The Internet Gambling Regulation and Enforcement Act (HR2046), sponsored by House Financial Services Committee Chairman Barney Frank, gained its 47th co-sponsor on Friday.

Congressman Tim Bishop [D-NY], representing the 1st District of New York State has joined the effort to right the wrong initiated by former Senator Bill Frist when he pushed through the Unlawful Internet Gambling Enforcement Act (UIGEA) in 2006 without the ability of Congress to debate the merits of the bill by adding it to a must pass National Anti-Terrorism Port Security Bill.

Congressman Bishop is serving his third term in office; he is the former Provost of Southampton College. He currently serves as a member of the House committees on Budget, Education and Labor, and Transportation and Infrastructure.

Rep. Bishop is a champion of the people, fighting for the rights of middle class families and seniors, strengthening education, safeguarding the environment, and securing the homeland.

Congressman Bishop has joined a growing number of legislators that recognize the wrong that has been put on the American people by outlawing the transfer of money to and from legitimate foreign companies regarding gambling, and are also concerned about America’s blatant violation of International Treaties. This past week the European Union launched an investigation into these violations.

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A House panel plans next month to review regulations proposed by the Department of Treasury to enforce a 2006 ban against Internet gambling.

The hearing by the House Financial Services Committee could occur as early as April 2.

The draft rules, which were published Oct. 4, reportedly have drawn more than 200 comments from lawmakers and various interest groups.

Many of the comments question whether the regulations would be effective.

“The hearing is going to show — I want to show — that it’s not that the regulations weren’t done well. It’s that they can’t be done well given the inherent nature of the issue,” said Barney Frank, chairman of the House Financial Services Committee.

Frank, who has called the ban “one of the stupidest things I ever saw,” offered legislation last year to repeal it and require the Department of Treasury to regulate Internet gambling in the United States.

About 23 million people gambled on the Internet in 2005 on 2,500 Web sites. About 8 million of those gamblers were from the United States.

So far, Frank’s bill has 46 co-sponsors — 42 Democrats and four Republicans.

Former Senate Majority Leader Bill Frist, R-Tenn., who attached the Internet gambling ban to a port security bill as Congress rushed to finish business in 2006, on Thursday repeatedly declined to answer questions about the ban or efforts to repeal it.

“I’m not going to talk about it. I’m going to talk about the issue today,” said Frist, who was in Washington to promote efforts to save children’s lives across the world.

After leaving the Senate at the end of 2006, Frist returned to his medical practice in Nashville.

Meanwhile, former Sen. Alfonse D’Amato, R-N.Y., the chief lobbyist for the Poker Players Alliance, acknowledged Thursday he does not expect Congress to overturn the Internet gambling ban this year.

“It’s going to take a couple of years,” said D’Amato, noting the increased difficulty of passing legislation in a presidential election year.

Although he declined to disclose names, D’Amato said he is talking to Republican senators in hopes of finding one who will lead efforts in the Senate to exempt poker from the online wagering ban. 

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The Interactive Media Entertainment & Gaming Association (iMEGA) today applauded the decision by Judge Mary L. Cooper, of the U.S. District Court for the District of New Jersey, granting iMEGA the standing to pursue a challenge of the Unlawful Internet Gambling Enforcement Act (UIGEA). This is a significant victory for iMEGA in the case of iMEGA v. Gonzales, et al.

“Granting iMEGA standing is a major victory any way you look at it,” said Eric M. Bernstein, Esq., attorney for iMEGA. “Judge Cooper’s ruling holds that, even with the passage of UIGEA, online gambling is only illegal in states where a statute specifically says it is.”

“iMEGA is very pleased that the Court recognized our standing and the weaknesses in UIGEA” said Joe Brennan Jr., the chairman of iMEGA. “Judge Cooper found that banks, credit card companies and other payment system instruments are exempt from criminal sanctions under UIGEA, significantly undercutting UIGEA’s enforcement mechanism. Her ruling echoes the growing consensus of opinion that UIGEA is a fundamentally flawed statute.”

