Denny’s Double Dealing: Hastert and the Gaming Industry. Part 3 of 3

by , posted on Saturday, November 4th, 2006 at 9:05 am

Originally posted at Fireside 14 and Daily Kos.


When Republicans first began pushing internet gambling prohibition about ten years ago, it was a fairly straightforward proposition. As the titles of the legislation would indicate — Computer Gambling Prevention Act of 1996, Internet Gambling Prohibition Act of 1997 — these were anti-gambling measures, no doubt about it. And the National Gambling Impact Study Commission report recommendations regarding internet gambling, released in June 1999, called for prohibition “without allowing new exemptions or the expansion of existing federal exemptions to other jurisdictions.”

But there was a problem with this approach. The bills never made it to the floor for a vote. Too many Members had gaming interests in their districts that would be harmed by the legislation. So, in order to sweeten the deal, loopholes began to show up in these bills. So many loopholes, in fact, that House Resources Committee Chairman Don Young wrote to Hastert to complain.

I note that H.R. 3125 has been reported out of Subcommittee containing an exemption from its proposed Internet gambling prohibition for the following forms of gambling:

–intrastate lotteries,
–horse tracks,
–jai alai,
–multi-state lotteries,
–dog tracks,
–fantasy sports,
–and all other intrastate pari-mutual wagering authorized by any State.

It appears that just about the only Internet gambling prohibited by H.R. 3125 is tribal gaming.

Still, the loopholes had the desired effect. Internet gambling prohibition legislation finally began to make its way toward a floor vote in 2000. And while so much had been compromised away in order to win support for the bill that there wasn’t much gambling prohibition left in the measure, what little was left was threatening to some. Like the company eLottery, who hired Jack Abramoff in May, 2000 to work against the bill. The strategy? Persuade supporters of internet gambling prohibition that the bill would actually expand opportunities for legalized gambling. And with the help of friends and associates like DeLay staffer Tony Rudy, Grover Norquist, Ralph Reed, and Rev. Louis P. Sheldon of the Traditional Values Coalition, Abramoff was able to do just that, and outmaneuver the majority in Congress who supported the bill.

In early June 2000, DeLay had not yet taken a position on the Internet gambling ban. But his aide, Rudy, was already providing advice to Abramoff about how to kill it. …

He followed up with a suggestion that Abramoff’s team get a conservative House caucus to seek a meeting with the chamber’s top leaders, Speaker J. Dennis Hastert (R-Ill.) and Majority Leader Richard K. Armey (R-Tex.) — a key supporter of the bill. …

Sheldon was also hard at work, holding news conferences and button-holing House conservatives to argue against the bill. On July 10, he called Abramoff’s group saying he had run into resistance from the staff of an influential member who still favored the bill. …

Abramoff got another strategy e-mail the next morning from Rudy. Rudy was on DeLay’s staff but wrote “we” as though he belonged to Abramoff’s team. “I think we should get weyrich to get like 10 groups to sign a letter to denny and armey on gaming bill,” Rudy wrote …

Slowly the tide began to turn. DeLay came on board, as did Rules Committee Chairman David Dreier, and it was decided the usual rules would be suspended when the bill came to the floor for a vote. The upside of this strategy was that they would be able to avoid amendments and extended debate that could easily upset the balance of the carefully negotiated exemptions Goodlatte had woven into the bill to win support. The downside was that the bill would now have to receive a two-thirds majority to pass. When it came to a vote the final tally was 245 in favor, 159 opposed. In spite of the fact a strong majority supported the bill, it didn’t pass. Abramoff had persuaded just enough of the right people to oppose it, enabling him to win round one.

The bill’s supporters, however, refused to give up and vowed to bring it back somehow for another vote before the end of the session. So Abramoff went back to work.

Abramoff’s strategy was to dispatch Sheldon to pressure about 10 social conservatives in their home districts, accusing them of being soft on gambling for supporting Goodlatte’s bill. Abramoff’s group hoped those members would stir fears among House leaders that another vote on the gambling bill could threaten those members and thus the GOP’s thin 13-seat majority. …

Sheldon’s campaign in conservative districts had the desired chilling effect on GOP leaders. That became clear on Oct. 24, when House Republicans met to discuss their year-end strategy … DeLay, Safavian wrote in an e-mail, “spoke up and noted that the bill could cost as many as four House seats. At that point, there was silence. Not even Rep. Dick Armey (R-Texas) — our previous opponent — said a word.” …

Abramoff had won another round. He had succeeded in convincing the Republican leadership not only that the bill simply wasn’t much of an anti-gambling bill in it’s compromised form, but, more importantly, that there would also be a political price to be paid if it passed. So, it didn’t. It never ever got to the House floor for a second look. And the interests Abramoff represented, segments of the gaming industry Goodlatte’s legislation really could have put out of business, dodged another bullet.

