Posted on

FEDERAL ONLINE GAMBLING LEGISLATION

Poker
By Wendeen H. Eolis
Poker Player Newspaper
July 16, 2013

Just as the 2013 World Series of Poker was beginning to wind up its engines for the main event at the Rio Hotel and Casino in Las Vegas, Congressman Joe Barton (R-TX-) rolled into town for his third visit to the annual WSOP; this time to rev up support for his updated poker bill in the U.S. House of Representatives. The Poker Players Alliance hosted a Town Hall Meeting designed to preview Barton’s online gambling bill HR 2666, the “Internet Poker Freedom Act of 2013,” which was subsequently introduced in the U.S. House of Representatives, July 12.

While the PPA has been beating the drums for Barton’s “poker only” bill it is also applauding the Internet Gambling Regulation, Consumer Protection and Enforcement Act of 2013  (HR 2282) introduced by Congressman Peter King (R-NY) last month. The King bill proposes “poker plus” other casino game options excluding, sports bets.

Unity is hard to come by in the business of online gambling and this week, from out of the blue,  came a new wrinkle in the debate of online gambling consumer protections. The complexities in bringing online gambling to U.S. players seamlessly across the country grows at every turn, and so does the cast of characters with unique skin in the legislative game—at both the state and federal level.

Barton and King—Different Visions

The King bill follows in the footsteps of  Congressman Barney Frank’s (D-MA) online poker bills and the  expanded online poker bill prepared but never introduced by Sen. Harry Reid  (D-NV) with now retired Sen. John Kyl’ (R-AZ). It was their plan to move federal online gambling legislation to the finish line last year. The Reid bill included broad consumer protections and was quietly endorsed by the AGA.

The Barton bill is most appealing to the “poker only” crowd. It effectively carves out poker from other gambling games and recognizes it as a game of skill as per Federal Judge Jack Weinstein’s opinion in U.S. v Di Cristina.  That case has been appealed by the Government and has been heard..It is likely several months will pass before a further ruling. The Barton bill is narrow in scope and not generally regarded as sophisticated in addressing relevant issues to more conservative lawmakers. For  them the Barton bill does not have have enough teeth in it. The bill is plainly designed to extricate poker from the grip of anti-gambling legislation such as the Unlawful Internet Gambling Enforcement Act that was enacted in 2006.  In both federal  legislative proposals now on deck, the authors provide opt out provisions. They also respect the rights of states that have invested in intra state online gambling statutes.

Senate Hearings Pop Up Suddenly

The latest potential complication in aggregating support for either bill is the hearings scheduled by the Senate Commerce, Science and Transportation Sub Committee on Consumer Protection, Product Safety and Insurance “to examine the expansion of internet gambling, focusing on assessing consumer protection concerns.”

Sub-Committee Chairwoman Claire McCaskill will begin the process of testimony at 10 AM Wednesday, July 17. The witnesses include:

Mr. Chuck Canterbury – National President, the National Fraternal Order of Police

Mr. Matt Smith – President, Catholic Advocate Mr. Tom Grissen – Chief Executive Officer, Daon, Inc. (a biometrics software firm)

Mr. Jack Blum – Attorney (specializing in money laundering compliance)

In a seven page Republican staff memo obtained as we were going to press, the subject matter is introduced thusly:

“This will be the Commerce Committee’s first hearing on the proliferation of Internet gaming and its implications for consumers in the 113th Congress, although the Committee has examined gaming issues in previous Congresses. The Commerce Committee has broad jurisdiction over both internet communications and consumer protection matters, generally.

The memo, sets up  and then sets forth its central purpose for the hearings. “This hearing will focus on potential consumer harms related to online gaming in the absence of a clear legal landscape or consistent oversight.” It provides opponents to expansion of online gambling a chance to regurgitate  consumer protection issues –real and imagined. These issues have been widely debated for years in political and philosophical discourse. The sudden appetite for hearings occurs in a time frame apparently designed to thwart near-term consideration of either the Barton bill or the King bill.

Congressman Dean Heller (R-NV),  a supporter of online poker, is the ranking Republican on the sub-committee. One particularly interesting acknowledgement in the memo was the statement,” Although UIGEA neither legalized nor made unlawful Internet gambling, per se, it added enforcement tools to thwart unlawful Internet gambling payment transactions.”

At the end of the staff missive, the urgency to the hearings is duly noted with a reference to Rep. Joe Barton’s bill which “would, among other things, establish a program for the licensing of Internet poker by the states and (Indian) tribes.”

