A congressional push last year stopped many Americans from playing the games online, but the law may be changed

A bill before Congress that would legalize Internet gambling in the United States has American companies poised on the sidelines, waiting to capitalize on a potentially humongous new market.

The bill, the Internet Gambling Regulation and Enforcement Act, was introduced by Rep. Barney Frank, D-Mass., in April. Congressional hearings on the feasibility of the bill were held in early June.

The bill seeks to reverse the Unlawful Internet Gambling Enforcement Act, which Congress passed last year and which bans Internet gambling in the United States by prohibiting American banks and credit card companies from processing payments to and from online gambling sites.

The stakes in this political showdown are huge. Frank’s bill would set up a framework for the government to legalize, license, regulate and tax Internet gambling. The bill would also set up safeguards to prevent underage and compulsive gambling, as well as money laundering and fraud.

After trying for almost 10 years to pass anti-Internet-gambling legislation, the Republican-controlled Congress passed its law in October by tacking it onto a bill concerning port security, arguing that terrorists launder money via online gambling sites. Few members of Congress wanted to vote against beefing up port security right before an election and the legislation passed easily.

Now, with Democrats in control of Congress, Frank wants to repeal that law and legalize online gambling. Frank calls last year’s bill “one of the stupidest things I ever saw.”

“I want to get it undone,” Frank said. “If an adult in this country, with his or her own money, wants to engage in an activity that harms no one, how dare we prohibit it? Adults are entitled to do with their own money what they want.”

Under the bill that prohibits Internet gambling, banks and credit card companies have become Internet pseudo-cops, forced to determine which e-transactions involve online gambling and then blocking them. Frank is chairman of the House Financial Services Committee, which oversees the activities of banks and credit card companies, who have made it clear they don’t want to be the Net’s gambling police.

Those banks and credit card companies have made numerous campaign contributions to Frank over the course of his 14 terms in Congress. If Internet gambling is legalized, not only will banks and credit card companies no longer have to block online gambling transactions, they’ll be able to process them and profit from them.

Under the proposal, American companies for the first time could legally set up Internet casinos, run them from the United States and accept U.S. customers. Corporations that currently run land-based casinos in Las Vegas and elsewhere will likely be among the first to jump into the new industry, casino officials said, but they won’t be the only ones.

“We would do so as quickly as we could,” said MGM Mirage Senior Vice President Alan Feldman. “We would have it up and running within a year. And I have to believe that just about everyone will get involved at some level. All the major players.”

The major players in gambling?

“Yes,” he said. “But not just them. All the major entertainment companies will get involved, too. Sony, Apple, Universal, Columbia, Time Warner. It just seems logical that at some point they would find their way into the industry.”

Even a company as family-oriented as Disney could get involved in opening an Internet casino, Feldman said. “I know Disney has certain beliefs about its core brand structure that could prevent it,” he said. “But they could always create a sub-brand, as they do with their movie company Touchstone Pictures (which produces R-rated movies).”

MGM Mirage owns and operates about a dozen major Las Vegas casinos, including MGM Grand, Mirage, Monte Carlo, Bellagio, Mandalay Bay, Luxor and Treasure Island. MGM Mirage previously operated an Internet casino from the Isle of Man in the British Isles, from 2001 to 2003, that was open to people in every country but the United States. The casino failed, Feldman said, because of that ban.

“About 70 percent of the global online wagering market is from the U.S.,” he said. “So we were competing, with only 30 percent of the market. It wasn’t enough to be profitable.” But with the U.S. market, under Frank’s proposal, it would be profitable, he predicted.

If the bill passes, MGM Mirage will operate its Internet casino from Nevada, Feldman said. “That’s the point (of the bill),” he said. “For the home state to get the tax benefits.”

The Las Vegas Sands Corp., which owns the Venetian casino in Las Vegas, as well as other entities, announced plans last year to open an Internet casino in 2007 that would operate from the Channel Islands and service the United Kingdom only. It hasn’t opened yet.

But now, with the potential new law, the company’s attentions are turning toward the more lucrative U.S. market.

An Internet casino run from the United States that Americans could patronize is definitely something the company would be interested in, should it become legal, according to Sands spokesman Ron Reese. “We see it as another opportunity to grow our business,” he said.

Representatives from other major casino corporations made similar statements about Internet gambling, but didn’t want to be quoted or identified, for fear of losing a competitive edge.

Not everyone is as excited about the prospects of legal Internet gambling.

Already, longtime Internet gambling opponent Sen. Jon Kyl, R-Ariz., who was a co-sponsor of the 2006 bill that banned gambling, has spoken out against Frank’s bill.

“Online poker is currently the most addictive form of gambling activity among American youth,” Kyl said. “Online poker players are more likely to exhibit problem gambling symptoms than other types of gamblers, and over half of young people who gamble on the Internet displays signs of problem gambling.

“There is an attempt by Congressman Barney Frank to remove the online gambling enforcement mechanisms provided by (the current law). I oppose efforts to remove tools that our state and federal authorities have long sought.”

So-called “gaming” Web sites in the U.S., which are already legal, aren’t considered “gambling” sites because they only offer casino games that can be played for free, and thus pose no financial risk to players. Such sites appear to be in key position to enter the legal Internet gambling business in the United States, should it open up, because they’ve already got the Internet infrastructure in place and it wouldn’t take much effort to transform, for example, a play-for-free online poker site into a play-for-pay online poker site.

One such Web site is Triple Jack (www.triplejack.com), which operates from Coral Springs, Fla., and offers free online poker, with cash and other prizes awarded to winners. The site, in operation since 2005, makes money by carrying ads, and claims to have more than 100,000 registered players. Adding real-money poker would likely exponentially increase profits.

