Poker enthusiasts who trekked to Capitol Hill on Wednesday made it clear that they are not ready to fold in their fight over the legality of online gambling.

At a policy forum hosted by the Poker Players Alliance, a panel including a professional poker player and legal and policy experts took shots at the federal government’s recent attempts to target the Internet gambling industry.

Several lawmakers already have floated proposals to fix perceived problems created by a new law that prohibits the financial industry from processing payments to online gambling sites. The alliance is among those lobbying aggressively to repeal the law — or amend it to allow poker and other games of skill to be played online.

John Pappas, executive director of the alliance, charged that the proposed rules for enforcing the e-gambling ban would unfairly deputize the U.S. financial firms responsible for implementing the rules. The proposed rules, which were released earlier this fall by the Treasury Department and the Federal Reserve Board, would make people at financial firms with direct customer relationships responsible for ensuring that unlawful transactions do not occur.

Professional poker player Howard Lederer said it is particularly problematic that payment processors would bear that responsibility when the federal government has not yet adequately defined unlawful activity. The result, he said, will be that banks will “over-block” transactions to avoid potential violations.

Kenneth Adams, a partner in the Washington office of Dickstein Shapiro, predicted that the over-blocking issue would spark litigation.

The Interactive Media Entertainment and Gaming Association already has sued to keep regulators from enforcing the new law. Oral arguments in the case were heard earlier this fall. Adams said that court efforts to overturn the act are unlikely to succeed and that there are more useful ways for the law’s critics to attack right now.

“The odds are worse than drawing an inside straight,” he said.

House Financial Services Committee Chairman Barney Frank, D-Mass, has introduced a bill to permit and regulate online gambling rather than ban it. Rep. Robert Wexler, D-Fla., also has authored a measure to classify poker, the Chinese game mahjong, bridge, chess and other pastimes as “games of skill” that could be played online.

The panel has acknowledged, however, that generating the political will for Congress to rethink the issue will be difficult.

The House passed the anti-gambling measure last year by a strong margin, and the Senate attached language to an unrelated port security bill that became law.

Harvard University law professor Charles Nesson, founder of the school’s Berkman Center for Internet and Society, said he heard from an industry official who visited this week with Rep. Jane Harman, D-Calif., one of his former students. Nesson said she reportedly is unwilling to fight the e-gambling ban because so many of her constituents morally oppose gambling.

Pappas said part of the challenge will involve convincing people that it is a “pro-good-government” issue, not a “pro-gambling issue.”

He said the alliance is planning to conduct a voter-registration drive next year so poker enthusiasts and other supporters of online gambling can better flex their collective political muscle.

The U.S. should heed the wrath of the World Trade Organization by making betting games legal on the Web. Pro or con?

Pro: It’s Prohibition All Over Again
by Martin Owens, Gaming-Issues Attorney

The passage of the Unlawful Internet Gambling Enforcement Act (UIGEA) in October has led Antigua, which had previously sued America in 2003 before the World Trade Organization over the issue of Internet gambling, to seek relief before the world body once more. Chief among Antigua’s claims was that U.S. laws against Internet gambling constituted a trade barrier in violation of trade obligations.

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Con: This Vice Deserves No Encouragement
by Guy C. Clark, National Coalition Against Legalized Gambling

The U.S. government’s obligation to protect its citizens from a toxic, addictive product exceeds its responsibility to please the gnomes at the WTO.

Gambling addiction rises predictably with proximity of games and speed of play. Nothing is more proximate than a personal computer, and nothing works faster. Plus, the Internet adds the deadly element of anonymity. The neighbors won’t spot you at the virtual casino. Solid citizens with no previous criminal record commit outrageous crimes when addicted to gambling.

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You’ve got to know when to hold ‘em and know when to fold ‘em — and that means poker is a game of skill and not luck, a panel of lobbyists, academics and gamblers argued Wednesday on Capitol Hill.

The distinction involves a pot potentially worth tens of millions of dollars.

Federal law classifies poker as “a game subject to chance,” and for such games it bars the transfer of funds from a financial institution to an Internet gambling site.

