There are now 48 co-sponsors for Barney Frank’s legislative attempt to regulate online gambling in the USA
 
The Congressional representative for the 8th District of New York, Jerrold Nadler, became the 48th co-sponsor of Congressman Barney Frank’s  HR 2046 Internet Gambling Regulation and Enforcement Act this week, seeking to regulate online gambling in the United States.
 
Nadler signed in a week where a Congressional hearing heard financial institutions, politicians, regulatory drafters and pressure groups roundly condemn anti-online gambling legislation currently in force as impractical and virtually impossible to enforce.
 
Now serving his 9th term in Congress, Representative Nadler speaks for the 8th District of New York, which includes part of Manhattan’s West Side, Lower Manhattan, and areas of Brooklyn.
 
Highly respected in the House of Representatives, he is a member of Frank’s House Judiciary Committee, the Transportation and Infrastructure Committee and is chairman of the influential Constitution, Civil Rights, and Civil Liberties Subcommittee, which oversees issues relating to freedom of expression and religion, personal privacy and the correct observance by the authorities of due process. He also serves on the Crime, Terrorism, and Homeland Security Subcommittee.
 
The official website of Representative Nadler sums up his strong belief in the rights of Americans in asserting: “….there is nothing more fundamental to being an American than the assurance against unwarranted government interference in one’s personal affairs.”

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The lobbying group iMEGA (Interactive Media Entertainment & Gaming Association) is proceeding with full force in its fight against the federal law that has shackled the growth of Internet poker and other forms of online gambling in the United States.

The group filed notice Tuesday in the 3rd U.S. Circuit Court of Appeals that it will challenge the recent dismissal of its lawsuit opposing the Unlawful Internet Gambling Enforcement Act of 2006.

The challenge follows a decision last month in U.S. District Court in New Jersey that was mostly favorable to the federal government. The ruling affirmed Congress’ right to pass the law — which severely restricts financial transactions linked to Internet gambling — in a constitutional manner and rejected the claim that gambling is a form of free speech.

The ruling, however, also established iMEGA’s “standing” — law lingo meaning the legal right to initiate a lawsuit.

Jay Lakin, co-owner and vice president of Poker Source Online, who is following the case closely, was encouraged by that part of the ruling and saw it as a small victory for those involved in the Internet poker scene.

“This is certainly a big step for iMEGA,” Lakin said. “Judge (Mary) Cooper’s ruling that the organization has standing means the case will go on. Hopefully her decision and the trial’s visibility will result in the Internet gambling issue gaining steam.”

Poker Source Online, a community of Internet poker players, was founded in 2004 in Virginia and is now based in Costa Rica. It has more than 100,000 registered members, including many from Las Vegas, according to Lakin.

Lakin also touched on a couple of other developments regarding Internet gambling, including a hearing Tuesday in Washington before the Subcommittee on Domestic and International Monetary Policy, Trade and Technology. Rep. Barney Frank, D-Mass., was expected to argue for his cause of legalizing online gambling at the hearing.

Frank, who has called the UIGEA “one of the stupidest things I ever saw,” favors the legalization of online gambling and regulation by the Treasury Department. He has proposed a bill, the Internet Gambling Regulation and Enforcement Act, that would topple the current law.

“This will be the second major congressional hearing about Internet gambling,” Lakin said. “Congressman Frank’s bill would call for licensed Internet gambling in the United States and would revolutionize the landscape as we know it.”

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A law banning the transfer of funds from U.S. banks and credit unions to Internet gambling Web sites was sharply criticized today at a hearing of the House Financial Services Domestic and International Monetary Policy Subcommittee. Opponents on Capitol Hill and in the industry have slammed the law for failing to sufficiently define terms like “unlawful Internet gambling” and “restricted transactions,” which could hamper financial institutions’ ability to adhere to rules being developed by the Federal Reserve and Treasury Department. Companies impacted might respond by “overblocking transactions to protect themselves,” said Domestic and International Monetary Policy Subcommittee Chairman Luis Gutierrez, D-Ill. The plan, which has inspired a European Union investigation and a possible World Trade Organization complaint, also does not ensure legal transactions will not be impeded, he said. The rules “could wreak havoc on electronic commerce” and impinge on consumers’ lawful activities.

