A few months ago, Christy Martin started letting the Ultimate Poker League hold poker nights at her club, the Ice House of Bentonville.

The club does not charge people to play, but Martin said poker has been a moneymaker for her business in other ways.

When players are away from the poker table, “they’ll play pool, they’ll eat food,” Martin said. “It brings people in.”

Poker, especially the Texas Hold ‘Em version featured on ESPN’s “World Series of Poker,” has experienced an unprecedented surge in popularity, and entertainment businesses are cashing in. Midland Bowl in Fort Smith, Billy’s Blues Club in Fayetteville and Zack’s Place in Little Rock are among dozens of Arkansas businesses that lure customers in the door by hosting poker games.

“Pretty much every club here (in Bentonville) has it,” Martin said.

The businesses say they are able to host the games legally, despite Arkansas’ anti-gambling laws and constitutional ban on lotteries, because customers are not really gambling — they pay nothing to play and no betting is allowed.

“We don’t take any money at all. It’s totally free,” said Cindy Carter, a manager at Fox and Hound English Pub & Grille in North Little Rock.

The National Poker Challenge has made similar claims about its poker club in Little Rock, but the club’s future is uncertain following a Nov. 18 raid by Little Rock police.

“The fact that we are most proud of is that it is nongambling, not a lottery and that no customer ever has a chance to risk money,” the Memphis-based company said in a statement posted on its Web site, explaining how it could operate in Arkansas.

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The University of Nevada, Las Vegas is trying to quantify how many Nevadans gamble online and measure gamblers’ attitudes toward legalizing Internet gambling, regulators said.

The study, commissioned by the state Gaming Control Board, is expected to be released within weeks and is intended to inform lawmakers about the pros and cons of regulating a business that the U.S. government has declared to be mostly illegal.

“This will be valuable information for policymakers,” said board chairman Dennis Neilander.

The Nevada Legislature in 2003 allowed regulators to study whether Internet gambling could be regulated.

Las Vegas gaming attorney Tony Cabot, who has consulted for Internet operators, said the UNLV study may show there are enough gambling dollars going to offshore sites to warrant efforts by the state to tap that revenue.

Besides, he said, state regulation is appropriate. “It’s historically been the policy of the state of Nevada to regulate gaming so that we can protect patrons and make sure they get paid when they win,” he said.

The government says almost all forms of Internet gambling are illegal. The Wire Act from the 1960s was enacted to stop bookies from taking bets over the phone but some say it only makes it illegal to place online sports bets.

An act passed last year, the Unlawful Internet Gambling Enforcement Act, bars financial institutions from handling Internet gambling transactions, with exceptions for lotteries and horse racing.

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European trade chief Peter Mandelson said the United States should let foreign companies into its multibillion-dollar online gaming market instead of trying to compensate European firms for shutting them out.

“The U.S. has so far opted for compensation to make right what is wrong. I don’t think compensation does that job,” he told members of the European Parliament on Tuesday.

The European Union and other trading partners have been in compensation talks with the United States over Washington’s decision to remove gambling services retroactively from commitments it made as part of a 1994 world trade agreement.

Billions of euros were wiped off the market value of European online gaming companies when the United States closed off its market last year.

“What we really need is for the legislation to be put right and for foreign operators to stop being excluded and discriminated against in the way the present U.S. legislation does,” Mandelson said.

Mandelson met U.S. Representative Barney Frank during a visit to Washington this month and he said on Tuesday he was hopeful Frank’s attempts to change the law would be successful.

“I will continue to make these arguments on behalf of the European industry,” Mandelson said.

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Annie Duke, who testified at a recent House Judiciary Committee hearing on Internet gambling, is not a typical poker player. A professional for 13 years, she is the biggest female money winner in the history of tournament poker.

Gregory J. Hogan Jr. is not a typical poker player either. As his father, the pastor of the First Baptist Church in Barberton, Ohio, explained at a House Financial Services Committee hearing last summer, “Gregory Jr. is currently in prison for a robbery he committed to feed his online gambling addiction.”