That means online poker players can’t use credit cards — a major obstacle for the use of increasingly popular Internet gambling sites. While Internet gambling is illegal in the United States, offshore poker sites have used MasterCard and Visa as international modes of wagering.

Leaders of the Poker Players Alliance, claiming 800,000 members nationwide, visited congressional offices and sponsored the Wednesday’s forum in an effort to convince lawmakers to change the law. Professional poker champions Chris Moneymaker, Annie Duke, Howard Lederer, Barry Greenstein, Andy Bloch, Vanessa Rousso, Chris Brown and Victor Ramdin were among those making the pitch.

High-stakes card tournaments televised by ESPN have made national celebrities of many players of Texas Hold ‘Em and other poker variations.

“We’re poker players. We’re here to speak to our legislative representatives,” said Charles Nesson, a professor at Harvard Law School and founder of the Berkman Center for Internet and Society. The current law is “a disreputable piece of legislation,” he said.

The Poker alliance supports a bill sponsored by Rep. Robert Wexler, D-Fla., called the Skill Game Protection Act. It would exempt poker, mah-jongg, chess, bridge and other games where contestants compete against each other rather than the “house” from the Unlawful Internet Gambling Enforcement Act of 2006.

“Poker is a game, not a crime,” Wexler said. “Millions of Americans enjoy competing with each other in games of skill on the Internet.?We should protect the freedom of law-abiding adults to participate in these great American pastimes.”

These “games of skill” would not violate the federal law against “bets and wagers” on the Internet, Wexler explained. The current law already exempts horse and harness racing, fantasy sports and lotteries.

In a prepared statement, Wexler said his bill creates safeguards to prevent minors from participating in Internet gaming, excludes players in states that forbid Internet game participation, combats fraud and money laundering, provides assistance to persons with gaming addictions, and protects the privacy and security of persons engaged in these games.

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Coming off a resounding defeat in Congress a year ago, the country’s top poker players are trying their hand at a time-honored Washington parlor game: lobbying.

Nearly 100 leading card players are flying into the nation’s capital this week to urge lawmakers to roll back a ban on Internet gambling. They are led by Senator D’Amato, the New York lawmaker turned lobbyist who serves as chairman of the Poker Players Alliance.

The group is pushing a bill that would legalize and regulate online gambling through the federal government, effectively reversing a law that President Bush signed last year making it illegal for American banks and credit card companies to process online bets.

“We shouldn’t be making criminals of people who want to play poker in their own home. It’s ridiculous,” Mr. D’Amato said in a telephone interview.

The former three-term Republican senator brings added political clout to an industry that says it was broadsided by last year’s legislation, which was added to an unrelated port security bill and passed overwhelmingly. “They snuck the bill through,” Mr. D’Amato said.

The poker professionals in Washington this week include Chris Moneymaker, Howard Lederer, and many others who have become celebrities thanks to ESPN’s exhaustive televised coverage of the “World Series of Poker” events. They have scheduled dozens of meetings over two days with members of the House Financial Services and Judiciary committees, along with a public forum on Internet poker.

While Mr. D’Amato said this is the first organized lobbying effort by the group, he envisions the poker alliance having a much larger political presence in the months to come; he said he wants to create a political action committee and start voter registration drives.

“There is a growing constituency and a voice that cares about their ability to enjoy poker on the Internet,” he said. “We’re going to demonstrate to the members that this awareness translates into votes.”

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America’s online poker enthusiasts descended on Capitol Hill this week with two messages for Congress: Poker’s good for the brain, and stop jeopardizing our games already.

The multiday lobbying visit by members of the the Poker Players Alliance, which counts more than 800,000 professional and amateur players on its rolls, arrived about a year after politicians enacted a restrictive anti-Internet gambling law.

The players’ goal for the fly-in: to boost support for a couple of bills, which so far enjoy support from only a handful of politicians, that would roll back those restrictions in favor of more tailored regulations. One proposal would expressly carve out poker from any ban on online gambling, placing it in a category with “games of skill” like backgammon, mahjong and bridge.
cards

“Certainly I think the growth of the game has been hurt,” Howard Lederer, a two-time World Series of Poker bracelet winner, said of the current law’s impact at a public forum organized by the PPA here Wednesday. He’s known as the “Poker Professor” for his commentary and analysis in card-playing circles and is one of the founders of the online card room Full Tilt Poker.