Gutierrez also questioned the appropriateness of the underlying Unlawful Internet Gambling Enforcement Act. If lawmakers are going to impose additional regulations on financial institutions, he said their time would be better spent tackling predatory lending practices. He also questioned the effect the rules might have on the already overburdened remittance systems that immigrants use to send billions of dollars home each year. Financial Services Chairman Barney Frank called the change “an intrusion into personal liberty” and said it would set “a precedent of a federalization of the Internet based on the moral views of members of Congress.” Frank, who has introduced a bill to exempt licensed operators from the gambling ban, said Congress wrongly “enlisted payment systems and the banks of America to be our anti-gambling cops.”

Rep. Maxine Waters, D-Calif., who voted for the anti-gambling bill, said she was “seldom in a position where I change my vote but this may be one of those times.” Reps. Peter King, R-N.Y., and Jeb Hensarling, R-Texas, also expressed doubts about the forthcoming rules. King said they run “a severe risk of going too far,” while Hensarling said regulatory certainty is needed. “We need black, we need white — not shades of grey,” he said. But Financial Services ranking member Spencer Bachus stood firmly in support of the ban, which he said will mitigate “a scourge on our society.” He cited a letter signed by 45 state attorneys general who also back the proposal and said FBI and Justice Department officials have testified that Web gambling is a vehicle for money laundering and encourages drug trafficking and tax evasion.

Witnesses from the Federal Reserve and Treasury Department said they have struggled with the legislation’s ambiguity. “The payment system wasn’t designed for this task,” said Louise Roseman of the Federal Reserve. It will be difficult to enforce the law “without a more bright line on what is included as unlawful Internet gambling,” she said. Representatives from the American Bankers Association, Credit Union National Association, Financial Services Roundtable and Wells Fargo & Co. also articulated a variety of fears about how their businesses could be negatively impacted when final rules are adopted.

Is it government business if consenting adults, in the privacy of their own home, decide to play . . . poker?

Andy Bloch says no. “It’s like sex, without the sex,” said the professional card player, who came to D.C. with 2000 World Series of Poker Main Event champ Chris “Jesus” Ferguson to lobby against a 2006 law that restricts online poker games. The pros spent two days on Capitol Hill and dropped by Reason magazine Tuesday night to talk about the politics of poker.

Bloch is best known for winning more than $3 million playing Texas Hold ‘Em and other forms of poker, but was also a member of the MIT student blackjack team that inspired the new hit movie “21.” After earning a bachelor’s degree and master’s in electrical engineering, he spent six years beating Las Vegas by counting cards. “I’ve been kicked out of many casinos and arrested many times — but never beaten up,” he told us. He made enough money to pay his way through Harvard Law, passed the bar, but doesn’t practice law. Bloch modestly says he makes six figures a year playing cards: “To be honest, I don’t work very hard.”

The libertarian crowd was, as usual, for anyone who believes in the individual’s right to lose money to friends without SWAT teams breaking down the door. “One of the most egregious and absurd things in American culture right now has to do with online poker and home games,” said Reason TV editor Nick Gillespie.

So — who looks good in the presidential election? Bloch likes Barack Obama, who played in a regular low-stakes poker game while in the Illinois state legislature: “I think he’d be the best candidate for poker players.”

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Today, the House Financial Services Committee held a hearing to discuss the UIGEA regulations and the burden it imposes on the financial services industry.  By all accounts the hearing was a huge success that verified what the PPA and others have been saying all along: prohibition does not work.  It also reaffirmed our position that there is no federal statute that would preclude someone from playing a game of skill, like poker, on the Internet.  
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Contact:           
Teresa Schofield
(202) 347-7516
tschofield@theheraldgroup.com

Washington, D.C. (April 2, 2008)- Former Senator Alfonse D’Amato, chairman of the Poker Players Alliance (PPA), the leading poker grassroots advocacy group comprised of almost one million online and offline poker players nationwide, issued the following statement on today’s hearing before the House Financial Services Committee hearing on the Unlawful Internet Gambling Enforcement Act (UIGEA).
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Hoping to be seen to be “doing something” about the perceived problem of Internet gambling, Congress approved the Unlawful Internet Gambling Enforcement Act (UIGEA) in October of 2006.1 The Act, however, seems unlikely to stop Internet gambling and could even threaten the stable, smooth operation of America’s banking system. UIGEA and its currently proposed enabling regulations will undermine the financial privacy of all Americans and reduce the security of their bank accounts. In short, UIGEA makes almost no financial, social, or economic sense. It deserves reexamination.

