Thursday, August 09, 2012
Wednesday, August 08, 2012
States seeking revenue could spark a boom in Internet gaming
By Jamey Dunn
Illinois paved the way for states selling lottery tickets online. Now some experts believe that the U.S. Department of Justice ruling that allowed for such online sales will open the door for other forms of online gambling to sweep across the nation.
“We’re going to have Internet gambling that everybody acknowledges is Internet gambling, and it’s going to be in less than 10 years,” I. Nelson Rose, a law professor and gaming consultant, said today at the National Conference of State Legislatures' legislative summit in Chicago.
Rose said the Justice Department ruling, which Illinois and New York requested, allows for many new forms of online gaming — such as poker and even versions of popular games such as the Internet Phenomena Angry Birds, with added wagering components.
Rose said that state lotteries could offer online versions of scratch-off tickets that would be “indistinguishable from a slot machine.”
He said that the new interpretation of the 1961 Wire Act gives states substantial leeway when it comes to gaming. Rose said the interpretation found that the act only restricts sports wagering. Anything states opt to do must be legal under state law, or it may fun afoul of federal statues meant to target organized crime, he said, “which means that states can now do anything they want with some limitations.”
Senate President John Cullerton has already floated the idea of online gaming to the Illinois General Assembly. In May, he introduced House Bill 4148, which would create a Division of Internet Gaming within the Illinois Lottery. Cullerton estimated that online gambling could bring in hundreds of million of dollars in revenue for the state.
“Certain forms of iGaming, especially poker, rely on large pools of potential players, and states that move swiftly to design a system that captures the widest audience of participants will have an advantage in terms of long-range success,” Cullerton wrote in a letter to legislative leaders and Gov. Pat Quinn. “As a result, it is necessary that Illinois create a legal template that is flexible enough to allow an organized approach to maximizing revenue in an ethical and socially responsible manner, while also establishing logical standards and regulations.”
The bill was never called for a floor vote. Quinn reluctantly supported the legalization of video gaming in bars and restaurants across the state to fund Illinois’ first capital construction program in a decade. However, his administration was slow to implement the plan, which was approved in 2009. The first machines are reportedly arriving in bars and restaurants this week. Quinn has not been receptive to recent gaming expansions passed by the legislature. He has yet to act on a gambling bill that lawmakers approved at the end of May.
Rose and others believe that many states will take the opportunity to delve into online gaming, either through offerings from their lottery programs or by granting licenses to private companies. Rose noted that the popularity of gambling has gone up and down in the country over time. Lotteries were prominent in the colonies and early years of the nation, only to shrink during the mid 19th century. Gambling enjoyed a resurgence in the South after the Civil War and in the western territories, which is why it is associated with the Wild West today. State lotteries began in the 1960s and began to pop up across the country. After one state in a region created a lottery, nearby states often followed suit to avoid losing revenue to their neighbors. “Lotteries exist for a very simple reason: because states and their residents need the revenue,” Margaret DeFrancisco, president and chief operating officer of the Georgia Lottery, said at the summit. The recent recession and the budget shortfalls in many states means that they country may be primed for another. “When there’s an economic downturn or some other motivation it springs up again.”
De Francisco and Rose said the online shopping habits of young people contribute to making the Internet the next frontier for gambling. “Twenty-two-year-olds do not want to go and sit in front of a little metal box with wheels going around,” Rose said. De Francisco said that bricks-and-mortar lottery vendors have “been the bread and butter of our industry and will continue to be.” However, she said online lottery ticket sales give states a chance to target consumers who otherwise might not play.
Some in the gaming industry say the Justice Department ruling leaves the issue too open and that Congress should pass a basic regulatory framework that states must adhere to. “Given the inherently interstate nature of the Internet, we believe there has to be some level of regulation by the federal government,” said Whitaker Askew, vice president of government affairs for the American Gaming Association, which represents casinos, racetracks and several gambling vendors. He said that states should have the power to regulate and tax Internet gaming. He added that state legislatures should have to vote to opt in to legalizing Internet gambling, and those that do not should have the option of keeping it illegal within their borders. Askew said the federal government should only set a bare minimum of regulation that states must uphold to avoid a “regulatory race to the bottom” among states seeking to accommodate gaming operations. While the members of Askew’s association are likely to find themselves in competition with Internet gambling sites, it is also possible that existing casinos may be granted licenses to run online operations.
