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Gaming the Federalist System

The Restoration of America’s Wire Act (RAWA) has gone nowhere in Congress. And yet it won’t go away, either.

If RAWA were ever to pass Congress and become law, it would impose a one-size-fits-all ban on states legalizing online gaming. The measure offends our nation’s federalist framework by removing from sovereign states their constitutional rights and responsibilities. Online gaming may not be right for every state. But every state should be able to determine that for itself.

Because of this self-evident fact, RAWA has not enjoyed much legislative success in Washington. And its prospects continue to dim. Rep. Jason Chaffetz of Utah, a key champion for the measure, has left Congress.  Another sponsor, Rep. Charlie Dent, has announced he won’t seek reelection in Pennsylvania.

At issue is the proper interpretation of the Interstate Wire Act of 1961. The law was designed to help authorities crack down on mob-controlled sports betting. It prohibited the use of wire transmissions to facilitate the placing of “bets or wagers on any sporting event or contest.”

In 2011, the Department of Justice released a legal opinion indicating online games do not constitute a “sporting event or contest.” Online gaming opponents immediately cried foul, suggesting this interpretation was something new. But nothing could have been further from the truth. The DOJ opinion merely clarified the long-held bipartisan understanding of the Interstate Wire Act and its scope.

Nevertheless, a few supporters of the legislation still linger in the Senate, though they appear to have given up hope of Congressional action. Sens. Lindsey Graham (R-S.C.) and Dianne Feinstein (D- Ca.) recently authored a letter to Deputy Attorney General Rod A. Rosenstein hoping the Department of Justice will reverse its 2011 legal opinion.

“The 2011 DOJ opinion needs to be revisited and withdrawn, with the question of whether online casinos should be permitted in the United States properly returned to Congress to determine,” they wrote last month. In other words, Sens. Graham and Feinstein believe power belongs in Washington, D.C., not state capitals.

Four states have already decided legal online gaming is right for them: Nevada, New Jersey, Delaware, and Pennsylvania. All four report experiencing budget relief through enhanced revenues associated with expanded gaming. Sens. Graham and Feinstein would take that away from them.

It bears noting that there is an entrenched incumbent in the gaming space that strongly opposes legal online gaming. Specifically, casino mogul Sheldon Adelson has used his considerable political clout — especially among Republicans — to push to ban online gaming at the federal level. He astutely recognizes online gaming as a competitor to his brick-and-mortar empire. Adelson’s lobbyist has been identified at the true author of RAWA. And the correlation between his political donations and RAWA’s political support is no small coincidence.

RAWA lacks public support. It lacks legislative momentum. It’s not even constitutional. So what exactly is the threat here? Clever politicians have a way of inserting unpopular measures into so-called “must pass” legislation, such as an appropriations bill or a Continuing Resolution necessarily to keep the government running. Earlier this fall, Rep. Dent attempted to sneak the principles of RAWA into the appropriations bill. And unless you’ve missed the headlines, Congress is negotiating an urgent Continuing Resolution as you read this.

Matt Cordio is co-founder and President of Skills Pipeline, a technology talent solutions company as well as the founder of Startup Milwaukee.

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