(Reuters) - Massachusetts' state treasurer on Wednesday blasted an online-gambling bill backed by Senate Majority Leader Harry Reid, saying the proposed federal law threatened the Massachusetts lottery that last year yielded nearly $1 billion in profits.
Steven Grossman, who is also chair of his state's Lottery Commission, said in a letter to Reid and co-sponsor Republican Senator Jon Kyl of Arizona that the bill sharply limits states' abilities to regulate online gambling inside their borders.
The bill, which would bar most types of Internet gambling but not off-track horse wagers and licensed online poker, would also give an unfair edge to gambling companies in Nevada, Reid's home state.
"The proposed act would effectively limit participation in the online gaming marketplace to gaming operations with a presence in Nevada and sharply constrain the ability of state lotteries to offer online products," Grossman said.
Reid has said the bill, if passed, would create a needed regulatory framework that would protect minors and others and make online poker operators accountable.
Lottery officials in Massachusetts are studying selling tickets online and have yet to make a decision for the state operation, which last year had $4.7 billion in revenue and profit of $982 million that was largely turned over to the state's cities and towns.
But, Grossman said, the Reid-Kyl bill would forbid online sales of instant scratch and Keno chances "that are responsible for more than 85 percent of the Lottery's sales."
Grossman, a Democrat like Reid, said the bill's limits served no business purpose.
"Accordingly, we can only assume that the act is a blatant, unwarranted and inappropriate attempt to secure first-mover advantage in the online gaming space for Nevada," Grossman said.
State governors, through a letter from the National Governors Association, last week criticized the Reid-Kyl bill.
(Reporting By Michael Connor in Miami; Editing by Cynthia Osterman)