De Francisco said she and other state administrators are wary of federal regulation. Rose said that the gridlock in Congress means that a federal law is probably not coming any time soon. “I think the federal boat has sailed,” he said. “It just isn’t going happen. It certainly isn’t going to happen this year.”
But some experts believe that states that turn to gambling may make their economies worse. “Gambling’s effect on our economy is like reverse pump priming. It is taking money away from consumer spending and dumping it basically into electronic gambling machines,” said John Kindt, a professor of business and legal policy at the University of Illinois Urbana-Champaign. Kindt said the Justice Department went too far in its interpretation of the Wire Act.
“[The Justice Department’s legal opinion is] an amazing document because the net impact is that a bureaucrat has issued a new controversial interpretation of the 1961 Wire Act, which was designed to attack organized crime. It’s a law that has withstood legal challenges for over 60 years. But this one bureaucrat in the Department of Justice has changed 60 years of precedent, reversing it 180 degrees overnight,” he said in a prepared statement. “The effect this legal opinion will have is that it is slowly removing almost all regulatory oversight of gambling. And once gambling is on the Internet, it’s in every living room, office, school and mobile phone.”
Kindt said that Congress should evaluate the ruling and consider banning Internet gambling. "States are going to do whatever they think they can get away with to expand gambling simply because they need the revenue. The only way to prohibit it is for Congress to completely ban it again because states need more than a little oversight when it comes to certain things that have the potential to destroy their economies. Internet gambling is public enemy No. 1 in that regard. It’s an incredible economic danger that cannot be overstated."
Tuesday, August 07, 2012
Monday, August 06, 2012
New pension proposals emerge but still no clear solution
By Jamey Dunn
As a special legislative session on pension reforms draws near, one lawmaker has filed new legislation that she hopes will move negotiations forward.
Rep. Elaine Nekrtiz, who serves on a General Assembly pension reform working committee, introduced House Bill 6209 and House Bill 6210.
Gov. Pat Quinn called a special session for August 17. The Illinois House was already scheduled to be in session that day to decide the fate of Chicago Democratic Rep. Derrick Smith, who is accused of taking a bribe. A House disciplinary committee recommended that Smith be kicked out of his seat. Lawmakers plan to take that issue up for a floor vote.
But Quinn also wants them to tackle pension reform, and he has called the Senate back on the same day in an effort to push the issue.
Nekritz’s bills are similar to Senate Bill 1673, a proposal she backed at the end of the spring session. Employees would have a choice of either giving up the compounding cost of living adjustments [COLAs] they receive after retirement or sacrificing their state subsidized retiree health care.
Republicans balked at SB 1673 because it would have required school districts, community colleges and universities to pay for their employees’ pension benefits. At present, those entities only pay part a portion of the cost, while the state picks up the bulk of the expense. Republicans said that such a shift would result in layoffs and increased property taxes. They dubbed the provision a “poison pill” that made them unable to support the underlying changes.
Democrats say that the cost shift would require school districts to consider pension costs when offering raises. Chicago lawmakers also argue that it is unfair that the city covers the bulk of pension costs for its teachers while the state picks up most of the tab for suburban and downstate districts.
Nekritz’s new plan, House Bill 6209, would shift the cost more gradually than SB 1673. Under the new plan, schools would pay .6 percent of payroll in Fiscal Year 2014, with the cost stepping up by .6 percent each fiscal year through FY 2024. After that time, the cost would step up by .5 percent. The amount schools would have to pay would increase until they had taken over the entire employer cost for retiree benefits. “The concept of the longer phase-in on the cost shift was the results of negotiations, and it never has made its way into bill form,” said Nekritz, a Northbrook Democrat.
The Senate dodged the cost shift issue by passing HB 1447 on the last day of regular session. The bill only applies to state employees and members of the General Assembly, leaving out teachers and university employees.
Nekritz said that HB 6210, which would apply to teachers and university employees, could be a “companion” bill to HB 1447. HB6210 also contains the more gradual cost shift.
But both of Nekritz’s bills would require more than one day of session to pass through both legislative chambers in their current forms, and she is not expecting lawmakers to be in session for multiple days next week. “I think the likelihood of us staying over the weekend is not high.” Both of the bills also have an immediate effective date, which means they would require a three-fifths majority to pass in 2012. It is unlikely that proponents would be able to drum up such support on a controversial issue this close to the November general election.
