The Gambling Industry and President-Elect Trump in the Trump Gamble

By Ben Hamill - December 27 2016

Casinos in America

The Future of Gambling in America

Many issues were raised during the 2016 presidential election campaign but the subject of gaming reforms was barely mentioned. That doesn’t mean that the question about whether gambling can expand in America is a dead subject. To the contrary, as the industry grows worldwide, American politicians and public issues experts are carefully considering how, if and when to expand gaming in the USA.

The Present

At present the laws regarding gambling vary widely within the United States. Each state is responsible for creating its own legislation to govern gambling activities within its borders. For instance, every state except for Hawaii, South Carolina, Tennessee and Utah allows charitable lotteries and 43 states offer state lottery options. Over half of the states offer racetrack betting within their state boundaries and almost half of the 50 states have legalized commercial casinos in operations. Many tribal authorities allow casinos to operate in their territories — in these cases the tribal governments, along with state and federal bodies, monitor and regulate those casino sites

Trump and Casinos

Donald TrumpThere are presently approximately 450 commercial casinos in the United States which are owned and operated by private companies. President-elect Trump has a long relationship with casinos. Trump begin his involvement with casino ownership and operation in the 1980s and over the years has, both individually and through the publically-traded Trump Hotels and Casino Resorts company, owned and managed Harrah’s in Atlantic City, Trump 29 Casino in Coachella California, Trump Casino in Gary Indiana, Trumps World’s Fair at Trump Plaza in Atlantic City, Trump Castle/Marina in New Jersey and the Trump Taj Majal in New Jersey which recently closed.

Although Trump didn’t speak about his intentions re: gambling during the election campaign, gambling advocates are optimistic that he will promote more liberal gambling policies in his administration and perhaps promote the Trump Gamble to work to legalize online gambling activities as well.

United States and Online Gambling

Internet gambling is popular throughout the world but it is prohibited in the United States. The reason most cited is the Federal Wire Act of 1961 which effectively delegitimizes any form of betting that is facilitated through wire communication. The act reads in part:

“Whoever being engaged in the business of betting or wagering knowingly uses a wire communication facility for the transmission in interstate or foreign commerce of bets or wagers or information assisting in the placing of bets or wagers on any sporting event or contest, or for the transmission of a wire communication which entitles the recipient to receive money or credit as a result of bets or wagers, or for information assisting in the placing of bets or wagers, shall befinedunder this title or imprisoned not more than two years, or both.”

The question of whether Internet gaming falls under the Wire Act is questionable. As of 2016 Supreme Court has not ruled on the meaning of the Federal Wire Act as it affects Internet gambling. If the question of online gaming goes to the Supreme Court any candidates that Trump nominates to the Supreme Court will affect this ruling. Trump already has one Supreme Court vacancy to fill and will likely be asked to fill others during his presidency.

CongressAn additional impediment to online gambling in the United States involves the Unlawful Internet Gambling Enforcement Act(UIGEA) of 2006. UIGEA effectively prohibits internet gambling through banking laws. The main thrust of the bill reads that it

prohibits gambling businesses from knowingly accepting payments in connection with the participation of another person in a bet or wager that involves the use of the Internet and that is unlawful under any federal or state law.”

This means that gambling businesses cannot accept payments from another person in a bet or wager on the internet. The bill was created because its proponents said thatInternet gambling is creating problems for banks and credit card companies. Observers note that this assertion that has not been borne out by time.

Since the UIGEA bill was passed by Congress, it must be repealed by Congress. A number of members of Congress have tried to overturn the bill or, at least, to mitigate the bill’s major obstacles to Internet gambling. If Mr. Trump supports these efforts it would go a long way towards encouraging Congress to undo UIGEA.

Vice President Pence

Mike PenceVice president-elect Pence is generally overlooked when the question of the future Trump administration’s gaming policies are discussed but they could influence the administration’s actions. Mike Pence, in his term as Indiana governor, presented himself as a social conservative who showed no interest in promoting gambling in his state.

In point of fact however Pence did use his power to help gambling interests in Indiana. During Pence’s term as Indiana governor the gaming industry made big strides. Pence supported legislation that allows riverboat operators to move casinos on shore. This has created a thriving gambling industry in Indiana. If Pence turns out to be an active player in the Trump administration he could influence online gaming advancements as well.

Bottom Line

Trump may have refrained from discussing the legalization of online gaming in the United States during his campaign but he has addressed the issue in the past. Most observers note that Trump, who has promoted economic growth as a major campaign platform, sees online gambling as a way to make that happen. When asked, early in the campaign, for his thoughts on Internet gaming Trump said "we have been looking at this for a while…This has to happen because many other countries are doing it and like usual the U.S. is just missing out."

Trump Tower New YorkTrump must be careful because of his own family’s business interests in the gambling industry. He has an association with billionaire Marc Lastry whose hedge fund controls the Avenue Capital Group. ACG could conceivably control 10% of the online gambling market if online gambling regulations become a reality.

Yet Trump has never been known to step away from a fight and he may well pull the Trump Gambleoff.