While Annie Duke recognizes that most Americans who play poker do it for fun, not for a living, Pastor Hogan tends to overgeneralize from his son’s equally extreme experience with the game, which involved losing hundreds of dollars a day while playing 12 hours at a time. Hogan demands an addict’s veto over Internet gambling: Because his son robbed a bank, he thinks, no one should be allowed to play poker online.

“I oppose any effort to legalize or even give credibility to Internet gambling,” Hogan said. He called last year’s passage of the Unlawful Internet Gambling Enforcement Act, which effectively requires American financial institutions to shun transactions related to online wagers, “an answer to my prayers that other families would not have to suffer as my family has.”

Hogan’s argument is a fine illustration of prohibitionist logic, which says anything that can be done to excess should be illegal. But as Duke noted, “If the government is going to ban every activity that can lead to harmful compulsion, the government is going to have to ban nearly every activity. Shopping, day trading, sex, [eating] chocolate, even drinking water—these and myriad other activities, most of which are part of everyday life, have been linked to harmful compulsions.”

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The chairmen of two powerful House committees Nov. 19 called on the Bush administration to pursue a legislative solution to the dispute with the European Union and other members of the World Trade Organization over Internet gambling, saying that the current approach could end up being very costly for the United States and set a dangerous precedent.

Reps. Barney Frank (D-Mass.) and John Conyers, Jr. (D-Mich.), who chair the Financial and Judiciary Committees, respectively, said in a letter to U.S. Trade Representative Susan C. Schwab that they were “surprised” by the administration’s “relatively unprecedented” approach to the issue, which has involved withdrawing commitments made by the United States in previous trade agreements and exposing itself to compensation demands from other WTO members.

“[W]e are very concerned about the precedent this sets for future situations in which parties to these agreements find a particular obligation inconvenient or politically difficult,” Frank and Conyers wrote. “Traditionally, when a U.S. law has been found to be out of compliance [with WTO rules], the administration has consulted with Congress about possible legislative solutions that seek to bring the U.S. back into compliance. In this case, however, your agency has chosen not to consult with Congress, but to instead take what we view as a drastic step which could have significant consequences for the entire WTO system.”

Also signing the letter were Reps. Robert Wexler (D-Fla.), John B. Larson (D-Conn.), Shelley Berkley (D-Nev.), Jim McDermott (D-Wash.), Steve Cohen (D-Tenn.), and Joseph Crowley (N.Y.).

Stephen J. Norton, a USTR spokesman, said that the Bush administration will review the letter and “work with Congress and its trading partners to address this matter.”

The United States, which was due to reach compensation agreements with the EU, Canada, India, Costa Rica, Macao, and Antigua and Barbuda by Oct. 22, recently reached agreement with the complaining parties to extend the talks until Dec. 14.

Officials said that the requests for compensation were prompted by the May 4 announcement from USTR that the United States would modify its services schedule to correct what it described as a drafting “oversight” by specifically ruling out any market access commitments on gambling services.

Scheduling Change to Achieve Compliance

U.S. officials said the scheduling change was the only way the United States could comply with a WTO dispute panel ruling in 2004 involving a complaint filed by Antigua and Barbuda while maintaining its long-standing ban on Internet gambling. But the move has provoked widespread criticism for setting a precedent that other WTO members could use to rescind negotiated commitments.

The WTO panel backed Antigua by ruling that U.S. market access commitments under Subsector 10.D of the General Agreement on Trade in Services (GATS) schedule covering “other recreational services” include gambling services, despite U.S. claims that it never intended to open its market to foreign gambling firms.

Under WTO rules, however, any country that alters its GATS market access schedule must offer compensation to affected countries in order to maintain trade “not less favorable” than that provided for in the original schedule.

While European gambling firms have urged Brussels to demand up to $100 billion in compensation–a strategy aimed at convincing the United States that it would be less costly to lift its gambling ban–the United States is believed to be offering only market access improvements in the marginal sectors of storage services, warehousing services, and technical standards testing.

‘Expensive’ Compensation

The Nov. 19 letter from the eight Democratic lawmakers to Schwab, however, maintains that compensation, in whatever form, “could prove expensive for the U.S. economy.”

It said that “we are writing to express our interest in considering possible legislative solutions that might restore U.S. compliance with the GATS agreement without renouncing any of our commitments under that agreement.”

