There is news in both North Carolina and Massachusetts right now regarding sweepstakes machines. North Carolina kinda-sorta banned them on December 1 and Massachusetts is getting some more of them.

On December 1, North Carolina passed a ban of sweepstakes machines, though interestingly the state will continue to offer a lottery. The ban was then challenged and received conflicting rulings in court. Two different judges gave different interpretations of the ban, with one even saying that the machines are illegal if they are not “dependent on the skill or dexterity of the player.” Of course, sweepstakes are by definition games of chance that do not depend on player skill.

North Carolina Attorney General Roy Cooper sent a letter to law enforcement telling them that most of the ban reminds intact and that they can shut down machines that do not require skill. That would, of course, be all of them. So far, for the safety of players, the attorney general has yet to confiscate lottery tickets from convenience stories and raid the state lottery office.

In Massachusetts, it’s a completely different story. The Internet Sweepstakes Network (ISN) has announced that they will begin opening online sweepstakes cafes in the state. In the announcement to investors, the company said that they are offering investment opportunities for prices lower than the market value. In return, they ask that investors donate 10% of their net profits to a charity set up by the ISN, called SweepstakesCharity.org.

The contrary news coming from two different states serves as a microcosm of gambling in the United States. Some states are cracking down on sweepstakes machines, while others are installing more. Some states want to allow table games in full-fledged casinos while others want nothing to do with the casino industry. Some want to gamble online while others passed a ban of the activity. The variety in state laws and policies is one of the things that makes America great, but it can also be frustrating.

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.

There has been a lot of talk in the online gambling industry lately about the U.S. Congress passing gambling legislation during the lame duck session. To be honest, I’ve never paid much attention to it because I thought there was no way it would happen.

Congress usually doesn’t pass anything major or anything controversial during the lame duck session. In addition, there are much bigger concerns for Congress right now, such as avoiding a January tax hike and funding the government. Yes, that’s right. Congress has not yet gotten around to passing a bill providing funding to the government. Without a stopgap funding bill, there would be no appropriations for the government – not that that’s important! With unemployment at almost 10% and underemployment at almost 18%, there are much bigger things for Congress to do by the end of the session than worry about online gambling.

I should have known, though, that this Congress doesn’t care about what is important; they have their own priorities (that’s why so many lost their jobs). So instead of worrying about keeping taxes at their current level (or better yet, lowering them), they are more concerned with passing an amnesty bill for illegal immigrants, repealing Don’t Ask Don’t Tell, passing a weak START treaty and more. So it shouldn’t come as a surprise if they consider online gambling a priority, too.

I’m now paying attention to this scenario because it’s now being reported by legitimate sources. Yesterday, Bloomberg reported that Democrat Senators are being accused of a secretive deal attempting to pass online gambling legislation in the lame duck session. Three Republicans in the U.S. House are calling the process “closed-door” and “undemocratic.”

Those representatives are Spencer Bachus (who will be chairman of the Financial Services Committee), Dave Camp (who will be chairman of the Ways and Means Committee) and Lamar Smith (who will be chairman of the Judiciary Committee). All three committees would oversee online gambling legislation if conducted through a normal open Congress.

The three representatives believe that some Democrats plan to attach online gambling legislation to “must-pass” legislation, such as tax cuts, and have asked Senate Majority Leader Harry Reid to abandon the secretive deals and conduct business out in the open.

In the letter they said that creating a new industry and “imposing an unprecedented new tax regime on such activity requires careful deliberation, not back-room deals.” They have a right to be angry, and this Democrat-controlled Congress has been one of the worst at history in terms of crooked back-room deals. Still, to be fair, UIGEA was passed as a sneaky add-on to a bill in 2006.

Many in the gambling industry applaud this move to pass online gambling legislation as an add-on, but is it a good idea? I want online gambling legalized in the United States, but can the Democrats who have ruined every industry they have gotten their hands on be trusted to regulate the industry in an efficient way? (The answer is no). Can they be trusted to tax the gambling industry in a fair and appropriate rate? (The answer is no).

I am 100% opposed to the tactic of conducting secretive back-room deals to push legislation through, but I support legalizing online gambling. Does the ends justify the means? To me, the answer is no, especially when I don’t trust the Democrats to regulate the industry in a way that allows the industry to thrive. However, passing gambling legislation would not be a priority for the next Congress and if they were to pass it at all, it would probably be a while. Maybe we should hope that the legislation passes now and that wise fiscal conservatives can amend the law later to make it more sensible. What do you think?

It pains me to say this, but it looks like New Jersey will the first state to accomplish something in America. It looks like they will be the first to legalize and regulate online gambling. Yes, folks, the same state that brings us Snooki and the Situation, the same state that is responsible for Bon Jovi, may be a trendsetter. That is a state that the Giants and Jets are so ashamed of that they go by New York even though they play in the Meadowlands.