“We believe Judge Cooper missed the opportunity to affirm Americans’ online privacy rights and we plan to appeal to the Third Circuit Court of Appeals,” continued Bernstein. “However, her honor’s decision significantly undercuts the federal government’s argument that UIGEA is a well-drafted, effective and enforceable law.”

UIGEA was passed in the waning minutes of the 109th Congress with very little input from most Members of Congress. iMEGA filed suit to challenge UIGEA on June 5, 2007 and oral arguments were heard in the case on September 26, 2007. A decision has been pending since that date. In the interim, the Federal Reserve Board of Governors and the Department of the Treasury have issued proposed regulations to implement UIGEA and iMEGA and numerous other organizations, such as the American Bankers Association, have filed comments objecting to them.

“iMEGA supports the use of effective, existing technologies to protect children and problem gamblers,” continued Brennan. “Although UIGEA is purportedly designed to limit illegal Internet gambling, it falls woefully short of having the ability to accomplish that purpose and fails the American people on a number of fronts. If promulgated, the proposed regulations would stifle online innovation and commerce; inadequately protect children by failing to ensure adequate safeguards; and have a chilling effect on the digital civil rights of all Americans.”

The official name of the case is Interactive Media Entertainment & Gaming Association vs. Alberto Gonzales, et al.

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House Financial Services Committee Chairman Barney Frank (D-Mass.), who once declared a ban on online gambling “one of the stupidest things I ever saw,” will use a hearing this spring to highlight the headaches he says anti-gambling regulations have created for banks and other financial institutions.

Online gambling inside the United States has been illegal for years. In order to prevent Americans from gambling with foreign companies via the Internet, Congress approved legislation in 2006 that requires banks and credit card companies to block payments to any online gambling websites based outside the United States.

At the time of the bill’s passage, opponents of the legislation argued it would place onerous requirements on the financial institutions that oversee the flow of money — a point Frank hopes his hearing will drive home.

“The banks have a lot of other things to worry about right now,” Frank said, citing the ever-expanding mortgage crisis and a host of other financial woes that have beset the industry this year. “I don’t think poker should be one of them.”

Frank introduced legislation last year to roll back parts of the anti-gambling law. At the time, the Financial Services Committee chairman said he had no plans to advance that repeal until a sufficient number of colleagues would support it.

So far, that groundswell has failed to materialize. But last week, Rep. George Miller (D-Calif.), a powerful ally of House Speaker Nancy Pelosi (D-Calif.), signed on as a co-sponsor to the Frank legislation. And Rep. Jim McDermott (D-Wash.), a member of the tax-writing Ways and Means Committee, introduced a new version of his legislation this week to legalize, regulate and tax some forms of Internet gambling.

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It’s not easy making rules for a U.S. law intended to deter illegal Internet gambling by choking off the flow of funds to offshore sites. That’s because no one seems to agree on what the law covers.

Officials at the Treasury Department and the Federal Reserve Board found that out sifting through more than 200 comments from banks, gamblers, church groups and members of Congress on recommendations for the Unlawful Internet Gambling Enforcement Act of 2006. The basic sentiment was that their Oct. 4 proposal, which depends on financial institution enforcement, won’t work.

The outcome will affect 23 million online gamblers, some 2,500 Internet sites and the growth of an industry with an estimated $15 billion in annual global revenue. The law bars financial institutions from processing payments involving Internet gambling — with the notable exceptions of Indian gaming, state gaming and horse racing.

“If the federal agencies themselves cannot agree on the law, what hope is there that banks can resolve these confounding legal issues,” the American Bankers Association said in commenting on a conflict between the Treasury and Justice departments on the legality of betting on horses.

The Washington trade group said the suggested rules are more likely to catch its members in a compliance trap than stop profits from illegal gambling from escaping offshore.

The proposal says generally that it covers the making of bets on the Internet that already are illegal under state or federal law. It just doesn’t spell out those games of chance.

A Reasonable Effort

Banks and other financial institutions would have to make a reasonable effort to stop payments to Internet gambling sites through credit cards, checks or electronic funds transfer.