That’s unfortunate, Lederer argued, because “yes, it can be used as a vice, but for most of us it’s a wonderful form of entertainment that actually massages your mind, gets you thinking.”

To be sure, the online gambling bill doesn’t specifically outlaw online poker games nationwide. Congress’ intent was to clarify that forms of offline gambling already considered unlawful by state and federal laws are also illegal when shifted online. (Bets on horse racing, lotteries, fantasy sports and games that don’t involve exchanges of anything of “value” are exempt.)

The law requires banks and payment processors to take certain steps to block transactions stemming from “unlawful” forms of gambling and, in some cases, would force Internet service providers to block access to offshore gambling sites.

The trouble with that tactic is, it’s not always clear what forms of Internet gambling are “unlawful” from state to state–and how poker fits in.

With the risk of hefty fines and criminal penalties if they don’t do their part, payment processors seem to be playing it safe, opting to stop accepting transactions from online poker and bridge sites even when it’s not clear laws are being broken, poker enthusiasts said Wednesday.

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Poker might not be a sport, but it is a game
of skill. That’s according to the Poker Players Alliance, which is
mobilizing support this week to end federal restrictions against
playing for money online.

Nearly 100 of the PPA’s 809,000 members, from
professionals Annie Duke and Chris Moneymaker to former U.S. Sen. Al
D’Amato (R-N.Y.), will lobby legislators Tuesday and Wednesday for
changes to Internet gaming bills.

A federal law adopted last year, the Unlawful
Internet Gambling Enforcement Act of 2006, prohibits banks and credit
card companies from processing online gambling transactions, including
poker. The statute makes no distinction for games of skill.

“We want to demonstrate to the public, to the
members of Congress, that this is a game of skill,” said D’Amato, who
gave up his regular Monday night poker game to attend.

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Poker players pining for a return of Internet gaming now have the law on their side. Harvard Law, that is.

A pair of top Harvard Law School professors have taken up an unlikely cause – the legalization of online poker.

Professor Charles Nesson has become an outspoken advocate on behalf of online poker, blasting last year’s crackdown, which banned online poker and other forms of Internet gaming in the United States.

Nesson has teamed up with some of his law students to form the Global Poker Strategic Thinking Society, which held a pair of inaugural sessions last week.

Meanwhile, Professor Alan Dershowitz is helping defend an online entrepreneur facing charges related to an offshore sports betting site with which he was involved.

Important legal principles are at stake, the two men say – though they both also admit to being avid poker fans. And they’re not alone in their interest. Harvard Law this year offered its first-ever course in gaming law.

“The idea of Internet freedom is a core notion of modern political freedom,” Nesson said.

Nesson first became interested in the game in 1981. On sabbatical, he was programming his new IBM computer, which came with a version of poker – five-card draw, jacks or better. As he tinkered with his computer, he got a close look at the bluffing algorithm and became entranced with the “elegance” of the game.

When online poker emerged years later, the Harvard professor became a fan of that too, enjoying both the challenge and the convenience. And he found himself “affronted” when poker and other forms of online gaming were banned last year in the United States after what he derides as a “midnight” vote in Congress.

Nesson contends that poker is a game of skill, not chance. Given that, poker tournaments, including online play, should be legalized, he said.

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Internet poker players are raising the stakes in Washington.

Threatened by a federal law that restricts online gambling, the Poker Players Alliance, a two-year-old lobbying group that says it represents 800,000 poker enthusiasts nationwide, plans on pressing Congress this week to consider several new bills that would exempt poker from the law or regulate the gaming industry.
    
It’s legal to play poker online, but the law made it illegal for U.S. banks and credit-card companies to process payments to online gambling businesses outside the United States. Supporters of the ban say Internet betting can be addictive and potentially drain people’s savings.

But John Pappas, the group’s executive director, said the law only forced several public British companies _ such as PartyGaming PLC and 888 Holdings PLC _ that had financial and age safeguards in place from the U.S. online poker market.