On Monday, the New Jersey Senate voted 29-5 to let Atlantic City casinos offer online gambling to residents of the Garden State. Now that the bill has passed the state Senate, it still has to pass the state Assembly and be signed by the governor. Since Governor Christie has been outspoken about saving jobs in Atlantic City and getting the government out of people’s personal lives (such as how they spend their money), it is likely that he will sign the bill. Even if he is not a proponent of online gambling (he does not seem to have taken a stance on the subject), I would be shocked if he vetoed the legislation. It now seems likely that the bill will become law this year.

Aside from giving New Jersey residents the freedom to gamble online, the bill would also increase revenue to the state by levying a 15% tax on gross gaming revenue. The bill only allows Atlantic City casinos to operate the internet gambling websites. Interestingly, though, people overseas would be able to gamble at the websites. Residents of the other 49 U.S. states, however, could not.

Senator Raymond Lesniak, who sponsored the bill, says that by passing the law and allowing international gaming in New Jersey, they would be “showing how juvenile our federal government’s policy is with regards to gaming.” He also pointed out that the federal government’s current policy towards online gambling is ineffective and also “unconstitutional and quite frankly just dumb in terms of governmental policy.” I couldn’t have said it better myself.

Most online gambling websites have pulled out of the United States market, out of fear of prosecution from the Justice Department. Though there is no federal law banning online poker or any form of online gambling, the Justice Department treats the UIGEA, passed in 2006, as a de facto ban. The government uses that law to go after any gambling websites or financial institutions who are involved in gambling transactions with American citizens. Now one poker room has found a loophole and is legally operating in the U.S.

Chilipoker recently began offering a service for American customers that allows them to play online poker for real money. And it is 100% legal. Chilipoker is offering a “subscription-based service.” Basically how it works is that instead of the players paying for each hand of poker, they pay a monthly subscription fee. They then play the games themselves for free, with winners earning cash prizes.

Though the U.S. is growing more and more progressive and anti-business, there’s nothing illegal about operating a website that requires a paid subscription. There’s also nothing illegal about giving away cash prizes. The fact that the website features poker games is irrelevant. It could be solitaire, checkers, World of Warcraft, fantasy football or whatever.

Right now I’m sure the DOJ is looking for a way to prosecute Chilipoker. Just as they found a way to sue a state (Arizona) that made the federal government look incompetent, I’m sure they’re searching for a way to prosecute a poker website that is making them look like fools. Like Arizona, Chilipoker has broken no laws, but that doesn’t stop progressive governments from flexing their muscles and exerting their control over foes. It will be interesting to see how this shapes up and whether other gambling operators follow Chilipoker’s lead to enter largely neglected the U.S. market.

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.

Online gambling proponents in the United States, you might want to sit down, because I have more bad news. Things just aren’t going well for you. I know a lot of you got excited about Barney Frank’s online gambling bill, especially when it passed the House Financial Services Committee, and optimism is a good thing, but there are too many reasons to think that UIGEA will survive 2010.

The biggest obstacle is simply time. As I mentioned before, Congress has a limited time to pass the law. Any bill that isn’t signed into law when the new Congress takes over in 2011 will be killed. Congress then has to start the process over from the beginning. Even if they took the same exact bill, they would still need to get support from the new members of Congress, get new markups from those members, clear committee, have the bill reach the floor for debate, be voted on, passed and signed into law.

Congress recesses on October 8 and from then on is going to be in full-on campaign mode until after the mid-term elections on November 2. Before October 8, few bills will be passed and certainly nothing of a controversial nature, giving ammunition to the opposition.

For all of those reasons, Barney Frank admitted to The Hill that his legislation, the Internet Gambling Regulation, Consumer Protection and Enforcement Act (H.R. 2267) is not likely to become law in 2010. Another problem is that the companion bill, the Internet Gambling Regulation and Tax Enforcement Act (H.R. 2268), is going nowhere. The bill, proposed by Jim McDermott, would set up the tax laws and structure for online gambling once it is legalized by Frank’s bill. Recently, McDermott admitted that he does not think the bill will be marked up before the Congressional recess, meaning the bill would never even make it to committee.

Even if Frank’s bill and McDermott’s bill somehow both got passed by the House, there’s another problem: the Senate. Senator Robert Menendez introduced the Internet Skill Game Licensing and Control Act (S 3616) and companion legislation last year, but it has little support and is drastically different from Frank’s bill. The bill has yet to be marked up and may not have enough support to clear committee. Even if it does, Harry Reid, the Senate Majority Leader, opposes the legislation. Reid, who represents Nevada, is looking out for the interests of the Las Vegas casinos. His office released a statement that said that he “does not support any of the existing bills and he would oppose any proposal that would put jobs in Nevada at risk.”

It’s hard to pass a bill in the Senate without support from the Majority Leader. Even if that happened along with the House passing both H.R. 2267 and H.R. 2268, the bills would be different, so they would have to go to conference committee until there is only one online gambling bill. Then it would have to be signed into law by President Obama before the new Congress takes over in January. Sure, that is possible, but I can tell you that the odds are worse than any game in Vegas.