It should be mentioned that while Abramoff was taking the lead, he wasn’t the only lobbyist on the case. While he and his Preston Gates team were working against this legislation on behalf of eLottery, former Abramoff associate David Safavian and his team at Janus-Merritt Strategies (the firm Safavian founded with Norquist in 1997 after leaving Preston Gates) was working the same beat on behalf of the Interactive Gaming Council, the Interactive Services Association, CDM Fantasy Sports, and the Inland Entertainment Company. Indeed, as supporters of the internet gambling ban tried in vain to get the bill attached to some other legislative package during the lame duck session of Congress held after the election that fall, Safavian was reporting to his clients that “our entire team has been essentially camped out on Capitol Hill and at the White House for the past two weeks, urging the negotiators to reject any Internet gambling rider that might come up.” (soon to evolve into PodestaMattoon, when Daniel J. Mattoon, Hastert’s close friend and longtime political associate, signed on as the senior Republican principal at the firm in the middle of all of this legislative wrangling) was also representing the Interactive Gaming Council. And during this period, while these lobbyists were working against this legislation, Hastert received $21,000 [196, 197, 198] in campaign contributions from them.

Safavian appears to have played an even more interesting role in derailing internet gambling legislation when it was reintroduced in 2001. Once again, Goodlatte was attempting to guide his carefully crafted bill through Congress.

In the end, however, Goodlatte’s compromises were stripped out of the bill when the committee approved an amendment from Rep. Chris Cannon, R-Utah, that made the legislation more of an outright ban on all forms of Internet gambling. Cannon’s amendment removed exemptions for casinos and state lotteries, for example.

Ostensibly, Cannon’s amendment toughened the bill by removing exemptions for horse and dog betting. But in reality it was a torpedo: many House members represented areas with extensive horse-betting, including Speaker of the House Dennis Hastert (R-IL). If the bill reached the floor, it would probably die.

And it wasn’t just the gambling interests back home that would have mattered to Hastert. At least a few of the Las Vegas casino operators, such as the MGM Mirage, Park Place Entertainment, and Station Casinos — the very people Hastert had been raising enormous sums from at his Vegas fundraisers every year, the very people he had told he had no interest in regulating their industry — were counting on one of those exemptions to allow them to set up their own Internet gambling websites.

So, when Cannon’s amendment closed up the loopholes, making the bill a truly anti-gambling bill once again, it lost the support it needed to pass. Abramoff and everybody else who was working on behalf of the internet gambling interests won another round.

What did Safavian have to do with all of this? Well, Safavian had left Janus-Merritt in 2001 to become Cannon’s Chief of Staff.

While working for Cannon, David served as the congressman’s political advisor and oversaw the legislative activities of the office. His role, he says, involved managing the minutiae of the legislative process …

One can therefore reasonably assume that Safavian would have been intimately involved in the crafting of Cannon’s amendment and would have known exactly what it’s effect would be, that it would be a “poison pill” that would doom the bill, exactly the thing his friend and mentor Jack Abramoff wanted to see happen.

Abramoff moved on from Preston Gates to Greenberg Traurig at the beginning of 2001, but he brought clients with him and added new ones. His new firm was registered to represent the Interactive Gaming Council, the E-Commerce Payment Coalition, Playboy Enterprises, Bowman International (an online sports betting service), Starnet (developers of online gaming software), and the National Association of State and Provincial Lotteries on internet gaming issues, and in 2002 they added Sportingbet (a London-based online gambling company) to their roster. In addition, Financial Times has just this month reported that they were also representing Gibraltar-based PartyGaming, operators of the world’s largest online poker site. Abramoff’s junior associates worked the accounts, but one can safely assume Jack was never too far removed from the fray.

In 2003, at the beginning of the next Congress, Rep. Jim Leach (R-IA) started off a new round of this legislative dance by reintroducing the Unlawful Internet Gambling Funding Prohibition Act, which sought to prohibit anyone engaged in a gambling business from accepting credit cards, checks, electronic fund transfers, or the like in connection with illegal Internet gambling. As one would have expected by this point it included the usual exemptions for lotteries, and horse and dog racing, and, again, as expected, it was amended by Cannon in the House Judiciary Committee to strip the exemptions back out. Rep. Spencer Bachus (R-AL) then introduced a new version of the bill which put the exemptions back in, but eliminated any criminal or civil penalties. This allowed the bill to sidestep the Judiciary Committee, and, more to the point, to sidestep Cannon, with the intention of reintroducing the penalties once the bill had safely made it over to the Senate. But a number of Members were reportedly uncomfortable with the manner in which the bill was being “fast-tracked” through the system, and, once again, in order to avoid amendments being offered on the House floor, the usual rules were suspended and a two-thirds vote was required for passage. The votes were not there, so a floor vote never took place.

