Sen. Harry Reid is launching a bill in the lame duck congressional session that he says is about standardizing online gambling, but may really be about granting the gaming industry in his state complete power over online gaming well outside Nevada’s state lines. The American Gaming Association is behind the bill, which would have the federal government impose its regulations on online gaming in ways that would end up benefiting…the members of the American Gaming Association.

The states, however, have labeled the Reid-Kyl bill as a payoff to Nevada’s casino industry. State lotteries and governors have argued vigorously that they shouldn’t be limited to offering only online poker to their residents.

Steven Grossman, the chairman of the Massachusetts State Lottery Commission, noted in an Oct. 31 letter to Reid and Kyl that the profits from online poker are minimal. He vowed that “attempts to wish the online gaming genie back into the bottle are doomed to fail,” especially given the easy accessibility of international gambling websites.

“Whether you like Internet poker or not, any American with an Internet connection can even today go online and play Internet poker, bet on sports or play Internet casino games,” Pappas said. “The only thing they can’t do is do that on a licensed U.S. site.”

The bill would even set up a new federal bureaucracy, the Office of Online Poker Oversight within the Commerce Department. In an age of so-called austerity, this is among the last things we need to be doing.

Reid needs more than a dozen Republican votes to move the bill in the Senate, but has not secured them so far. But that is not yet deterring him.

Brian Darling, senior fellow for government studies at the Heritage Foundation, said Reid has three options for passing the bill absent bipartisan support to pass a standalone bill.

Reid could attach the gambling bill to other “must-pass” legislation—such as a possible fiscal cliff deal—as an amendment. He could wait and attach the bill in conference between the Senate and the House as they hash out differences on a must-pass bill. Or he could insert the bill directly into the base language of another bill.

“If he has the will to do it, he has tools at his disposal,” Darling said, suggesting a “secret negotiation” could be undertaken to pass it.

In other words, Sen. Reid will work harder to hand a sop to the gaming industry in Nevada than he will work to pass federal budget.

There may be good arguments on both sides of the bill, but as Big Government notes, Harry Reid’s efforts to push the bill are a red flag.

If Harry Reid’s ideas become law, and one set of regulations governs, with only online poker being allowed, large corporations will be able to quickly snap up the lion’s share of the gaming, with most of those corporations being casinos headquartered in Harry Reid’s home state of Nevada. Reid admitted as much when he castigated Rep. Dean Hellerin September for allegedly not doing enough to recruit GOP support for the measure:

On Tuesday, Reid scolded Heller. “In May, you agreed to help me cement Republican support for the bill in the Senate,” he wrote Heller. “Since then, you have been unable to garner the necessary Republican votes to pass this bill. As a result, we are at a standstill. And every day we stand still, Nevada’s workers, its economy and its gaming industry suffers.” 

“Reid said the legalization and regulation of online poker “may be the most important issue facing Nevada since Yucca Mountain. This bill means jobs for Nevada.”

But not for the other 49 states.