Online gambling proposal resurfaces in Iowa Senate bill

Backers breathed new life into a gambling package Thursday by deferring plans to legalize Internet poker in Iowa for a year so state officials can better assess the extent of illegal activity currently taking place and how best to regulate an intrastate online program.

The Senate Ways and Means Committee voted 9-6 to approve a reworked version of Senate File 458 in hopes of salvaging provisions that would end the requirement that existing state-licensed casinos periodically conduct countywide referendum votes. The bill also includes a separate section that seeks to resolve a dispute over purse money among the state's various horse breeders and the Altoona racetrack-casino.

Senators removed a key feature of the bill that would have authorized the creation of an intrastate online poker network and provided a regulatory structure for its implementation, operation and taxation. Instead, the state Racing and Gaming Commission would be directed to conduct fact finding regarding the framework for state regulation of a system by which a hub operator would contract with state-licensed casinos to operate affiliated online sites within a “closed loop” in Iowa for registered players ages 21 and older.

Proponents say the legislation is needed because unregulated wagering already is taking place in Iowa via online poker websites offering games illegally via offshore operations. They estimate that up to 150,000 Iowans could be playing online poker now with no consumer protections from the state that would prevent them from being cheated.

“We have it and I think it's irresponsible to ignore it,” said Sen. Merlin Bartz, R-Grafton. “I think the most responsible thing to do is to regulate it in a way that's fair and equitable and transparent.”

However, Sen. Randy Feenstra, R-Hull, expressed concern that the report would be “one-sided” because it primarily directed state regulators to consult with existing casino licensees and potential hub operators in reporting on the possible regulation of intrastate Internet poker without consideration for the social consequences of a gambling form that he considered to be more addictive and problematic.

Feenstra said it appeared the report “heads us down that slippery slope to approve this someday,” while Sen. Matt McCoy, D-Des Moines, worried the arrangement would put the state “in bed with an industry that has the most to gain” from the legalization of online poker.

“We've got the opportunity today to slam the door on this thing but, no, we're going to go ahead with this,” Sen. Brad Zaun, R-Urbandale. “I think we've hit a low point and it's an act of desperation to do what we're doing here.”

Other committee members objected to removing the requirement that voters in counties that have state-licensed casinos conduct referendums every eight years to allow the gambling activities to continue. The new language would end the requirement after the second successful public vote unless citizens petitioned for a subsequent “reverse referendum” by gathering signatures equal to 10 percent of participants in the most recent presidential election.

Sen. Roby Smith, R-Davenport, said that would mean gathering 7,500 signatures in his community. He said switching to a reverse referendum would break a promise made to voters when gambling was legalized.

Sen. Bill Dotzler, D-Waterloo, who managed the bill in committee, said he was hopeful the re-crafted version would pass the full Senate and he was optimistic about its chances in the House. However, Rep. Tyler Olson, D-Cedar Rapids, ranking member on the House Ways and Means Committee, said he has heard nothing about the measure on his side of the rotunda with roughly two weeks remaining in the 2011 session.