Who will benefit from the crackdown on internet poker?

Is online poker a victimless crime? I think so. So does Conor Friedersdorf at the Atlantic. But Friedersdorf's colleague, legal expert Andrew Cohen, objects. I found Cohen's argument unconvincing on the whole, as he battled multiple strawmen and ignored obvious objections, but this was the part of Cohen's piece that struck me the most:

And just ask casino and horse racing executives what they think of the way online poker operators have taken advantage of Congressional fecklessness on the topic.

This bolstered a suspicion that I've had since the FBI shut down the three big online poker hubs. Was this bust partly about protecting government-enforced monopolies like Harrahs (owned by Caesars) and the tribal casinos?

I'll get even more specific: The land-based casinos used to oppose all online gambling. In the last year or two, most of them have come around, calling for legalization of online poker, but (and this is a common refrain in debates about legalizing anything) in a highly regulated form.

Let me clarify something about these poker sites. The sites are not illegal. Other countries allow internet gambling. In fact, many Americans could, and did, play online poker for cash legally in the U.S. The 2006 law targeting online poker merely restricted credit card transations — making it hard for U.S. players to put in new money, but not preventing them from playing with the stakes they already had before the law.

So the online poker sites were already established in the industry Harrah's wants to enter.

When the casinos are looking for a friend in Washington, the obvious go-to-guy is Harry Reid, whose re-election they supported in extraordinary ways. (Remember this: “Waking up to the defeat of Harry Reid Nov. 3 will be devastating for our industry’s future.”) After the casino shuttle busses ran, and Reid won reelection, he started pushing legislation to legalize online poker for only:

providers that have an established track record of complying with a strict regulatory environment, have an established track record of providing fair games to consumers, and have significant goodwill and assets at stake, in addition to their Internet poker assets, to ensure they would comply strictly with the new regulatory regime.

In other words, Reid wanted to give his friends a monopoly. Clearing out the competition first sure helps. Don't be surprised to see Reid's bill move soon, and if it passes, the big casinos dominate the industry.

Beltway ConfidentialHarry ReidIndian CasinosUS

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