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How the Trump administration could affect Pennsylvania's gambling expansion debate

The spin cycle is in high gear in Pennsylvania's latest gambling expansion debate, and at least part of the new twist has to do with the change in administrations in Washington.

Everybody's interested in seeing how President Donald J. Trump, a one-time Atlantic City casino operator, steers the future of national policy on issues such as online gaming and sports betting.

The speculating began in earnest here with Trump's selection of Alabama Sen. Jeff Sessions as his Attorney General. Sessions' confirmation received the endorsement of the Senate Judiciary Committee Wednesday.

During his Jan. 10 confirmation hearing, Sessions raised the blood pressure of some in the gambling industry when he said, in response to a question from Sen. Lindsey Graham, R-South Carolina, that he might revisit a 2011 opinion issued by the Obama Administration's Department of Justice that opened the door to legalized online gaming.

Sessions said he was "shocked" and critical of the original memorandum allowing online gambling, although he also said he didn't know how he would finally rule on the issue.

"Apparently, there is some jurisdiction or argument that can made to support the Department of Justice's position, but I did oppose it when it happened," Sessions told the committee.

"I would revisit it and I would make a decision about it based on careful study. And I haven't gone that far to give you an opinion today," Sessions said.

With Internet gambling just a touch ahead of other games in Pennsylvania's quest to raise more tax revenue from gambling, Sessions' words pricked up the ears of gaming interests here, even if no one really knows what to make of them just yet.

"It is just one more drop in a big bucket of complicating factors," said Steve Crawford, a lobbyist for a group of Pennsylvania casino operators who generally support casino-run online games.

Here's some possible dominoes to watch for:

The key, they say, is to get the games approved here quickly in hopes that they can be grandfathered if the new Attorney General changes the rules from Washington.

Sen. Robert "Tommy" Tomlinson, R-Bucks County and one of the legislative architects of Pennsylvania's 2004 slots law that gave birth to the state's existing casinos, said he's seeing the intensity ramp up.

"It has stirred the pot, because they (supporters) want to try to get it in before this decision," said Tomlinson, who is very worried about changes that could erode business at the existing casinos.

Video going terminals are, they note, a game the state can benefit from no matter what the Trump Administration does.

  • Or, don't worry too much about Sessions' comments -- yet.

Maybe, for example, Trump, with his emphasis on pro-business policies, will say keep going with online games and push at the federal level for other changes, such as repealing the national ban on sports betting.

It's worth noting that no one knows where gambling issues will sit on Sessions' priority list. PennLive's efforts to reach out to the Attorney General-designate and his staff for this story were not successful.

As Crawford, a former senior staffer in the Rendell Administration, put it Wednesday, "if we start enacting public policy in our state based on what may or may not be happening in Washington, we might be in for a really wild ride."

Trump -- who formed a company with his daughter Ivanka in New Jersey to explore offering internet gambling in New Jersey but never sought a license -- has so far not taken a public position on the issue.

He does have supporters on both sides.

Sheldon Adelson, CEO of the Las Vegas Sands Corp., is one of the most prominent opponents of online games, which Adelson believes have the effect of eroding walk-in traffic at his brick-and-mortar gambling palaces.

Adelson gave $35 million to a pro-Trump campaign committee in the 2016 campaign, and served on the president's inaugural committee.

At the same time, a coalition of organizations supporting federal business deregulation have weighed in against any changes in the current interpretation of the federal Wire Act of 1961.

In a letter to Sessions and Vice President-elect Mike Pence, the Competitive Enterprise Institute wrote that reversing the Justice Department's 2011 ruling "would severely injure one of our nation's founding principles: the idea that the federal government's power should be limited and states should be free to regulate intrastate commerce as they see fit."

The gates to cyberspace opened when the Obama Administration's Department of Justice, in response to requests from New York and Illinois, said states could sell lottery tickets online without violating the Wire Act, which bars wagering across state lines or national borders by telecommunications systems. The opinion specifically addressed proposals to sell tickets to adults within their state's borders. 

"As long as the gambling operator and the customer are within the same state and the betting activity does not include sporting events, the state's own laws would govern," it stated in part.

That has, in the years since, led to commercial online gambling platforms in Nevada, New Jersey and Delaware. About 20 states have added online sales to their lottery operations.

Gov. Tom Wolf and state lawmakers here agreed in principle last year to legalize online games here in the 2016-17 budget, though the expansion legislation has not reached the governor's desk to date.

Wolf is now believed to want to pair any authorization of online gambling with so-called "i-Lottery" capabilities, to ensure that the Pennsylvania Lottery isn't placed at a competitive disadvantage.

Rep. Scott Petri, a Bucks County Republican who is the new chair of the House Gaming Oversight Committee, agreed this week that Sessions' remarks have added a new layer of questions to a debate already full of them.

For now, he said he's awaiting a legal opinion from House Republican lawyers on the reliability of arguments that - in the event of a Trump Administration reversal - any online gambling program here would be grandfathered based on an old Justice Department memo.

Petri said his goal is to advance some kind of policy in tandem with the 2017-18 budget. Until then, he added this week, "I don't feel pressure to move anything quickly. I think we need to take our time and do this right."