Lawmaker Behind Gutting Of House Ethics Panel Also Authored UIGEA Language, Fantasy Sports Carveout

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Goodlatte UIGEA

Rep. Bob Goodlate (R-Virginia) –– who created a firestorm on Capitol Hill with legislation to weaken an ethics panel in Congress — was one of the men also behind the Unlawful Internet Gambling Enforcement Act.

That’s the federal law that makes it illegal for financial institutions to process payments related to online gambling not specifically authorized by the states. The UIGEA also gave rise of the daily fantasy sports industry. Its language carved out fantasy sports from its provisions.

The backstory on Goodlatte and ethics

Goodlatte is the driving force behind new legislation that would take away power from an ethics office that keeps tabs on members of Congress. An amendment to HR 5 would significantly hinder the Office of Congressional Ethics, which Congress created a little less than a decade ago.

From the New York Times:

House Republicans, overriding their top leaders, voted on Monday to significantly curtail the power of an independent ethics office set up in 2008 in the aftermath of corruption scandals that sent three members of Congress to jail.

The move to effectively kill the Office of Congressional Ethics was not made public until late Monday, when Representative Robert W. Goodlatte, Republican of Virginia and chairman of the House Judiciary Committee, announced that the House Republican Conference had approved the change. There was no advance notice or debate on the measure.

Media outlets universally painted the move as weakening ethics oversight in Congress. But Goodlatte said it would do the opposite in a press release:

Goodlatte: “The amendment builds upon and strengthens the existing Office of Congressional Ethics by maintaining its primary area of focus of accepting and reviewing complaints from the public and referring them, if appropriate, to the Committee on Ethics. It also improves upon due process rights for individuals under investigation, as well as witnesses called to testify. The OCE has a serious and important role in the House, and this amendment does nothing to impede their work.”

Republicans were already backing off of the ethics panel move early Tuesday.

Goodlatte and iGaming, fantasy sports

Congress enacted UIGEA in 2006. Goodlatte co-authored its fore-runner: HR 4411, the Internet Gambling Prohibition and Enforcement Act.

UIGEA’s impact

Lawmakers famously slipped UIGEA into a larger bill called the SAFE Port Act via a conference report. That language would eventually have a twofold impact on gambling in the US. It would lead to the shutdown of many of the largest online poker operators in the United States in 2011, in what is known as Black Friday for the iGaming industry.

It would also set the groundwork for what would become the DFS industry, as early movers in the space used the language to justify the legality of contests.

The UIGEA exempts from its language:

“…participation in any fantasy or simulation sports game or educational game or contest in which (if the game or contest involves a team or teams) no fantasy or simulation sports team is based on the current membership of an actual team that is a member of an amateur or professional sports organization … and that meets the following conditions: …”

DFS companies such as DraftKings and FanDuel once heavily relied on the UIGEA as the backbone of their legal argument. They now point to the idea that their real-money contests are “games of skill” that many states’ laws allow.

Of note on the UIGEA and Goodlatte’s home state

Rep. Jim Leach — who authored the UIGEA language along with Goodlatte — said he never intended for what transpired with DFS vis a vis the UIGEA:

The assumption was that while unconstrained Internet gambling could change the nature of America’s savings and investment patterns, fantasy sports would be a ‘de minimus’ footnote. No one ever conceived of it becoming a large scale activity or that it could transition into one-day contests.

At least one Democratic lawmaker who worked on the UIGEA (who was retained by FanDuel) has disputed this portrayal of DFS and the UIGEA.

Virginia, from which Goodlatte hails, is one of several states that acted in 2016 to give legal clarity to the DFS industry via a regulatory act. That law, like many others, lifted language from the UIGEA.

What Goodlatte has said on fantasy sports

Goodlatte hasn’t weighed in on his brainchild in recent years, but he talk about the issue in a 2007 Congressional hearing regarding the UIGEA, after its passage. He had an exchange with poker player Annie Duke during that hearing:

Mr. Goodlatte: … What we don’t need is to have the Federal Government go beyond that and usurp the power of the States by saying that we are going to have a Federal gaming commission to regulate gambling on the Internet.

Ms Duke: Then I would like to hear why you supported a bill like the UIGEA that allowed interstate betting like horse racing and fantasy sports.

Mr. Goodlatte: Well, first of all, fantasy sports I have not heard anybody claim is a form of betting. …

“Congressman Goodlatte’s statement ten years ago is just one example of how federal lawmakers and executive branch officials have positioned fantasy sports in the broader context of sports wagering,” Ryan Rodenberg, an associate professor of forensic sports law analytics at Florida State University, told Legal Sports Report.

“Besides asking whether a federal regulatory framework for sports betting is even feasible, Congressman Goodlatte’s statement calls into question how the web of state and federal sports gambling laws can be reconciled,” Rodenberg continued.

Judiciary Committee is likely path for sports betting

Goodlatte could also play a key role in the future of legal sports betting in the US.

Despite the fact that a subcommittee of the House Energy and Commerce Committee held a hearing on DFS and sports betting in 2016, that’s not the most likely place for legislation to get the most attention in Congress.

The House Judiciary Committee — which Goodlatte chairs — is the body through which a sports betting bill is likely to flow. That’s the House committee that approved the Professional and Amateur Sports Protection Act in 1992. PASPA is the federal law that prohibits single-game wagering anywhere outside of Nevada.

A past sports betting bill introduced by Rep. Frank Pallone (D-NJ) was referred to that committee, although it saw no action. Pallone said he plans on working on federal gambling laws — specifically sports betting — in 2017.

A lobbying push by the American Gaming Association on sports betting is likely to begin this year. Such a push will likely have to influence Goodlatte and other members of that committee to gain any traction.

Image credit: Photo by Gage Skidmore used under license CC BY-SA 2.0