Without exemptions built into the legislation, internet gambling prohibition could never attract enough support to have a chance of passing. With exemptions built in, crafty opponents such as Jack Abramoff were able by hook or by crook to defeat it by persuaded just enough Members that the measure would no longer have the effect of prohibiting gambling, but would instead expand it by protecting established gaming interests. In spite of all the moralistic rhetoric that would be thrown around by the Republicans regarding the evils of gambling and the harm it brought to society, true internet gambling prohibition, without loopholes being built in for established gaming interests, had never and would never be seriously considered in Speaker Hastert’s House of Representatives.

Greenberg Traurig would continue to represent all of their Internet gambling clients through 2004 (they still represent the Interactive Gaming Council today). The campaign contributions continued as well. Between 2001 and 2004, Abramoff, his associates at the firm, and the Greenberg Traurig PAC gave another $47,250 [199, 200, 201, 202, 203, 204, 205, 206] to Hastert. (And they would give Denny another $33,500 [207, 208, 209, 210] in 2005-06, after Abramoff was fired, as they continued to lobby against Internet gaming prohibition.)

As the story of the Abramoff scandal unfolded through the course of 2004 and 2005, Jack’s old friends began seeking to distance themselves from him every which way they could. After Abramoff pled guilty to corruption charges on January 3, 2006, Hastert begrudgingly made charitable donations that were supposedly equal (they weren’t even close) to the amount of money he had received from Abramoff and his clients. House Republicans also looked for legislative remedies for what ailed them.

House members are rushing to co-sponsor a version of the Internet ban that failed after an Abramoff-led lobbying blitz in 2000. … With a Justice Department influence-peddling investigation still under way, lawmakers want to “show some separation between them and him [Abramoff],” says Rep. Bob Goodlatte (R., Va.), a chief sponsor of the 2000 Internet-gambling ban. In a few weeks, Mr. Goodlatte has racked up more than 100 co-sponsors

New life was also breathed into Leach’s bill, and on June 27, the Speaker announced that the House Republicans were making Internet gambling prohibition, in one form or another, a part of the American Values Agenda they would run on this year.

In the end, however, it was Senate Majority Leader Bill Frist, not Hastert, who made sure something passed before time ran out. Denny had other priorities.

Frist has been working hard to include some version of the Internet gaming language in the defense reauthorization bill in what a number of outside lobbyists see as a push to ingratiate himself with social conservatives and, more specifically, Leach, whose endorsement would be a big boost during the Iowa primary…

But that potential victory hung in the balance on Monday as House Speaker Dennis Hastert (R-Ill.) continued his threats to postpone a vote on the overarching bill until negotiators from both chambers include unrelated measures on immigration and court security

Unable to attach the internet gambling measure as a rider to the defense reauthorization bill, Frist somehow arranged for it to become Title VIII of the SAFE Port Act, passed after midnight on the last day of the session with none of the conference committee members ever even seeing the final language of the bill. In its final form it still had the same sort of loopholes built into it that it had always needed to attract the votes necessary for passage. It protected established gaming interests and focused it’s prohibitions on new market entrants. Nevertheless, with their legislative sleight of hand trick successfully performed at long last, the Republican leadership had all the prohibition it ever really needed or wanted.

Dennis Hastert has made no public statement concerning the passage of this piece of his American Values Agenda. The day it passed Congress was the same day Mark Foley, and what he had been up to with the Congressional pages, hit the news, so the Speaker has no doubt had other things on his mind.


Hastert claims to have always opposed Indian casinos, but he has accepted hundreds of thousands of dollars in campaign contributions from them and their lobbyists and has been happy to weigh in on their behalf when the odds favored that position. He has pandered to the social conservative base of the Republican Party with claims to support the prohibition of internet gambling, but has routinely subordinated that value to partisan political calculation and to the importance of defending existing gambling enterprises. All told, he has taken well over $2,600,000 in campaign contributions from gaming interests over the course of the last ten years and he has gone out of his way to assure them that he was their friend.

Hastert would like to have people believe that he is an opponent of the gaming industry, and yet the truth of the matter is that no one has worked harder to shield established gaming interests from the threat of competition for the gambling dollar, no one has worked harder to raise money from the gaming industry, no one has been a more valuable supporter of the gaming industry while the Republicans have been calling the shots on Capitol Hill, than Denny Hastert.

It’s time to put an end to Denny’s double dealing. Ladies and gentlemen, place your bets.

To go to Part 1, click here | To go to Part 2, click here


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