Online Gambling

As reported in yesterday’s The Wall Street Journal, the House Financial Services Committee voted 41-22 to approve legislation that would regulate many forms of online gambling, including poker and bingo, while specifically banning betting on major US sports leagues like the MLB, NFL, NBA, and others.

Other news articles point out that the legislation also would deny licenses to any online site that has allowed, or currently does allow, US players to gamble online. Looking ahead, this would appear to effect PokerStars, FullTilt, and other online poker rooms that have continued to serve US players despite the UIGEA of 2006.

Other key elements of the legislation include player loss limits, rigorous age verification systems and frequent testing thereof, and allowing states to opt out of this legislation and ban its citizens from online gambling.

And the legislation that was passed does not cover how the industry is to be taxed — that’s covered in a separate bill that hasn’t made it out of the House Ways and Means Committee.

It is unlikely that this legislation will be voted on before the current Congressional Session expires in September. The scheduling is simply too tight. If it is not voted on, the process will need to start again next session. Perhaps it will be attached to some other legislation, as was the UIGEA of 2006. Even so, if the legislation is approved, it still would need to be signed by Obama.

We are still years away from any comprehensive online gambling policy in the United States. Need proof? The UIGEA of 2006 took nearly 4 years before it actually went into effect this past June 1 — and there are still plenty of loopholes in that legislation that allow US players to fund and withdraw money from their online gambling accounts… or so I’ve heard.

The Poker Player’s Alliance (PPA), the leading poker grassroots advocacy group with more than one million members nationwide, seeks to raise additional funds leading up to a crucial vote this summer on legislation to license and regulate online poker. On July 1, their goal is to raise $50K.

Please donate — even if it’s just a buck!

High-stakes hand for online poker By Paula Lavigne, ESPN

Rep. Barney Frank is sponsoring legislation that could clear up the legal ambiguity.

This Barney Frank guy is serious…. I’ll give him that much. There can be no doubt that this guy is seriously against online gambling prohibitions. At every stage of the game, he’s in there trying to get hearings, trying to sway votes, writing letters, giving interviews.

A recent InformationWeek article reported that Frank wrote a letter to U.S. Treasury Secretary Henry Paulson, in response to the finalization of the UIGEA regulations.

“I am deeply disappointed to hear that your agency is proceeding with what I consider to be unseemly haste in issuing regulations implementing the Unlawful Internet Gambling Enforcement Act. This midnight rule-making will tie the hands of the new administration; burden the financial services industry at a time of economic crisis.”

In the final analysis, I do not think that sending the letter will do any good… it’ll be up to the Obama administration to take the necessary steps to curb or stop the regulations from being enforced.

Yesterday, the United States Treasury and the Federal Reserve Board jointly issued a press release announcing the finalization of UIGEA regulations. The press release includes a link to the actual regulations, a 60+ page document that contains various regulations with which banks have been given a year to comply.

I published my analysis of the UIGEA regulations when they were published in draft form about a year ago. In the coming days, I will be reading the finalized regulations and offering my analysis here.

One initial thought is that the 12 month window that banks have to comply with the regulations is ample time for the Democratic Congress and new Obama Administration to take action to completely repeal the entire UIGEA. More on that later….

The outgoing Bush administration is trying to pull a fast one in its last days in power. According to a 11 Nov 08 Dow Jones Newswire:

The Treasury Department has finalized regulations that would effectively ban online gambling in the U.S. and is trying to have them implemented in the waning days of the Bush administration.

The controversial rules would make it illegal for banks to process credit card transactions from most Internet gambling sites.

Their implementation has been opposed by groups advocating individuals’ right to gamble, the banking industry, Democratic lawmakers in Congress and even officials at the Federal Reserve.

The rules stem from a last-minute addition to a law passed in the final hours of the Republican controlled Congress in 2006. The provisions related to online gambling were included in an unrelated port security bill.

The wire goes on to say that it is “…standard practice for outgoing administrations to finalize controversial regulations before leaving office, a practice known as a midnight drop.”

Really? The global financial markets are in crisis and the U.S. government — our government — wants to add more work for our banks? I don’t think that this is where our priorities should be at the moment!

Have your voice heard by providing feedback to the Federal Reserve Board via their Contact Us page. Select the second radio button, select Consumer complaints from the drop down list, and enter your views in the text box. Here is a template that you can use to get you started.

I am writing to express my concerns regarding the Treasury Department’s finalization of regulations to enforce the Unlawful Internet Gambling Enforcement Act of 2006. I understand that the regulations were finalized and forwarded to the Office of Management and Budget on Oct. 21, 2008, and am opposed to their being put into practice.

There are two reasons why I am opposed to the implementation of these regulations:

1. The global financial markets are in turmoil. The world is looking to the United States banking system to provide the stability necessary to get financial markets back on track in as short a time as possible. If the proposed regulations were put into practice, this would result in lost time, energy, and effort on the part of our banks in dealing with compliance with the regulations. Our banks’ priorities need to be on staying solvent and providing leadership in this time of crisis!

2. The impact on the average American citizen has not been studied. If US banks were required to comply with these regulations, there is no telling what the impact on the bank’s customers may be. The issue needs to be studied, and that study must include thought-leadership from the banks themselves, and not lawmakers.

If you want to call them, please do!

• Consumer Complaints, 888-851-1920
• Public Affairs, 202-452-2955

Earlier this week, the Kentucky state governor attempted to block access by the state’s citizens to over 100 online gambling websites on the grounds that the state government may seize devices that are used for illegal gambling. On Friday, the Poker Player’s Alliance (PPA) halted this domain name grab, at least temporarily, on the grounds that poker is a game of skill and, as such, is not covered by the laws that the governor was attempting to use to block access to the sites. In addition, the PPA claims that there are First Amendment issues that are relevant to the case.

Read more about the KY domain name grab at CardPlayer.com.

The Poker Players Alliance PPA has published an article that you may want to take a look at if you are in a Super Tuesday state. The article, The Candidates’ Views on Online Poker, suggests that on the Democratic ticket Clinton may be a bit more willing to study the issue than Obama. On the Republican ticket, it seems that none of the candidates want to tackle the issue; it is worth noting that McCain is endorsed by PPA Chairman Alfonse D’Amato (who supports McCain on his own, not as a representative of the PPA).

Molly Ball at the ReviewJournal.com wrote an excellent piece on the presidential candidates and their positions — both publicly and privately — on gambling. She covers many of the front runner’s histories as legislators, how they voted on past gambling-related issues, and where we can expect many of them to stand should the candidate become elected.

A very insightful article that is worth a read.