Nao Matsukata, a former USTR official who is now senior policy adviser at Alston & Bird LLP, said at a hearing of the House Judiciary Committee on Nov. 15 that the issue could be resolved through legislation (H.R. 2046) proposed by Frank earlier this year, which would license U.S. and foreign companies to provide online gambling services but would allow non-discriminatory regulation at the state level.

“The historical record clearly demonstrates that, in past instances where the United States has lost in WTO disputes, the Executive Branch has not hesitated to turn to the Congress,” Matsukata said. “The apparent unwillingness of [USTR] to consult with the Congress toward a legislative solution on this matter is unusual, unexplained, and deserving of appropriate scrutiny. Why has the USTR pursued a risky legal and negotiating strategy in this instance, and is it fully aware of the potential costs of failure?”

Matsukata, who served as director of policy planning for then-U.S. Trade Representative Robert B. Zoellick from 2001 to 2004, said that H.R. 2046 would provide a “regulatory approach consistent with WTO rules regarding discrimination and market access but honor the sovereignty of the states with respect to the types of gaming allowed in the jurisdictions.” Moreover, he said, the bill would subject foreign and domestic gaming operators alike to a fair barrier to market access that would ensure competition among responsible service providers.

“I would encourage the committee to consider a legislative solution to this matter of U.S. compliance with our commitments in the [WTO],” Matsukata said. “There is little need for brinkmanship to take the country into another fruitless trade war, nor should the United States create precedents that will allow others the latitude to undo the bipartisan, 60-year effort to build a durable, rules-based global trading system.”

It’s buried in the final pages of a lengthy document and totals just four paragraphs, but the section of Massachusetts Gov. Deval Patrick’s casino bill that calls for a ban on any form of wagering over the Internet has predictably drawn the ire of online gambling proponents.

“It’s inconsistent and contradictory,” Rep. Barney Frank, D-Mass, told Casino City earlier this week. “I’m surprised the governor would do this. I think it’s a great mistake.”

What Frank is referring to is the item found on page 28 of the 33-page bill designed to pave the way for the construction of three brick and mortar casinos in the Bay State.

The bill also proposes to stop online gambling and aims to punish any person who “knowingly transmits or receives a wager of any type by any telecommunication device…or knowingly installs or maintains said device or equipment for the transmission or receipt of wagering information,” with “imprisonment in a house of correction for not more than 2 years, or a fine of not more than $25,000, or both.”

Frank, an unabashed online gambling supporter who introduced his own bill in April that would repeal the Unlawful Internet Gambling Enforcement Act (UIGEA) and regulate online wagering Web sites, questioned the tactic of Gov. Patrick, whose office did not return repeated phone calls from Casino City regarding this story.

“I don’t understand how you can be for casinos but against letting people do the same thing in the privacy of their own homes,” he said. “I think they may have thought that this would somehow minimize some of the opposition they are getting from people who think we should ban all forms of gambling, but I think they misjudged it. I don’t think it makes any of the gambling opponents any less opposed to casinos.”

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A tax revenue analysis announced by Representative Jim McDermott (D-WA) estimates that regulating Internet gambling would generate between $3.1 billion to $15.2 billion in federal revenues over its first five years, and between $8.7 billion to $42.8 billion over its first ten years. The data, based on a detailed analysis provided by an independent accounting firm, was provided in testimony submitted to the House Committee on the Judiciary where McDermott also detailed policy refinements to his legislation, the Internet Gambling Regulation and Tax Enforcement Act.

“Even under the most conservative estimates, licensing and regulating Internet gambling – and collecting the taxes that are due – will provide much-needed revenue to the U.S. Treasury,” said McDermott. “This is money we are currently losing to other jurisdictions, for no other reason than some of my colleagues’ think we can actually stop people from gambling online. It is money we will continue to lose if we ignore the fact that if grown adults in America want to gamble online, they can and they will.”

The Internet Gambling Regulation and Tax Enforcement Act has been refined to provide better protections against tax cheating and thereby increase federal revenue from permissible Internet gambling activity. The only new fee proposed is a payment equal to two percent of player deposits placed with a licensed gambling operator – fees paid by the operator, not the individual gambler. The two percent deposit fee is designed to equalize the costs of operation in providing gambling services online as opposed to brick and mortar casinos providing gambling services in-person, and would only be applied to online operators.