Nekritz said her intent in presenting the bills was instead to push forward the conversation about pension reform. “The goal is to put this down and say: 'This is the latest thinking. How can we move ahead?'” However, the language in her legislation could be moved into a vehicle bill, which would allow for passage in a single day, and the effective dates also could be changed.
Quinn supports both of Nekrtiz’s bills. “The governor continues to feel that pension reform should be resolved as soon as possible. The governor feels that that there can be no more delay on an issue that is costing taxpayers $12.6 million a day and putting the state at risk of a future downgrade. That’s why he is calling the legislature back for a special session on pension reform, which will give them the opportunity to vote on this critical issue,” Brooke Anderson, a Quinn spokeswoman, said in a prepared statement.
House Minority Leader Tom Cross has reservations about even a gradual cost shift. The Teachers Retirement System may reduce its expected rate of return on investments, which could increase the system’s unfunded liability. A statement from Sara Wojcicki Jimenez said Republicans are concerned that if a change occurred, school districts and colleges would on the hook for a lot more than what is currently being discussed.
“The bottom line is that a pension cost shift is exactly that — a cost shift, not reform. We remain in total support of comprehensive pension reform of our pension systems. We have been and are willing to work with the other legislators and the governor to come up with a comprehensive solution as soon as possible,” she said. Jimenez said that the pension working group plans to hold more discussion this week.
However, union officials say they have not been included in negotiations. “We had hoped that the failure of the various unfair bills introduced in the spring would provide an opening for our union coalition to once again sit down with legislative leaders, and particularly the governor, to get serious about solving this problem cooperatively. That hasn’t happened. There have been no such meetings,” said Anders Lindall, spokesman for the American Federation of State County and Municipal Employees, Council 31.
Lindall said these new bills would have negative effects on employees that are similar to the proposal considered at the end of the regular session. “The general concept is to force workers and retirees to choose between losing their health insurance and future pensionable compensation or seeing their COLA gutted. The cost-of-living adjustment is the provision that allows retirees on fixed income to keep pace with rising costs.”
He said that unions are “willing to be part of a pension solution that is negotiated collaboratively.” However, Lindall said, “We are strongly opposed to any legislation that’s unfair and unconstitutional in putting practically the entire burden of the pension debt on the backs of employees, and in this case, [current] retirees.”
Sunday, August 05, 2012
Saturday, August 04, 2012
Friday, August 03, 2012
Thursday, August 02, 2012
AFSCME sues to keep prisons open
By Jamey Dunn
The state’s largest public employee union is suing to block Gov. Pat Quinn’s plans to shut down several correctional facilities on the grounds that the closures would create unsafe working environments for its members.
The American Federation of State, County and Municipal Employees Council 31 is seeking an injunction against the closure of seven facilities. Two of the facilities are prisons, a super-maximum-security prison near Tamms and a women’s prison in Dwight. The union is also suing to keep open adult transition centers in Decatur, Carbondale and Chicago and youth prisons in Joliet and Murphysboro. According to AFSCME, Quinn’s closure plan would result in the transfer of almost 5,000 prisoners, including youth offenders.
“Many of the inmates that will be moved are those who have been intentionally segregated in the correctional system because of the danger they pose to guards and to other inmates. Almost a thousand maximum security female inmates will be moved, and several hundred maximum security youth will be moved as well. The insertion of these inmates into the overcrowded prisons of the state will inevitably foment unrest that will put employees, other inmates and the general community at risk,” said AFSCME’s complaint.
According to the complaint, AFSCME is suing to protect its members from the “risk of injury and death” that the group says they would face under Quinn’s plan. “Inmates are being sent to prisons that are too crowded, too short of staff or lacking appropriate security features to safely incarcerate them,” AFSCME Council 31 executive director Henry Bayer said in a prepared statement. “We’re asking the court for an injunction to prevent the state from moving forward with any closure until the related grievances have been resolved.”
Lawmakers approved a budget that contained money to keep facilities open for the current fiscal year, but Quinn used his veto pen to reject the money and has moved forward with closures. “They’re going to be closed. I do believe that we have to see our budget as what our priorities are,” Quinn said when he announced his changes to the budget. He called on lawmakers to instead use the money to defer other cuts that were in the budget, including an $86 million reduction to funding for the Illinois Department of Children and Family Services. The State-Journal Register reported that the agency recently issued layoff notices to 600 employees as part of a restructuring plan that would result in a net reduction of 375 jobs. The department claimed that the layoffs were a direct result of the budget cut.
