2007 Year in Review

As those of us at the American Gaming Association (AGA) and others in Washington, D.C. ring in 2008, the energy coming from the upcoming presidential and Congressional elections has people inside the Beltway buzzing.  Despite the dominance that the elections are exerting over Capitol Hill, there are some gaming industry issues that came to the forefront during 2007 and may stay there during 2008.

The gaming issue that got the most attention during the past year was Internet gambling, with the introduction of four bills during the Congressional session.  The AGA took a position on only one, endorsing legislation offered by Reps. Shelley Berkley (D-Nev.) and Jon Porter (R-Nev.) calling for an in-depth study of Internet gambling by the National Academy of Sciences to identify the proper response of the U.S. to the growth of Internet gambling.  A hearing on the bill took place in mid-November in the House Judiciary Committee, and at press time the bill had garnered 66 co-sponsors. While it’s doubtful that Internet gambling will be a hot topic in the upcoming election year, if any of the four bills are likely to pass, I anticipate it will be this one.

On the regulatory front, the Department of Justice and the Department of the Treasury this fall released a joint proposed rule to implement the Unlawful Internet Gambling Enforcement Act.  The proposed rule would require U.S. financial firms that participate in designated payment systems to have policies and procedures that are reasonably designed to prevent payments being made to gambling businesses in connection with unlawful Internet gambling.   

The wild card in this situation is the recent WTO decision that the existence of the Interstate Horse Racing Act puts the U.S. in violation of the General Agreement on Tariffs and Trade (GATT).  Antigua and Barbuda have leveled a $3.4 billion claim against the United States for damages.  The European Union, Australia, Canada, and a handful of other nations also are seeking compensation.  This conflict is still playing out, and there is the potential that this situation, more than any other, could force some form of congressional action on the Internet gambling issue.

Turning to other federal issues, one bill that would benefit the entire gaming industry is the Travel Promotion Act of 2007, which would create an entity to more clearly communicate U.S. travel policies, highlight improvements and join nearly every developed nation in the world in competing for international travelers.  Currently the Senate version of the bill has 29 co-sponsors and the House version has 127 co-sponsors, and we will continue to work with other tourism industry representatives to support this initiative.

Another national issue that has a direct impact in Nevada and for the gaming industry is immigration, and the AGA once again this year worked to promote a comprehensive approach to immigration reform that accounts for border security and the creation and protection of employment opportunities for the immigrant workers who help our businesses succeed.  The issue stalled in Congress in 2007, and with the politically-charged nature of the immigration reform debate, it is highly unlikely that an immigration reform package will be passed in the upcoming election year.

The AGA was active on the tax front in 2007, working through its Tax and Finance Task Force to help facilitate negotiations with the IRS on tip rates, which were successful in obtaining key benefits for gaming employees in Nevada.  The task force also worked with the IRS to ensure that, beginning in 2008, casinos and other sponsors of poker tournaments will no longer have to withhold federal income tax from the winners’ pay-out if, in most cases, sponsors report payments to winners to the IRS.

In another important regulatory development, the Financial Crimes Enforcement Network (FinCEN) of the U.S. Department of the Treasury this year approved the first-ever reduction of currency transaction reporting (CTR) requirements for the gaming industry – an exemption from reporting jackpots paid out by slot machines and video lottery terminals that the AGA had pushed for nearly a decade and should save gaming companies a significant amount of reporting time. 

Overall, 2007 was another successful year for the gaming industry in Washington.  Looking ahead to 2008, the presidential and congressional elections are likely to shine a spotlight on several national issues – such as immigration reform, health care and tax reform – that are important to the gaming industry and its employees.  No matter what issues come up on Capitol Hill and in the halls of federal agencies, the AGA will continue to be the industry’s eyes, ears and voice in the nation’s capital.