Last week Howard Stutz of the Las Vegas Review-Journal penned a must-read column that detailed some of the costly unintended consequences Sheldon Adelson’s push for a federal online gambling ban might bring about.

Most notably, RAWA (the Restoration of America’s Wire Act) could lead to a ban on mobile sports betting in Nevada – a ban that could cost the state’s casinos up to $1 billion in annual revenue.

Mobile sports betting is a booming business

Mobile sports betting is estimated to account for some 30% of Nevada’s $3.9 billion sports betting industry, according to Stutz’s research.

Gaming attorney Greg Gemignani of the Las Vegas office of the law firm Dickinson Wright agrees that RAWA has the potential to curtail this business. He told Stutz that it could “backfire on some of our operators in Nevada.”

According to Gemignani, even though mobile sports bets placed with legal Nevada sports books would originate and end within the state’s borders, these calls are often routed through surrounding states such as California, Utah, and Arizona.

Gemignani fears the interstate nature of these bets would cause them to fall under the scope of the RAWA’s version of the Wire Act, even though the bill likely never intended to ban such an activity.

As if this wasn’t bad enough, Gemagnani also envisions a scenario in which RAWA criminalizes the use of VPN’s (Virtual Private Networks), a tool some casinos use to operate their land-based slot machine server systems.

As Gemagnani told Stutz, “By making licensed and regulated online gaming illegal, the bill is counterproductive.”

Gemagnani makes an excellent point.

Criminalizing legalized and regulated online gambling options will not put an end to online gambling, it will simply hurt regulated operators and create a void that will be filled by illegal, unregulated, operators.

Couldn’t they just carve out mobile sports betting in Nevada?

So why not change RAWA to exempt mobile intrastate sports betting?

This is certainly a possibility, and seems like an easy enough fix. But RAWA already has several carveouts, and will likely need several more for it to have any reasonable chance to pass through Congress.

Already exempted from Sheldon Adelson’s online gambling ban are fantasy sports and horse racing as well as some forms of online charitable gambling.

The exemptions are unlikely to end there

In addition to the current carveouts, the general consensus is the bill would have to make an exception for online lottery sales (something Lindsey Graham has already hinted at), as several states have already made lottery tickets available online (Minnesota, Georgia, Michigan, and Illinois).

Several more -Kentucky, West Virginia, and Florida – are at various stages in the process.

Additionally, many analysts feel RAWA has little chance to pass unless it exempts the current online gambling industries in Nevada, Delaware and New Jersey, as these three states have already passed online gambling legislation and have regulated iGaming industries up and running.

If these states receive exemptions, it is likely that a number of other states currently exploring online gambling will voice opposition to RAWA unless they are also granted exemptions.

As I’ve explained in the past, at some point this growing number of exemptions will make the bill all but useless, and will expose what is widely believed to be its true intention: prohibiting Adelson’s competitors from offering regulated online gambling.

And as Chris Grove has detailed, because of the current online gaming landscape and the carveouts RAWA contains, the bill would more or less only prohibit legalized online poker.

The problem with exempting an activity Las Vegas Sands participates in

An exemption for mobile sports betting in Nevada would also make what is already considered crony capitalism look even more like a political favor for a billionaire donor.

So far the exemptions don’t pose a conflict of interest with Adelson’s current gaming enterprise.

But, exempting a business Sheldon Adelson profits from – Las Vegas Sands’ Nevada casinos do offer mobile sports wagering – would only serve to underline one of the key arguments opponents of RAWA have been screaming from the mountaintops. Namely, that RAWA is a protectionist piece of legislation designed to preserve Sheldon Adelson’s grip on gambling in Nevada.

It also opens RAWA up to the most basic attack line imaginable. Why does Sheldon Adelson think online sports betting in Nevada is acceptable, but online poker is not?

It doesn’t get much simpler than that.

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