The National Poker Challenge poker room in Little Rock was shut down Sunday night. Little Rock police arrested the owner and four dealers and charged them with keeping a gambling house, a class D felony.

When the poker room opened in September, police and the City Attorney said the operation would be illegal under Arkansas law. National Poker Challenge maintains that the poker room does not break gambling laws, because players don’t have to buy into games, although they can pay to track their statistics.

“I’m not too worried about the semantic jousting over whether something is or is not gambling, is or is not of value, whether something is or is not winning or losing,” said Jegley.

National Poker Challenge said that it checked with various lawyers besides the city attorney, and they advised that the play would not constitute gambling.

Also Sunday, Little Rock police confiscated equipment at the poker room on Rodney Parham and Reservoir, effectively stopping operations there.

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The Bush administration should explore legislation to roll back a U.S. ban on Internet gambling instead of paying compensation to the European Union and other trading partners, the chairmen of two House of Representatives committees said on Monday.

House Financial Services Committee Chairman Barney Frank, House Judiciary Committee Chairman John Conyers and six other lawmakers criticized the Bush administration’s handling of the issue in a letter to U.S. Trade Representative Susan Schwab.

“Your agency has chosen not to consult with Congress, but instead to take what we view as a drastic step which could have significant consequences for the whole WTO (World Trade Organization) system,” the lawmakers said.

Rather than comply with a negative WTO ruling in a case filed by the Caribbean nation Antigua and Barbuda, the United States announced earlier this year it was “clarifying” it never intended to allow foreign firms to offer Internet gambling services as part of the 1994 Uruguay Round trade pact.

That opened the door for other trading partners to demand compensation for the United States’ decision to retroactively exclude Internet gambling from its commitments under the General Agreement on Trade in Services, or GATS.

The United States has been in negotiation with the EU, India, Japan, Costa Rica, Macao, Canada and Australia on a compensation package and the trading partners recently set a new mid-December deadline for reaching a deal.

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With time running out, the tiny Caribbean island nation of Antigua and Barbuda holds the cards in a dispute over Internet gambling that could ultimately cost the United States billions of dollars.

If arbitration efforts fail, Antigua and other aggrieved parties, including the European Union, could begin exacting sanctions as early as next month over the U.S. decision to withdraw from a World Trade Organization accord recognizing the legality of Internet gambling.

Antigua is seeking sanctions worth $3.4 billion, and has suggested it might claim that sum by becoming a harbor for pirated intellectual property such as movies and musical recordings. Total sanctions claimed by the EU, India and other countries approach $100 billion, although the United States, in negotiations, contends that appropriate levels of compensation would be far less.

Eight House Democrats, including Judiciary Committee Chairman John Conyers and Financial Services Chairman Barney Frank, on Monday wrote U.S. Trade Representative Susan Schwab expressing surprise that the USTR had moved on the issue without consulting with Congress on possible solutions. The lawmakers said they viewed the administration action “as a drastic step which could have significant consequences for the entire WTO system.”

Antigua in 2003 initiated WTO dispute proceedings against U.S. federal and state laws barring foreign participation in U.S. Internet gambling markets. The WTO, in rulings in 2004 and 2005, found that the United States had violated its 1994 General Agreement on Trade in Services, or GATS, which the WTO says allows Internet gambling.

The USTR responded last May by asserting that U.S. laws banning interstate gambling have been in place for decades. When GATS was being negotiated, said Deputy U.S. Trade Representative John K. Veroneau, “no WTO member could have reasonably thought that the United States was agreeing to commitments in direct conflict with its own laws.”

The United States, he said in his May statement, had decided “to exclude gambling from the scope of the U.S. commitments under the GATS.”

“This might be regarded and is regarded by many as a cynical manipulation of the system — you lose the game, so you try and change the rules,” WTO arbitration expert Joseph Weiler, a professor at the NYU School of Law, told Conyers’ committee last week.

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Gaming companies are well-positioned for the eventual spread of legalized Internet gambling to the United States, top executives of the world’s two largest casino operators said Wednesday during a panel discussion at the Global Gaming Expo.

Terry Lanni, MGM Mirage’s chairman and chief executive officer, said the company’s first venture into Internet gaming may have been unsuccessful financially, but it laid the groundwork for the company to return when the time is right.

“We closed the operation down with the thought that we know what we’re doing, and we’re prepared to do it if and when it becomes legal here,” Lanni said.