Legislators opposed to the closures have asked Quinn to hold off on shutting down the facilities until they have a chance to act on the governor’s vetoes.
“Anyone who calls to keep these outdated, half-full, expensive facilities open is calling for the continual waste of taxpayer dollars on facilities the state no longer needs,
” Kelly Kraft, a spokesperson for Quinn, said in a prepared statement. “The overall population is down from last year, and female entries into the system are declining. Inmates will be safely and securely transitioned into appropriate facilities fully capable of securing offenders and resulting in costs savings to Illinois taxpayers. Some will say that money was provided in the budget to keep these facilities open, when in reality, legislators made a choice on how to spend taxpayer dollars: choosing outdated, half-full, expensive prisons over educating our children and keeping them safe.”
Wednesday, August 01, 2012
Illinois becomes second state to bar employers from asking for social network passwords
By Jamey Dunn
Today Illinois became the second state in the nation to bar businesses from asking employees or potential employees for their social media profile passwords.
“It is important that we understand that even though we live in an information world—a very fast paced world where we can get information in split seconds—there’s some information, if [it] belong[s] to the person, that belongs just to the person. That’s their choice. If they want to share it, that’s their business, but privacy is a fundamental right,” Gov. Pat Quinn said today before he signed House Bill 3782 at a Chicago news conference.
According to the National Conference of State Legislatures, more than a dozen other states are considering bills that would restrict employers from asking for information from employees’ profiles on social media networks, such as Facebook and Twitter. Maryland Gov. Martin O'Malley signed his state’s ban in May.
Nationally, some U.S. senators have asked the U.S. Department of Justice to determine if employees who ask for social network information are violating any federal laws. Facebook has come out against employers asking for passwords and users sharing their passwords with others. “If you are a Facebook user, you should never have to share your password, let anyone access your account, or do anything that might jeopardize the security of your account or violate the privacy of your friends. We have worked really hard at Facebook to give you the tools to control who sees your information.
"As a user, you shouldn’t be forced to share your private information and communications just to get a job. And as the friend of a user, you shouldn’t have to worry that your private information or communications will be revealed to someone you don’t know and didn’t intend to share with just because that user is looking for a job,” said a written statement from Erin Egan, Facebook’s chief privacy officer.
Lori Andrews, director of the Chicago-based Institute for Science, Law and Technology, said that Illinois’ new law puts the state at the “forefront” of online privacy rights. “Over 900 million people are on Facebook. If it were a nation, it would be the third largest nation in the world after India and China, and yet it’s very unclear what your rights are in that venue,” said Andrews, who is also a professor at the Chicago-Kent College of Law.
Andrews said research has shown that about 75 percent of employers browse potential employees’ public social network profiles, and about one third say they have opted not to hire employees based in part on what they found. But Andrews said that allowing businesses to access information on social sites that has not been shared to the general public would open the door to potential discrimination. “It could reveal things about your religious beliefs or your political affiliations or your sexual preferences.” She said that employers might be able to access information about topics such as family medical history or family planning decisions, which are legally barred from asking job applicants about in interviews. “If your employer can go on the private side of your Facebook page, your potential employer might find out that you’re planning to get pregnant or that you liked the American Cancer Society,” she said. “So this bill will protect employees and potential employees by preventing them from having to cough up this very personal information.”
Illinois’ law will bar employers from asking for passwords to social media accounts or making employees log in to their account and show it to the employer. It will also keep employers from making workers or applicants grant them access to information on the site that is blocked by privacy settings. However, under the new law an employer could ask for user names and view any information that a worker or job candidate chooses to make public.
Senate Minority Leader Christine Radogno, who sponsored the law, said the ban would help to protect young people who are active on social media sites. “This was kind of a fun bill to work on because we pass a lot of bills in Springfield that many people, especially young people, don’t feel really affect their lives or they can relate to personally, and this is one that people definitely relate to and understand. I know I got a lot of ‘likes’ on my Facebook page when we talked about this bill. But Radogno said that as a mother, she felt the obligation to warn young people to be careful about what they post online. “Please remember that they can’t ask for your password, but be discrete and be smart about what you put out there on the Internet because it is still out there and it can affect you.”
The law goes into effect next July 1. Businesses that violate the ban would be subject to a civil penalty of between $100 and $300 for a first offense.
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