The final rule is overdue, as regulators review the flood of comments.

“This is an issue that there is so much interest in that we don’t want to rush,” said Jennifer Zuccarelli, a spokeswoman for the Treasury Department. “We are just trying to hear from everyone.”

There are a variety of complaints. Gamblers pointed to what they see as hypocrisy in the proposal. Why hamper Internet gambling, they argued, when states enthusiastically license casinos, and taking long odds on a state lottery ticket is perfectly legal?

Former Senator Alfonse D’Amato, a New York Republican, representing The Poker Players Alliance in Washington, told the agencies its constituency should not even be included since poker is a game of skill, not chance.

“What is legal now?” Joseph Kelly, a professor of business law at the State University of New York college at Buffalo and an expert in online gambling, said in an interview. “God only knows.”

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Congressman George Miller (D-CA), chairman of the House Democratic Policy Committee and the House Education and Labor Committee, has signed on as a co-sponsor of the Internet Gambling Regulation and Enforcement Act. The legislation, introduced last year by Congressman Barney Frank (D-MA), would allow licensed operators to provide Internet gambling services in the United States.

As a member of the Democratic Leadership and chairman of the House Democratic Policy Committee, Congressman Miller is responsible for helping Democrats to develop and articulate a wide range of policies of benefit to all Americans. He has a long record of important legislative achievements and is a leading advocate in Congress on education, labor, the economy, and the environment.

“The endorsement of this key legislation by Congressman Miller, one of the most influential leaders on Capitol Hill, further demonstrates the growing support for regulated Internet gambling,” said Jeffrey Sandman, spokesperson for the Safe and Secure Internet Gambling Initiative. “We expect continuing momentum in Congress as more people realize that the current approach to prohibit Internet gambling is a failure. Rather than leave consumers vulnerable in an underground, uncontrolled marketplace, regulation of Internet gambling would protect consumers and generate billions in revenue needed for critical government programs.”

The Internet Gambling Regulation and Enforcement Act (H.R. 2046) and the Internet Gambling Regulation and Tax Enforcement Act (H.R. 2607), a companion bill introduced by Representative Jim McDermott (D-WA), would regulate and tax Internet gambling activity. Under the proposed legislation, each Internet gambling operator would be licensed by the Financial Crimes Enforcement Network (FinCEN) and required to ensure that the individual placing the bet or wager is physically located in a jurisdiction that permits a particular form of Internet gambling. The legislation would reinforce the rights of States to control what, if any, level of Internet gambling was permissible within their borders, including the ability to apply additional taxes, and to ensure that appropriate consumer protections and limitations were in place.

According to a tax revenue analysis prepared by PricewaterhouseCoopers, taxation of Internet gambling is expected to generate between $8.7 billion to $42.8 billion in federal revenues over its first ten years.

About Safe and Secure Internet Gambling Initiative
The Safe and Secure Internet Gambling Initiative promotes the freedom of individuals to gamble online with the proper safeguards to protect consumers and ensure the integrity of financial transactions. For more information on the Initiative, please visit http://www.safeandsecureig.org. The Web site provides a means by which individuals can register support for regulated Internet gambling with their elected representatives.

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Here is the text of the letter. To view a pdf of the letter, click here.

The effectiveness of any law is reliant on sound implementation. Federal regulations are intended to provide clarity and guidance for those subjected to their reach. The value of such regulations is to prevent non-compliance while minimizing wasted effort, time, and cost by those being regulated. Clear rules also promote interstate commerce by facilitating uniform enforcement.

In this spirit, your agencies have an opportunity to provide additional guidance in the implementation of the Unlawful Internet Gambling Enforcement Act of2006 (UIGEA). While the October Notice of Proposed Rulemaking contains certain guidance for the regulated community, it leaves sufficient ambiguity as to what sort of transactions are to be blocked. In failing to provide more detail, the proposed rules would inordinately burden every bank, credit union, credit card company, money transmitting business and payment system in the country, leading to non-uniform compliance and confusion. This issue is particularly important, as most federal and state gambling laws predate the Internet, and are less than specific as to their application to particular practices or circumstances.