“The idea that we can kind of stop people from doing this seems a bit irrational,” said Pappas, who estimates there are between 15 million to 23 million U.S. Internet poker players.

The group is flying in 100 members, including several poker champions, such as Chris Moneymaker, to lobby lawmakers Tuesday and Wednesday to get poker exempted from the law, which already excludes online horse races and lotteries and fantasy sports.

The group also backs a bill to license and regulate Internet gaming, in general. A small tax on online poker operators could net the government at least a couple of billion dollars in revenue, Pappas said.

Chaired by former New York Sen. Alfonse D’Amato and now lobbyist, the group has also upped its lobbying ante, spending $640,000 in the first six months this year, compared with $540,000 in all of 2006.

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In a case that illustrates the perils of online betting, a leading Internet poker site said Friday that a hacker exploited a security flaw to gain an insurmountable edge in high-stakes, no-limit Texas holdem tournaments — the ability to see his opponents’ hole cards.

The cheater, whose illegitimate winnings were estimated at between $400,000 and $700,000 by one victim, was an employee of AbsolutePoker.com who hacked the system to show that it could be done, said a spokesman for the company, who spoke with msnbc.com on condition of anonymity.

“This is literally a geek trying to prove to senior management that they were wrong and he took it too far,” he said.

The Costa Rica-based company, which is controlled by a parent company owned by members of the Kahnawake Mohawk tribe in Canada, issued a statement later in the day acknowledging the breach and promising to refund all money, including interest, to players who were victims of the scheme. It also promised a “comprehensive statement … providing more details of the findings” would be issued soon…

Site owned by Canadian Mohawks
Absolute Poker  states on its Web site that it is owned by Tokwiro Enterprises Enrg., located in Kahnawake Mohawk territory nine miles south of Montreal, Quebec. Tokwiro is described as a Mohawk owned and controlled sole proprietorship. The site also is licensed and ostensibly regulated by the tribe’s Kahnawake Gaming Commission, though it is not clear what level of scrutiny the commission applies to its licensees.

Many poker players interviewed for this article expressed concern that the incident would be another “black eye” for online poker, which has surged in popularity in recent years despite attempts by the U.S. government and many states to prevent Americans from playing over the Internet.  Most indicated they would prefer that the sites were licensed and regulated by the United States, but said they consider most of the leading offshore sites to be fair and secure.

“I think that the reasons this got handled the way that it has, with a happy ending, is because the overwhelming majority of people in the industry … want things to be run in a fair and honest way,” said Small of Pocketfives.com. “…  There is a perception that a lot of people in the industry are thieves, but that’s not the case for the most part. When something like this happens, the rest of the people, as soon as they catch wind of it band together and look for ways to pool information and bring people down who have done harm to them.”

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[Joe Saumarez-Smith is chief executive officer of Sports
Gaming, a U.K. management consulting firm to the gaming
industry. He also owns European online bingo companies and odds
comparison Web sites. The opinions expressed are his own.]

A year ago last Saturday, President George W. Bush signed the Unlawful Internet Gambling Enforcement Act and online gambling was banned in the U.S.

At least, that was the intention. Twelve months later, there are just as many people gambling online, if not more. Many bettors don’t even know the law was changed, partly because it was tacked on as an amendment to a measure aimed at increasing port security.

The biggest difference now is that the companies offering online gambling are privately held and operate out of countries where it is impossible to know who controls them; if you had a huge win, then the risk of not being paid is probably much higher. The major public companies that used to offer online betting to Americans, such as PartyGaming Plc, 888 Holdings Plc and Sportingbet Plc, all quit the U.S. market last October at a cost of several billion dollars to their shareholders.

America’s banks and financial institutions were given 270 days from the passage of the law to block gambling transactions. The detailed rules on how to do this and how to spot a gambling transaction are still to be completed. As a result, online poker rooms, sports bookies and casinos are still able to get money from and send money to their customers, albeit not as easily as a year ago.

Meanwhile, Americans are free to place online bets on lotteries and horse racing as those forms of gambling were deemed legal. They can also visit any number of legal casinos, poker rooms, racetracks or Off Track Betting centers, and play state lotteries.

The situation is, in short, a mess.

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