It was not long ago that seemingly every online gambling news source reported that UIGEA was likely to be repealed this year. They touted accomplishments like Barney Frank’s bill passing the House Financial Services Committee. Meanwhile, I was one of the few people telling you not to hold your breath, that in the limited time left before mid-term elections, it was unlikely that a Congress that is concerned now more with elections than in passing legislation would floor such a controversial bill. Now it seems that Barney Frank agrees with me.

Representative Frank recently told Capitol Hill that he does not believe his online gambling legislation will be discussed on the floor before the mid-term elections. He also does not believe it will be discussed during the lame-duck session. Traditionally, Congress does not pass any major legislation during the lame-duck session because doing so would likely go against the will of the American people, who voted the people out for a reason. Still, some members of Congress have hinted that major controversial legislation such as a climate change bill could reach a vote due to lame ducks having no more fear of losing their job.

Aside from lame-duck legislation, the other dirty trick that could get Frank’s bill passed would be to tack it onto another larger bill, such as a jobs bill or a tax-cut bill. UIGEA was itself tacked onto the SAFE Port Act in 2006 as an amendment and the best chance bill that would repeal UIGEA has is likely to do the same.

Yet even if that happens and Frank’s bill passes the House in 2010, there is still a much bigger problem: the Senate. The closest thing the Senate has to a comparable bill has little support and is also not scheduled for debate. In order for UIGEA to be repealed in 2010, the bill would have to pass the House and then the Senate and if the two bills are different, which is almost guaranteed, it would then have to be combined by a Conference Committee and passed again. It would then have to go to President Obama and signed into law. All of that before the new congressional session in January.

It is for that reason that I think 2011 is the best chance we have for repealing UIGEA. Though Frank may no longer be Chairman of the House Financial Services Committee anymore (and may not even still be in office), Congress should be full of moderate Democrats and Tea Party Republicans that lean toward small-government libertarianism. If that happens, both sides should be able to agree that the government shouldn’t be banning online gambling.

This seemed like crazy talk a few years ago, but online poker is coming to the United States. Tribal casinos in more than 30 states have joined together and the collaboration will result in the first interstate online poker network in America.

Atlantis Internet Group Corporation announced today that they signed a licensing deal with Cake Gaming NV that will open up online poker in the United States. The licensing agreement will allow tribal casinos to run online poker networks on their land. The Atlantis Internet Group Corp. will use their Tribal Gaming Network, which was approved by the National Indian Gaming Commission (NIGC).

This deal succeeds where Congress so far has failed. Many in Congress – most notably Barney Frank and Ron Paul – have been trying to get online gambling legislation passed, but it has stalled in the House after passing the Financial Services Committee and no bill with any support exists in the Senate. It seems increasingly unlikely that a repeal of UIGEA will happen this year. Since intrastate activity and activity on tribal casino is exempt from federal laws, the Tribal Gaming Network needs no such legislation.

The Atlantis Internet Group Corporation will run the only online poker network operating in more than one state. With it, anyone on tribal land can access the online poker network, existing on a Wide Area Progressive network (WAP) and play online poker against anyone else that is on the network.

Before UIGEA created a de facto ban on online gambling in the United States, America accounted for approximately two-thirds of the worldwide online gambling revenue. Losing that market meant online gambling operators losing a lot of money. The tribal online poker network will bring much-needed revenue to the tribes.

Donald L. Bailey, the CEO of the Atlantic Internet Group Corporation, said that the new system offers “an immediate and legal solution to Indian casinos nationwide, providing the largest online poker network in the U.S.” He also called the network a milestone and said that they will provide an “economic shot in the arm for tribes and states facing deficits nationwide.”

Several months ago, Harrah’s Entertainment became the first American land-based casino to launch an online gambling website. Harrah’s online casinos are based overseas and do not currently accept players from the United States. However, they are now for the first time advertising to U.S. players.

Harrah’s, sponsor of the World Series of Poker, has begun advertising for their online casinos on their WSOP website. Players cannot gamble for real money on the WSOP.com website. Instead, the online poker website can be used as a tutorial to learn the game. Visitors play poker using chips of fake money. The World Series of Poker website has links to Facebook apps, iPhone apps and online casinos. In those online casinos, unlike the other options, players can gamble using real money.

Right now, American customers cannot play for real money at the online casino, but Harrah’s is hoping it will be an option in the near future. The casino company may be thinking that UIGEA will be repealed soon, since the Barney Frank/Ron Paul online gambling bill (Internet Gambling Regulation, Consumer Protection and Enforcement Act) has passed the House Financial Services Committee. However, as I have pointed out, there are numerous obstacles still in the way of that bill becoming a law. Many in the online gambling industry are growing pessimistic of its chances.

Though I doubt there is anything illegal in advertising for their real-money online casinos in the United States, you can expect Harrah’s to get some heat from the government. The Nevada Gaming Control Board is already looking into their online casino deal and determining whether it is proper. By advertising online casinos in the United States for the first time, the casino will bring itself under further scrutiny, possibly by the federal government this time.