2012 Federal Legislative Effort Fell Apart

Last year, after a rocky start in the collaboration, Heller worked with Senate majority Leader Harry Reid (D-NV) and Senator John Kyl (R-AZ) who had finally come around to support online poker. They made  seemingly prodigious, albeit relatively quiet efforts to bring forward a “poker only” gambling bill acceptable to both online interests and the American Gaming Association. The legislation was to have called for licensing, regulating e (and taxing) online poker activities and was to provide  provide substantial consumer protections. Toward the end of the year it gained momentum. But, the project took second fiddle to other Congressional business, leaving Congressmen King and Barton, longtime proponents of online gambling legislation, to don follow up pitcher mitts, this year.

Washington Insiders Are Skeptics Now

The mood inside the Washington Beltway, among proponents of regulated internet-based poker, was hardly ebullient before this round of Senate hearings came about.

The PPA which is championing the Barton bill (a media conference call is scheduled for tomorrow) has a long row to hoe, but this grassroots advocacy group that counts more than a million members is proving slowly but surely, poker players can be change agents. The PPA is building a solid community that is on track to transform the image of poker as a gambling game to one of skill for those who are dedicated and as a respectable pastime to rest of the poker universe.

Hail Caesar!

While the PPA is pressing its members to become activists in support of favorable legislation, up in the ivory tower of Caesars Palace Gary Loveman, Chairman of Caesars Entertainment Inc. (the biggest gaming company in the world) is holding his cards close to the vest as to the Company’s exact position in the dicey game of politics and poker.

For years, Caesars (formerly Harrahs) promoted “poker only” as the means by which to persuade lawmakers to take their first leap of faith into online gambling, having assured itself online poker could be made safe, fair and easily restricted to adults and properly insulated against ties to organized crime, money laundering and the like.

Likewise, the AGA, which Loveman also chairs until year end, is pondering its position and options in support of federal legislation. Nevada is already on the road with passage of the first online intrastate gambling legislation in the country’s history.

Sheldon Adelson Reflects an Evolved Position

The history of online poker advocacy is rich and the characters are colorful. Most of the casino moguls have weighed in, often altering their positions as their views have evolved. These days, Caesars, MGM, and Boyd are clear supporters, but the terms they seek are still murky.  In contrast, Sheldon Adelson, who obtained a license for online gaming with European off shore regulators in 2003 has changed his tune on the merits of online gambling.

Adelson’s company, Sands Corporation, teamed up with PokerStars to produce the PokerStars.net North American Poker Tour Venetian at Venetian Hotel and Casino in Las Vegas, just 2½ years ago.  Now Adelson says he “is morally opposed to online betting”.

Stars and Wynn Fall In and Out of Love Quickly

Special mention is also warranted in the matter of the ill-fated conditional partnership between Wynn and Poker Stars. Steve Wynn fell in and out of love with PokerStars as fast as you could shake a stick.  Confident momentarily that his anticipated partner knew more than anyone as to how badly misinformed the U.S. Department of Justice was in its promise to bring online poker to its knees in America— Wynn quickly reverted, showing his would be partner the exit door no sooner than the DOJ accomplished its hteatened mission — in a single day.

Summing Up

One gaming industry expert summarized what was said by many queried for this article. He asserted, “The poker industry has made concrete progress this year—no matter what happens—thanks to Congressmen King and Barton in their respective bills. They have moved the needle and are propelling online gaming legislation in the right direction.” He adds, “The poker community can take comfort in the introduction of both the King bill and the Barton bill as instruments used to keep the concept of federal regulation, consumer protection and taxation alive, and part of the debate.”

Either or both bills would reinvigorate the poker community in terms of participation in the game say several online players who yearn for the return of online poker in their living rooms.

According to the consensus of lawyers consulted for this article, the King bill, besides being all inclusive, (poker plus) is the more sophisticated and better drafted bill.  It solves the constitutional issues not addressed in the now dead “Reid/Kyl” bill and as the Kyl bill succeeded so now does the King bill in also steering away from playing favorites, while addressing the concerns of the states, the lotteries, the Native American community, current brick and mortar casinos in Nevada, New Jersey, and elsewhere, horse racing and all of the other special interest groups.

The King bill according to the same gaming industry expert quoted earlier, “offers a true level playing field.”

Regardless, neither the King nor the Barton bill will reach victory beyond preliminary debate in the House without a companion bill in the Senate and the support of leadership in both parties. We should expect to face a continuing wait.