The extensive public comments received on this issue highlight the likelihood that risk-averse financial institutions will simply choose to block every transaction that may be interpreted or could resemble gambling, whether legal or not. Knowing that this is not your intention, we write to urge that any final rules contain a list of restricted transactions and instances that are covered by the law and the corresponding rules.

As an alternative, we suggest you consider separating the rules into those forms of activities for which there is settled federal law (i.e., defined by the Professional and Amateur Sports Protection Act (PASPA)) and those that are not. This would allow immediate implementation for known activities, while providing greater time to determine what other transactions are to be captured.

We thank you in advance for your consideration.

Sincerely,

Sen. John E. Sununu [R-NH]

Sen. Pete Domenici [R-NM]

The trade dispute between the United States and several countries in Europe, Asia and the Caribbean over Internet gambling has been embarrassing, expensive and now, according to the Office of the U.S. Trade Representative, a national security secret.

At least that’s what Ed Brayton, a freelance writer who opposes the government’s anti-gambling measures, found when he tried to get a copy of the agreement the United States has reached with the European Union, Japan and Canada on the issue. The accord spells out what trade concessions the United States is making to compensate those countries for U.S. laws and regulations that try to prevent Americans from wagering on foreign gambling Web sites. The latest law, enacted in 2006, prohibits U.S. banks and other financial institutions from processing any Internet gambling transactions.

Antigua and Barbuda, a former British colony in the Caribbean, touched off the dispute in 2003 when it brought a case to the World Trade Organization arguing that the United States’ efforts against gambling on foreign Web sites were an unfair trade practice because it exempted domestic horse racing Web sites. The WTO sided with the tiny Caribbean nation, which has yet to reach an agreement with the United States on compensation.

Other countries have, though, and Brayton filed a Freedom of Information Act request with the Office of the U.S. Trade Representative after the deal was announced in December. He says he just wanted to know precisely how much the United States was conceding in the December deal to maintain its gambling ban. The agency’s chief FOIA officer, Carmen Suro-Bredie, replied that the USTR was withholding the agreement because it was “classified in the interest of national security.”

In announcing the agreement with the EU, Japan and Canada, USTR spokeswoman Gretchen Hamel said it “involves commitments to maintain our liberalized markets for warehousing services, technical testing services, research and development services and postal services relating to outbound international letters.”

She did not respond to requests for more information about the deal.

Brayton says he’s planning to appeal the denial, which would force the trade office to explain why the agreement implicates national security. He says he suspects the agency may have something else in mind: hiding what could amount to billions of dollars in trade concessions.

“I can’t even imagine a reasonable explanation other than that in the furthest reaches of my imagination,” he says.

If you’re like me, you set the Tivo to record Lost and the Celebrity Apprentice on Thursday night and buckled down to watch the final debate between Democratic Presidential candidates Barack Obama and Hillary Clinton before Super Tuesday. Next week will feature nearly half of the United States voting for one of the five front-running candidates. With a critical issue like the future of online poker hanging in the balance, it’s important to catch yourself up to speed on the candidates’ standpoints. PocketFives.com went straight to the source for objective information: Poker Players Alliance Executive Director John Pappas. The PPA sent out 300,000 e-mails early Friday morning to members in states that vote on Tuesday.

Democratic Ticket
On the Democratic side, voters will choose between Senators Hillary Clinton and Barack Obama.

Hillary Clinton
Clinton, according to the PPA e-mail, “has recently expressed that she supports the industry’s position: to study Internet gambling to see whether it can be fairly regulated so that individuals can safely participate in it and American businesses can compete in the international market.”

Pappas comments to PocketFives about Clinton’s willingness to study the issue: “An open mind to regulation is something we won’t frown upon. The PPA’s position has always been that a study is nice, but regulation is better. Other countries have gone down the path of regulation and so there really isn’t that much to study. The reality is that politicians like to point to something as a reason to support it. Clinton’s study could be what they need to support regulation.”

