Maryland governor urges deficit panel to reject 'federalized' Internet poker

By Pete Kasperowicz - 10/24/11 02:38 PM ET

Maryland Gov. Martin O'Malley (D) late last week urged the leaders of the deficit-reduction supercommittee to reject any proposal to increase federal government revenue by legalizing Internet poker and gambling.

In his Oct. 20 letter to Sen. Patty Murray (D-Wash.) and Rep. Jeb Hensarling (R-Texas), O'Malley said legalizing these activities would drain state revenues and starve the states of money they need to fund education and other programs.

"In Maryland, for example, federalized poker and casino gambling would put at risk the $519 million annually we generate from our state lottery — our state's fourth largest source of revenue — and jeopardize the jobs and survival of lottery retailers, many of which are small businesses," he wrote.

O'Malley said reduced state lottery funding would hurt education at all levels. As an example, he said that in less than a year, the establishment of two new slot machine casinos has resulted in $50 million in new revenues.

"Many of us in the states already face significant budget deficits," he added. "Federalizing internet poker and casino games would serve to widen these deficits — and therefore threaten our nation's fragile jobs recovery."

He added that states have always had the right to decide whether and how to allow gambling, and said creating federal rules for online gaming would "strip states of those rights."

It's not clear that the congressional supercommittee will make any recommendation related to online gaming in November. However, the 12-member panel is under intense pressure to find $1.5 trillion or more in deficit reduction over the next decade — Democrats in particular have called on the panel to look for significant new revenues, and not to cut the deficit only by making spending cuts.

The supercommittee is required to vote on a proposed deficit-reduction agreement by Nov. 23, followed by a vote on the agreement by Dec. 23. If no agreement is reached, automatic spending reductions are required under the Budget Control Act.

Those who favor legalized Internet poker have been hoping that the fiscal crisis the federal government is facing might lead to a decision to take this step. On Tuesday, the House Energy and Commerce Committee will hold a hearing to explore Internet gambling.