The company set up an Internet gaming site in 2001 in the Isle of Man but quickly folded the operation. The site lost money because the company elected to undergo a more stringent registration process than its competitors.

However, the endeavor helped the company work out problems that will be useful when relaunching, such as how to determine a bettor’s age and location and how to protect problem gamblers.

Lanni and Gary Loveman, Harrah’s Entertainment’s chairman and CEO, agreed that Internet poker will be legalized ahead of other casino games, partially because of its popularity. Loveman predicted online poker would be legalized in the United States in the next 18 months to two years. Lanni predicted 12 months to 18 months.

Harrah’s, which owns the World Series of Poker brand, is already looking at the possibility of establishing branded online sites in jurisdictions that clearly allow online gaming, which includes many Caribbean countries and many members of the European Union.

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Cribbage players are confused.

Lawmakers are confused.

And Maine State Police say rules governing games of chance are anything but easy to explain.

Two weeks ago, a state inspector shut down cribbage games and tournaments at American Legion Post 4 in Gardiner.

The inspector told players their game was illegal because the Legion did not have a license to host games of chance.

Since an article about Post 4 appeared in the Kennebec Journal last week, Sgt. William Gomane of the State Police said he has been “fielding calls” from the public.

“These rules are not easy to understand and it’s hard to explain to people,” Gomane said. “Without knowing the circumstance, it’s difficult to say (if a game is legal or illegal). If it’s a community center and it’s social gambling, it’s legal. If you went to a place where you have sports betting in a for-profit bar, it’s illegal.”

THE LAW SAYS

So what is social gambling?

Title 17-A: Maine Criminal Code Chapter 39 Unlawful Gambling, says: “Social gambling is gambling, or a contest of chance, in which the only participants are players and from which no person or organization receives or becomes entitled to receive something of value or any profit whatsoever, directly or indirectly, other than as a player, from any source, fee, remuneration connected with said gambling, or such activity as arrangements or facilitation of the game, or permitting the use of premises, or selling or supplying for profit refreshments, food, drink service or entertainment of participants, players or spectators.”

Quite a mouthful.

Some people, including Post 4 American Legion Cmdr. Bob Mckay and Rep. Earle McCormick R-West Gardiner, believe the rules were part of a bill that passed in the last Legislative session that dealt with Texas hold ‘em card games.

The bill granted charities the right to run Texas hold ‘em tournaments six times a year.

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The Democratic head of the House Judiciary Committee voiced frustration on Wednesday about what he said are disparities in the enforcement of U.S. Internet gambling laws.

Chairman John Conyers questioned “the selective nature” of Internet gambling enforcement and said a ban enacted by lawmakers last year could end up hurting U.S. relations overseas.

“Continuing with the same old failed policies for the sake of feel-good politics doesn’t make sense,” Conyers, of Michigan, said at a hearing on the issue.

Conyers did not signal whether he supports any changes to the current law. A bill introduced by House Financial Services Committee Chairman Rep. Barney Frank, of Massachusetts, would roll back the ban on Internet gambling that was enacted by Congress last year.

However, Conyers and several other lawmakers on the committee pressed officials from the Justice Department and Treasury Department at the hearing to explain why they are cracking down on some forms of Internet gambling but not others.

As part of the crackdown, two founders of payments processor NETeller Plc were arrested in January. In May online gambling operator BETonSPORTS Plc, pleaded guilty to U.S. racketeering charges and agreed to cooperate in a case against the company’s founder and other co-defendants.

The Justice Department interprets a decades-old U.S. law, known as the Wire Act, as banning all forms of gambling over the Internet, although the gambling industry has argued the law only bars sports betting.

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Even as the Treasury Department and the Federal Reserve prepare rules to implement the federal ban on Internet gambling, several Democratic lawmakers called today for a loosening of the ban as well as a study that could lay the groundwork for legalizing Internet gambling within a regulatory framework of preventing underage and compulsive gambling.

The current online gambling ban was enacted last year under the Unlawful Internet Gambling Enforcement Act (PL 109-347). It bars U.S. banks and credit-card companies from processing payments for business generated by offshore online gambling providers. It did make exceptions for horse racing, fantasy sports and state lotteries.

That measure, authored by Rep. Bob Goodlatte (R-Va.), passed the House by a vote of 317-93 and was ultimately enacted after it was attached to a port security bill during conference negotiations. Supporters of the ban argue that Internet gambling drives U.S. dollars to offshore gaming sites, creating opportunity for money laundering.

