDermott’s bill and they seemed unimpressed. McDermott stated that America was simply driving gambling revenue offshore, giving money to foreign countries that America desperately needs. He also said that his bill would generate $72 billion in revenue over 10 years from creating new taxes. Among the new taxes are plans to tax the players on their deposits up front, taxes on the casinos on the wagers themselves, taxing the players’ winnings and more. Of course, there would also be many different types of licensing fees for the casinos, just like for current brick and mortar casinos.

Two representatives from Nevada weren’t too big on the bill, which isn’t surprising, since they have to look out for the interests of Las Vegas. Republican Dean Heller said he would keep an open mind, but he is concerned about online gambling’s impact on the Vegas strip. He is also against the “deposit tax” that would take money away from players up front, whether they win or lose at the casino. The other Nevada representative on the committee, Democrat Shelley Barkley, said she supports the legalization of online gambling, but not the taxing of it – at least not right away.

I know what you’re thinking? What? A Democrat is wary about adding a new tax? How can that be? Also surprising for a Democrat, she made a good argument. She wants to legalize and regulate the new online casino industry and let it develop first before taxing it. “Because the industry is not even established yet, I can’t imagine how we can know with any degree of certainty how the special tax would affect operators or customers,” she said. Instead, she says that it should be legalized and regulated, but should not be looked at as a source for revenue. Wow, now she’s sounding like a conservative.

No decision was made on whether to move forward with the bill. This is Washington; things move slowly.