In October of 2006, the Unlawful Internet Gaming Enforcement Act (UIGEA) became the law of the land in America. Although Internet gambling was not made a crime, the restrictions on money transfers and advertising dealt a severe blow to both poker players and site operators. The first bit of good news since then is that Barney Frank, a congressman from Massachusetts, introduced a bill this spring that would make it legal to play online poker.
I am writing this column on June 8, after watching for two hours on
C-Span the first hearing on that bill before the House Financial Services Committee, which Frank chairs. I was highly pleased with Frank's comments from the chair, and the type of people who testified before the committee. I had expected to see a heated debate between people lamenting gambling abuse and gaming-industry people touting their products. Instead, most of the testimony was from people who are either familiar with the British approach to gambling regulation or techies talking about financial transactions.
I was watching live and taking notes the whole time, and do not have a copy of the transcript. This means that where I use quotation marks in this column, it may not be word-for-word accurate, though I am confident that I have the correct thrust of what was said. Anything written in parentheses is a comment of my own.
The hearing started with some commentary from Congressman Frank. He pointed out the inconsistency of the conservative position, which is that the Internet should not be regulated - except for moral values. He pointed out other inconsistencies, such as the acceptability in the law for betting on horse races, but not dog races. And he said that there might be some place in the Bible that talks about the evils of gambling, but there appears to be an exception in that source for bingo. This brought some smiles from those in the room.
The first committee member to make comments was Rep. Spencer Bachus of Alabama, who took an anti-gambling stance. (I found his name rather ironic, as Bacchus was the Roman god of wine and intoxication.) Bachus pointed out that studies conclusively show that the earlier a person begins gambling, the more likely it is that person will become addicted to it. (Underage gambling is the number-one objection given by opponents of Internet gambling.) Bachus also made this point: "In passing the UIGEA, we did not make something illegal that was legal; we passed a mechanism for enforcing the law."
Rep. Robert Wexler of Florida talked specifically about poker. He said, "You can use the Internet to bet on the horses and buy lottery tickets online, but you are not supposed to use the Internet for betting at poker or mah-jongg. My district may well be the mah-jongg capital of the world." (Personally, I believe the capital to be West Bloomfield, Michigan.)
Rep. Ron Paul, a Republican presidential candidate from Victoria, Texas, said simply, "Prohibitions never work."
Steven LaTourette, Ohio Republican, said, "The technology does not support doing what the chair envisions. I am opposed to this legislation until the technology is put to use."
Heading the list of witnesses was Radley Balko, senior editor of
Reason Magazine and a former member of the Cato Institute, a libertarian think tank. Balko said, "Poker is as American as baseball," and, "Singling out Internet gambling is hypocritical, with the huge number of people who go to Las Vegas, state-run lotteries, and other such legalized gambling."
Next came Gerald Kitchen of SecureTrading, who talked about British gaming regulation. One of his technical points was, "It is far easier to regulate gambling when users must purchase a special bank card to play."
Another Brit, Jon Prideaux, the CEO of Asterion Payments, had some interesting observations. He said, "In a regulated world, Internet gamblers cannot remain anonymous," and, "Gaming transactions are less likely to give rise to a dispute than other forms of Internet commerce," and, "Anti-laundering regulations did not cause us to flag any Internet gambling transactions." (This was welcome news, stifling the attempt to portray online gambling as a route for terrorist money transactions.) Prideaux said, "We can actually better control compulsive gambling when it is done over the Internet, because of tools like velocity controls." Another point he made was, "Gamblers are attracted to regulated sites."
There was only one person who talked about the horrors of compulsive gambling. The Rev. Greg Hogan, a Baptist minister, told of his son becoming a compulsive gambler. The fellow actually tried to rob a bank to get money for online gambling. He was caught. At the time that he was supposed to be graduating from college, he was getting out of the penitentiary. No one can question that certain people are capable of ruining their lives by such excessive behavior.
From time to time, Frank used his position as chairman to make some observations. Some of them were, "The UIGEA makes it hard to comply with our WTO obligations," and, "The principle is fallacious that if something is abused by some, you should ban it for all." Most telling was this statement: "The real reason for the UIGEA is the result of a person's upbringing. Some people who do not gamble also do not want others to gamble."
There was a technical dispute between two witnesses. Jeff Schmidt, CEO of Authis, said that age and geographical verification of Internet transactions was not yet a reliable technology. Michael Colopy, senior vice president of Aristotle Inc., who calls his firm the leading provider of Internet identification technology, said that this technology is "rocketing forward" and has made huge progress in just the last couple of years. He said that his company has processed tens of millions of Internet transactions, with a reliability of about 99 percent. Both of the witnesses were quizzed closely by Rep. LaTourette because of their gap in views. The witnesses hedged a little, with Colopy pointing out that reliability of tracking depended on the amount and type of information provided, and Schmidt saying that much depended on how far a person was willing to go in order to evade the tracking process.
I liked what Frank said in wrapping up the hearing. "I spend a lot of time protecting people from the perpetrators of fraud, polluters of the air, and other types of anti-societal behavior. I have no energy left to protect people from themselves."
Here is my personal opinion: I think we should take great interest in the new regulatory methods being implemented in England. The choice for poker players should not be restricted to either suffering under Prohibition II or going back to an unregulated Internet environment. By using new techniques for age verification, we can address the main objection to Internet poker. I think Rep. Barney Frank's new gaming bill and the technical approach he is taking in his committee hearings is our best hope for the future of Internet poker.
Bob Ciaffone has authored four poker books, Middle Limit Holdem Poker, Pot-limit and No-limit Poker, Improve Your Poker, and Omaha Poker. All can be ordered from Card Player. Ciaffone is available for poker lessons: e-mail [email protected]. His website is www.pokercoach.us, where you can get his rulebook, Robert's Rules of Poker, for free. Bob also has a website called www.fairlawsonpoker.org.