Several bills to overturn all or part of this ban were discussed this morning at a hearing of the House Judiciary Committee.

House Financial Services Chairman Barney Frank (D-Mass.) has introduced the Internet Gambling Regulation and Enforcement Act (H.R. 2046) to end the federal ban on Internet gambling.

The bill would create a licensing program for online gamblers. Licensing would be handled by the Financial Crimes Enforcement Network – the U.S.
Treasury’s anti-money laundering agency – and would be granted only to applicants at least 18 years of age. License holders would only be able to place the online wagers in states that permitted Internet gambling and would have to pay taxes on any winnings.

Separately, Rep. Robert Wexler (D-Fla.) sponsors the Skill Game Protection Act (H.R. 2610), which would exempt skill games from Internet gambling prohibitions. Online games such as poker, mah-jongg, chess and bridge would not be prohibited if participants compete against each other and not against the “house.”

“What I would like is to have legislation that treats all gaming the same.
Either we prohibit it all or let it be up to the morals of the individual,”
Wexler said.

Wexler’s bill would also create safeguards to prevent minors from participating in Internet gaming, would exclude players located in states that forbid Internet game participation, would combat fraud and money laundering, would provide assistance to persons with gambling addictions and would protect the privacy and security of persons engaged in these games.

Meanwhile Rep. Shelley Berkley (D-Nev.) would call for the National Research Council to conduct a study of online gaming (H.R. 2140).

Berkley, who also testified before the panel, said that the law actually muddled the regulation of Internet gambling. Her bill, she said, would provide Congress with information on the effects of Internet gaming to provide a framework for its legalization and regulation to protect underage and problem gamblers.

“The law actually made things even worse by targeting the financial sector rather than gamblers and further memorializing the carve-out for horse racing,” Berkley said. “This is something that should have been done before we went forward with last year’s ban.”

Supporters of the ban were not convinced by the critics’ arguments.

“Turning back the clock . will only encourage the problems we seek to avoid,” said Rep. Lamar Smith (R-Texas), the Judicary ranking member.

Goodlatte testified before the committee, arguing that reversing the ban now would be premature at best.

“Regulations haven’t even been finalized yet. The most appropriate thing is to have the new law take effect,” Goodlatte said.

But Annie Duke, who testified on behalf of the Poker Players Alliance, reiterated her support for Frank’s bill as well as Wexler’s and Berkley’s.

“What I do not respect is them having the government preventing people from engaging themselves in gaming activities,” Duke said.

Annie Duke, one of the top poker players in the world, was online Wednesday, Nov. 14, at 2:30 p.m. ET to discuss her testimony in behalf of the Poker Players Alliance, to be delivered Wednesday before the House Judiciary Committee, examining U.S. policies relating to Internet gaming.

A transcript follows.

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Annie Duke: Hi everyone. I just finished testifying at the House Judiciary Committee hearing on online gaming. It was an exhilarating experience and I was honored to be able to represent the millions of poker players who enjoy playing poker on the Internet. I feel that we made some excellent points but there is still lots of work to do. I would encourage any of you who are passionate about this issue to join the Poker Players Alliance (www.theppa.org) if you have not already done so. Now I would love to answer your questions.

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Arlington, Va. : Gaming? GAMING? Where I come from, playing for money — on the Internet or elsewhere — is called GAMBLING. And that’s okay by me, but why do you insist on calling it “gaming”? How can you have an honest debate when you don’t use honest language?

Annie Duke: Poker is not gambling no more than options trading is. Gambling is an activity where you will mathematical lose in the long run but you play to try to get lucky and overcome the odds in the short run. Poker is a game of skill in which you play against other players and you can play with an edge. So it is gaming not gambling. I am using honest language.

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Bethlehem, Pa.: I believe that instead of outlawing online poker that government should go in the exact opposite direction and make it legal and run the sites themselves or at least tax it so that they can take a cut. What do you think?

Annie Duke: I agree with you in principle. Rep. Barney Frank has authored a bill, H.R. 2046 which would do exactly that.

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Milestown, Mont.: Posting early. Ms. Duke, is it true that you got your start in Billings, Mont?

If so, where did you play? How in the heck did you get your start there?

Annie Duke: I did get my start in Montana. I started playing at the Crystal Lounge in downtown Billings. I lived in Montana after I left grad school and, needing money, my brother pointed out there were legal poker rooms in Montana and suggested I try playing to pay the rent. Obviously, that worked out for me!

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