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Monday, Jan 11, 2010 4:42 PM UTC

Play poker online — and cut the federal deficit

The real reason Sen. Jon Kyl is waging war against the Treasury: He's afraid Obama will legalize Internet gambling

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Topics: Barney Frank, D-Mass., How the World Works,

Matthew Yglesias and Steve Benen are expressing understandable outrage at the news that Senator Jon Kyl, R-Ariz., is holding up confirmation of six Treasury Department nominees, per Wonk Room’s Pat Garofalo’s summary of a (subscribers only) National Journal story.

Kyl’s reason: He’s upset that Treasury and the Federal Reserve have delayed final enforcement of the Unlawful Internet Gambling Enforcement Act (UIGEA) for another six months. UIGEA was supposed to go in effect Dec. 1, and Kyl, who has waged a relentless  crusade against Internet gambling for years, is not happy.

Yglesias has the best rant.

This, ladies and gentlemen, is your modern United States Senate. If there’s some random crap that nobody cares about, it just takes one Senator with a bee in his bonnet to ruin everything for everyone who would like to live in a country with a properly administered government. There are six Treasury nominees still awaiting action being held up by Kyl.

You might think it would be a good idea to have an Under Secretary for International Affairs. Kyl disagrees. You might think it would be a good idea to have an Under Secretary for Domestic Finance. Kyl disagrees. You might think it would be a good idea to have an Assistant Secretary for International Markets and Development. Kyl disagrees. You might think it would be a good idea to have an Assistant Secretary for International Economics and Development. Kyl disagrees. You might think it would be a good idea to have an Assistant Secretary for Financial Markets. Kyl disagrees. You might think it would be a good idea to have an Assistant Secretary for Tax Policy. Kyl disagrees.

Benen’s take: Kyl “is pouting over a six-month delay in implementing regulations on Internet gambling.”

Yes, this is no way to run a country. But the six-month delay in implementing UIGEA is most definitely not “random crap that nobody cares about” nor is it just a matter of Kyl not having enough patience to wait until the summer. Billions and billions of dollars are at stake, both for the gambling industry and the U.S. government. The six-month delay is actually intended to give House Financial Services chairman Barney Frank, D-Mass., enough time to get HR 2267, a bill that would legalize Internet gambling in the United States, out of committee and onto the House floor for a vote. If Frank succeeds, and the Senate follows along, UIGEA would be repealed … to the great delight of the gambling industry and the banks who process all those online financial transactions. Oh, and the U.S. government could stand to rake in billions of dollars of new tax revenue.

A study released last year by PricewaterhouseCoopers claimed that legalized Internet gambling could result in between $8.7 billion and $42.8 billion in federal tax revenues over the first 10 years of a new regulatory regime. In the context of $1.4 trillion deficit, that may seem like peanuts, but every little bit counts.

The six-month delay is not a joke. The gambling industry is betting that during that window, Barney Frank will come to its rescue. The federal government is hoping for help on the deficit front. And, who knows, perhaps allowing Americans to legally gamble online, rather than send their cash to dodgy offshore establishments, might even have a stimulative effect on the U.S. economy.

Andrew Leonard

Andrew Leonard is a staff writer at Salon. On Twitter, @koxinga21. More Andrew Leonard.

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