To that end, this paper’s first section gives an overview of UIGEA’s provisions and the regulations proposed to implement them, the second describes the law’s likely and perverse consequences, and its conclusion outlines some principles for reforming or eliminating this harmful law.

About UIGEA and its Implementing Regulations. Congress enacted UIGEA into law as part of a port security measure. The law’s title suggests that it deals with gambling. But UIGEA, at its root, serves to regulate banking and credit cards. It has nothing to do with port security and, just as importantly, does not actually ban any type of Internet gambling activity that was not already illegal under state laws.

Instead, the law focuses on electronic financial transactions potentially linked to Internet gambling. Its core provision, section 5363, forbids people “engaged in the business of betting or wagering” from “knowingly” accepting “in connection with the participation of another person, in unlawful Internet gambling” any automated clearing house transaction, or bank draft. The law, furthermore, offers an amorphous description of “wagers” as any effort to stake: something of value upon the outcome of a contest of others, a sporting event, or a game subject to chance, upon an agreement or understanding that the person or another person will receive something of value in the event of a certain outcome.

Thus, the law touches every sort of financial service provider: banks, credit unions, credit card companies, wire transfer services, and even brokerages. It exempts insurance, stock and commodity trades, fantasy sports leagues, horse racing, and all activities permitted under state and tribal law.

Click here to go to the white paper and read more.

Note: The author of this piece is also a co-author of the article:
No Dice (The American Spectator, 03/25/08)

Anybody who has spent time in Washington knows that Congress often passes bad laws. But even the most widely derided laws — think of 2003’s Medicare drug benefit — end up doing roughly what their authors set out to do.

The misbegotten 2006 Unlawful Internet Gambling Enforcement Act (UIGEA), however, won’t even get that far. It will fail at its intended purpose of ending most Internet gambling while simultaneously creating enormous headaches for banking institutions and account holders. It’s a bad, bad law.

Despite its name, the Act has rather little to do with gambling. It doesn’t actually outlaw any online game — there’s still no federal penalty for wagering $1,000 on the spin of a virtual roulette wheel — and doesn’t directly create any new federal penalties for running an online casino.

Instead, the Act imposes an obligation on banking institutions to block transactions “related” to illegal online gambling. At first blush, this looks like an elegant solution for those who dislike gaming. Rather than trying to force all online gambling sites out of business directly or penalize people who play a few hands of poker online, the law — a brainchild of recently unseated Iowa Republican Jim Leach — simply threatens to cut off the money that makes gambling possible.

In practice, the language of the law, the nature of the Internet, and the wide availability of gambling in the United States make the law both unenforceable and enormously burdensome.

LANGUAGE FIRST: The statute’s definition of “gambling” contains dozens of loopholes. Some exceptions, like a safe harbor for stock and insurance transactions stem from common sense. Others, like loopholes for state lotteries and horse racing, are there because of the political power of existing industries.

Finally — and here is real the doozy — the government has decided not to create a particular list of “blocked” providers. Banks really don’t have any clearly defined law to enforce. So they’re most likely to simply leave it unenforced or, if threatened by regulators, over-enforce the law by blocking all sorts of perfectly legal transactions.

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description of the show from The Kojo Nnamdi Show website:

The Internet poker party is over– at least if you’re living and wagering in the United States. Federal prosecutors are targeting the Web’s busiest gambling venues and Congress is preventing credit card companies from processing payments to them. But some legislators are beginning to push back against the anti-gambling statutes, arguing that current laws infringe on our personal liberties. And at least one international organization says they’re a violation of free trade. Tech Tuesday explores future of online gambling. (Running Time: 52:26)

Guests
Annie Duke, Professional poker player; and author, “Annie Duke: How I Raised, Folded, Bluffed, Flirted, Cursed and Won Millions at the World Series of Poker” (Hudson Street Press)

Jim Leach, Member, U.S. House of Representatives (R-Iowa) (1976-2007)

Tony Batt, Reporter, Las Vegas Review-Journal

Jeff Schmidt, CEO, Idenik

Naotaka Matsukata, Senior Policy Adviser, Altson & Bird; former Director of Policy Planning, Office of the U.S. Trade Representative.

Listen via Windows Meda or Real or click below:

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