“To be clear, most of the revenues generated would come from taxes required under existing law that we currently lose because of a misguided belief that we can actually stop Internet gambling,” said McDermott. “Specifically, these are not new taxes, but rather taxes on existing activity that is currently unregulated, unsupervised, and underground.”

McDermott’s legislation functions as a companion bill to the Internet Gambling Regulation and Enforcement Act, legislation introduced by Representative Barney Frank (D-MA) which would establish a licensing and enforcement framework for regulated Internet gambling in the U.S.

Based on a provision in Frank’s legislation that permits individual states and sports leagues to prohibit any Internet gambling, the lower figure of projected revenue from regulating Internet gambling reflects a situation in which sports leagues and most states opted-out of the system. An additional estimate of $6.3 billion over five years and $17.6 billion in revenue over ten years is based on an assumption that the sports leagues opt-out entirely and the states that permit gambling activities in brick and mortar casinos world permit the same activities online.

“By prohibiting a popular, recreational activity that many millions enjoy in the comfort of their own homes, the U.S. is forfeiting billions of dollars in revenue needed for critical government programs,” said Jeffrey Sandman, spokesman for the Safe and Secure Internet Gambling Initiative. “It is time for Congress to regulate and tax Internet gambling to ensure security controls are in place to protect consumers and capture billions in revenue. Moreover, regulating Internet gambling could resolve a dispute around Internet gambling in the World Trade Organization that could force the U.S. to pay billions in trade compensation.”

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There is controversy over a poker tournament in Lakewood Saturday.

Organizers say the poker tournament is for charity, but the Colorado Bureau of Investigation says don’t bet your last dollar.

At first appearances, it looks like an ordinary poker game at the bar, complete with beers and finger food.

But for the Colorado Bureau of Investigation, the event is raising red flags.

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Pasco Sheriff’s Lt. Robert Sullivan sees offenders everywhere.

Poker tournament to raise money for Alzheimer’s support centers. Casino night to help a civic group. Church holding 50/50 raffle.

The county’s longtime vice cop has a reliable intelligence network for finding illegal gambling operations: newspaper ads.

“There’s not even an attempt to mask it,” Sullivan said last week during a Gambling 101 session of sorts with local media outlets.

He’s on a mission to put a stop to widespread illegal gambling, which he says is often committed by people unaware they’re breaking state law.

Frequently, the violators are nonprofit groups raising dollars for worthy causes. “I don’t know if people just figure, well, we’re giving this to charity so it’s okay,” he said.

But he suspects that’s the case.

“We want to spread the word on what is gambling,” he said. “We just want people to be knowledgeable of the law.”

And the law defining gambling, according to Sullivan, establishes three critical elements:

- Participants have to pay to play.

- The game is primarily one of chance, not skill.

- There’s a prize at the end.

There are events like Las Vegas Night, where companies are hired to bring in slot machines, blackjack tables, roulette wheels and dealers for a party.

But playing the games is gambling, Sullivan said, and beyond that, the equipment is illegal to possess.

Other common violations he sees are poker tournaments, often held in bars, and 50/50 drawings – contests where participants buy tickets, and at the end a winner is drawn who collects half the proceeds. The other half goes to the cause.

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The House Judiciary Committee hearing about online gambling may have swayed at least one congressman in favor of legalizing the industry. On Thursday, Rep. Earl Blumenauer (D-Ore.) signed on as a co-sponsor of the Internet Gambling Regulation and Enforcement Act.

The IGREA was introduced by Rep. Barney Frank (D-Mass.) in April and seeks to legalize, license and regulate online gambling in the United States.

At this time, the government points to legislation such as the Wire Act of 1961 as making online gambling illegal. More recently, the government passed into law in 2006 the Unlawful Internet Gambling Enforcement Act which restricts financial transactions meant for gambling online.

Blumenauer was actually among the representatives who voted to approve the UIGEA in 2006. It appears he’s now switching his opinion and supporting the new legislation that would legalize Internet gambling such as online poker and online casinos.

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