Barack Obama
Barack Obama was elected Senator from Illinois in 2004. The PPA e-mail and an article in the Las Vegas Sun newspaper state that Obama “has recently expressed that he worries that the Internet is ‘a Wild West of illegal activity,’ and supports a study of Internet gambling and supports regulation to address the worst abuses.”

He certainly does not provide as ringing of an endorsement for a study as Clinton, but as Pappas points out, “One of the interesting things is that he’s a renowned poker player. He was known to play in regular games when he served in State Legislature in Illinois. From my understanding, he still plays and still enjoys the challenge of the game. There’s an opportunity to have him understand the difference between poker and gaming against the house. The latter seems to be where his concerns with gambling have been.”

Republican Ticket
On the Republican side, the debate centers around three candidates: Mike Huckabee, John McCain, and Mitt Romney.

Mike Huckabee
Huckabee, a former governor of Arkansas, has the most negative views towards online gambling of any Presidential candidate. The PPA’s e-mail highlights Huckabee’s response to a questionnaire from the National Coalition Against Legalized Gambling: “Last year, Congress voted overwhelming to criminalize most forms of Internet gambling. This year some members of Congress are promoting legislation to legalize Internet gambling. If such legislation passed, would you veto it? Huckabee answered ‘yes.’”

Pappas, however, doesn’t believe that Huckabee’s stance against online gaming is permanent: “He has an evangelical background. Their stance typically isn’t in favor of gambling whether it’s regulated or not. We believe that whether or not you like gambling, the way to deal with it is to regulate it, not to tell people they can’t do it and drive it underground. Politicians change their minds as the political winds blow. As the PPA grows in power and people begin going to the polls caring about this issue, viewpoints can change.”

John McCain
Arizona Senator John McCain recently picked up an endorsement from PPA Chairman Alfonse D’Amato (who supports McCain on his own, not as a representative of the PPA). The former Senator from New York knows McCain well. According to the PPA press release, McCain is on the fence on online gambling: “The New Hampshire Republican primary winner does not have a specific position on Internet poker, but does appear to have been influenced by his fellow Arizona Senator Jon Kyl, who is a vigorous opponent of our rights. McCain, however, has always been willing to consider both sides of an issue and may simply need to know how strongly PPA members feel.”

Pappas is not concerned about D’Amato’s support of McCain. In fact, he views it as an important opportunity: “He knew McCain; they served together in the Senate. He believes McCain has qualities to be a strong leader for America. I can only hope that, should McCain be elected, we’d have some insight into his thought process. If you have someone that’s on the fence on your issue, then what better way to educate him than to surround him with people that understand the benefits of regulation, like D’Amato? We have a great open door to be able to engage him on the issue.”

Mitt Romney
Finally, Mitt Romney is in contention for the Republican nomination. The former governor of Massachusetts lacks a “formal position” on online poker. However, according to the PPA release, Romney “has contorted his issue positions wildly in a bid to gain support from social conservatives. As part of that effort, Romney tapped Tom Coates, Vice President, Truth About Gambling, Iowa, to his ‘Faith and Values Steering Committee.’ Coates, in turn, is vigorously opposed to gaming of any sort.”

Altering a candidate’s stance on certain issues is common in this stage of a primary, notes Pappas, since candidates are desperately seeking their party’s nomination: “The idea that a candidate has a values committee isn’t unusual, either. There’s a certain segment of the populous that is evangelical. Many Republicans are going to cater to that populous to gain the party’s vote. It’s difficult to nail down a candidate’s position until we figure out who our final two candidates are. Right now, the nominating process is about pandering to special interests.”

If you’re in a state that holds a primary on Super Tuesday, February 5th, then get out to the polls and vote. We’ve given several resources below for you to check out and educate yourself further on each candidate.

Election Resources
Clinton Website: http://www.hillaryclinton.com/
Obama Website: http://www.barackobama.com/
Huckabee Website: http://www.mikehuckabee.com/
John McCain: http://www.johnmccain.com/
Mitt Romney: http://www.mittromney.com/

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