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OUR WASHINGTON INSIDER: AFTERMATH OF SIXTY MINUTES EXPOSE

By Wendeen H. Eolis
Poker Player Newspaper

Companion pieces by two-time Pulitzer Prize winning reporter Gilbert M. Gaul appeared in the Washington Post on November 30th and December 1st. Gaul fleshed out the 60 Minutes presentation and laid out the case for and against legalized online gaming operations in the United States.

A day after 60 Minutes aired its investigations of the scandals, I journeyed to Washington, D.C. for client meetings, never anticipating that practically every lawyer, and just about everyone else with whom I was about to cross paths, had either seen the program or had read Gaul’s companion pieces in the Washington Post.

Mr. Kroft, the experienced 60 Minutes correspondent who two weeks earlier was seen in a spiffy business suit chatting up President elect Barack Obama, hunkered down for his presentation of the online poker scandals in more casual attire. He moved quickly into what he described as “the shadowy and murky world” of lucrative, off-shore online poker businesses.

Strolling through the World Series of Poker’s Amazon Room, he explained that the cavernous tournament arena that houses the biggest and most prestigious poker tournament in the world pales in size to the virtual real estate that is consumed by players in the online poker world.

The 60 Minutes producers had negotiated use of the WSOP arena as the backdrop for a series of interviews with several poker luminaries, including longtime ambassadors of the poker industry, as well as with several hip and highly educated online players who had starred in the investigation that uncovered the cheating scams at Absolute Poker and Ultimate Bet. By the time the 60 Minutes program aired, Kroft focused on the young online poker players but left the interviews conducted with the older industry leaders on the cutting room floor.

While toiling in Washington for the better part of the week, I was unable to resist occasional respites from my legal consulting duties. I periodically segued into probing discussions regarding the investigation undertaken by Kroft and his team.

Law firm partners, lobbyists, Congressional staffers, a division chief from the Department of Justice and three members of the Obama transition team were in the eclectic mix of lawyers who talked to me about their take on the 60 Minutes program. They offered informal but penetrating insights. Most were at least vaguely familiar with the enactment of the 2006 Unlawful Internet Gambling Enforcement Act which attempts to ban bets on Internet sites by United States players. All of them were aware of various midnight regulations that have been put into place by President Bush’s staff, but none of them realized that UIGEA regulations were among them. Judging from the effusive feedback, the program had plenty of impact on viewers.

An associate from one big firm who plays poker in a home game and occasionally dabbles in online tournaments said he was “freaked out” when he learned the amount of money pocketed by the cheaters, and “more astonished by the methodical and unyielding investigation of the online poker players.” He later commented, “The online players with law degrees are more invested in the game than I want to be.”

The managing partner at another firm whose son drives to Atlantic City for an occasional poker fix said he had always been wary of online poker games.” He added “It was a shock and awe moment to learn that the players busted the cheats.”

A division chief from a federal agency proved the least knowledgeable about online gaming, quite certain that the Justice Department had a right to ban American players from signing up at any Internet gambling site. Upon further reflection, he modified his position, saying, “I’m sure 60 Minutes checked on the legality issue before explaining that the online poker industry is illegal here.”

A lawyer with Covington Burling, who is also a colleague of Attorney General Nominee Eric Holder, summed up the predominant view expressed among the lawyers I queried, following the twin efforts of 60 Minutes and the Washington Post: “The instant scams might be isolated abuses, but the investigation offered broad, fact-based warnings that cannot be ignored.” He continued, “Effective regulation of online gaming is a lot more complicated than the protective oversight that has been largely achieved in brick and mortar casinos.”

Members of the Obama transition team abound in Washington these days. Most are pretty tight-lipped about substantive matters on the table, but as long as no identifying information is provided, they’re not shy about describing the landscape. According to one Obama intimate, “It will be an uphill battle, but not necessarily impossible, to convince the next Congress to repeal or modify the present Unlawful Internet Gambling Enforcement Act.”

Another Obama confidante, a Chicago-based lawyer who occasionally competes in tournaments, ticked off the points he gleaned from the 60 Minutes broadcast and the Washington Post articles:

(1) Respect for the smarts and perseverance of the online poker sleuths,

(2) General suspicion toward online poker operators,

(3) Distrust of the off shore regulatory body that oversees Absolute Poker and Ultimate Bet,

(4) A high level of concern for the prospects of integrity in online gaming, and

(5) A major concern for the personal rights that are abridged by banning online poker.

These five points, in various combinations, resonated far and wide.

Several lawyers who claim to have ties of one sort or another to the President–elect tell me not to get my hopes up to high or too soon on repealing or modifying UIGEA. One Senate staffer put it to me bluntly: “The President-elect and the Congress have a full plate of emergencies to deal with and this is not one of them.”

The high-powered Covington lawyer with whom Holder has worked gives a glimmer of hope: “When Holder talks, Obama listens.” The informative attorney whispers, “Holder likes poker. He used to play with cronies from his old office—the U.S. Attorney Office in Washington, D.C.”

President-elect Obama has talked about his fondness for poker with many friends and publicly, too. As I was leaving a roomful of folks who were still yakking about the 60 Minutes program, one of the President-elect’s old time poker buddies let me in on a secret: The new president’s past poker games amounted to wins and losses that rarely reached $50 either way. Rumor has it that Mr. Obama considered winning sessions a function of skill and losses a function of temporary bad luck!

Back in New York, I scoured the internet for comments about the program by avid online players. Most agreed that former computer scientist-turned poker pro Todd Witelles had provided 60 Minutes with a magic moment for the producers and a headache for the industry. Witelles was a victim of the Absolute Poker/UltimateBet cheating scandal and was involved in uncovering the scam.

People will remember his powerful warning that cheating such as had occurred at Absolute Poker and Ultimate Bet could happen anywhere, emphasizing that it could be happening right now on other sites. But he never shared on air a shred of such evidence in any game known to him currently.

Only time will tell if the sensational 60 Minutes presentation has tainted the entire industry or whether it will motivate serious efforts to license, tax and regulate online gaming. The industry leaders who were summarily cut from the program were expected to recommend that course.