“The U.S. government is losing out on a lot of (tax) money by not allowing Internet gambling,” said David Finkelstein, chief executive officer of Triple Jack. “European countries realize this and allow it.”

If the legislation passes, it won’t just be the federal tax coffers and the potential Internet casino operators that stand to benefit. Advertising agencies whose clients include online gambling firms, as well as media that carry online gambling advertising, also stand to profit.

Robert Blagman is the co-owner of Media Options Inc., a Los Angeles ad agency whose clients include some of the big hitters in the real-money online poker business: foreign-owned companies Party Poker (www.partypoker.com), Full Tilt Poker (www.fulltiltpoker.com), River Belle Poker (www.riverbellepoker.com) and 888 Poker (www.888.com).

Before the anti-online-gambling legislation passed, all four companies advertised heavily in the United States, especially on television, and Blagman’s company made heady commissions.

The new law “was a disaster for us,” Blagman said. “All our online poker clients immediately stopped advertising in the U.S.,” costing his agency more than $1 million in commissions.

Last month’s hearings before Frank’s House Financial Services Committee focused on the feasibility of effectively using new technologies to regulate Internet gambling and prevent abuse by underage and problem gamblers. After the hearings ended, Frank gave no timetable as to when he expects the full House of Representatives, as well as the Senate, to vote on the bill.
Net gambling history

1995 — First Internet casino opens. Blackjack, roulette, craps and other casino games can be played for fun, but not real money.

1996 — First Internet casino that can be played for real money, InterCasino, opens. Thousands more such virtual casinos will open in coming years.

1997 — Three San Francisco residents and former Pacific Exchange employees, Jay Cohen, Steve Schillinger and Haden Ware, move to Antigua and start Web site called World Sports Exchange, an Internet sports book that accepts online wagers on sporting events. It’s among the first.

1998 — Country and western singer Kenny Rogers, who had the hit song “The Gambler,” becomes first celebrity to open his own Internet casino. It’s based in Curacao. Fellow celebs including Rodney Dangerfield, Larry Holmes and Bubba Smith soon follow suit.

1998 — The U.S. Justice Department issues felony arrest warrants for Cohen, Schillinger, Ware and 18 other Americans for their roles in the illegal operation of a half dozen different Internet casinos and sports books around the world. Feds say the accused violated the Federal Wire Act, which prohibits wagering over phone lines, which the Internet uses.

1998 — Cohen and 13 others who were charged turn themselves in to federal authorities in the U.S. All but Cohen have charges dismissed or have plea bargains and receive fines. Cohen declines a plea bargain offering no jail time, choosing to go to trial. He hires attorney Ben Brafman, who previously defended Salvatore “Sammy the Bull” Gravano. Schillinger, Ware and five others who were charged remain fugitives.

2000 — After a jury trial in federal court in New York, Cohen is convicted of seven felony counts of Internet bookmaking and related offenses, and sentenced to 21 months in federal prison. He appeals the verdict.

2000 — Rogers becomes first celebrity to close his Internet casino. He cites the unclear legal status of the operation.

2001 — The U.S. Court of Appeals upholds Cohen’s conviction.

2002 — Cohen begins serving his sentence at a federal prison in, ironically, Las Vegas. He becomes the only person in U.S. history to go to jail for Internet gambling.

2003 — Chris Moneymaker, a Memphis accountant, wins the World Series of Poker in Las Vegas after qualifying by winning an online poker tournament. The Internet poker boom begins.

2004 — Cohen is released from prison after serving 17 months.

2006 — Congress passes the Unlawful Internet Gambling Enforcement Act, which bans U.S. banks and credit card companies from transferring monies to and from Internet gambling sites, making it difficult for Americans to fund online gambling.

2007 — The Poker Players Alliance, a San Francisco lobby group, hires former Sen. Al D’Amato, a noted poker player, to help get the law changed so it doesn’t affect online poker. The alliance says poker is a game of skill, not luck, and therefore isn’t gambling.

2007 — Rep. Barney Frank introduces bill called Internet Gambling Regulation and Enforcement Act, which would legalize Internet gambling in the U.S. The bill is yet to be voted on.

San Francisco Chronicle (07/02/07)

CHEYENNE – Poker players around the state can shuffle up and deal in restaurants and bars starting July 1, but in Cheyenne they may be forced to fold before even seeing their cards.

That’s because the city code prohibits poker and other forms of gambling.

Friendly poker games at bars and restaurants were common until December 2004, when Attorney General Pat Crank issued an opinion saying that businesses that profited from a poker game – even indirectly, such as when a poker tournament generated additional business – were breaking the law.

The Legislature this year removed the prohibition against indirect profits from the law, freeing the way for poker games starting July 1.
But that doesn’t change the Cheyenne statute.

“What the heck do we do?” asked Gary Waggoner, owner of Mingles, a Cheyenne bar. He worried that the law – or even the uncertainty – would drive some customers to bars outside the city limits. “Let’s get things cleared up or straightened up one way or another.”

So far, no one has asked either the Cheyenne City Council or City Attorney Mike Basom for clarification of the apparent conflict.

But state Rep. Keith Gingery, R-Jackson, said during the debate over the bill that he hoped legalizing poker games would boost business at bars around the state. And Basom this week said he thought the Legislature’s intent was to make such card games legal everywhere.

“My advice to the police department is, if you’re going to charge someone, do so under the state statute,” Basom said.

The Senate shelved legislation Monday that would have legalized Texas Hold’em poker tournaments in restaurants and bars across the state.

The Senate voted 22-14 to involuntarily postpone action on the House-passed measure, which should end its consideration during the legislative session.

House Bill 484 by Rep. Warren Triche, D-Raceland, ran into immediate opposition on the Senate floor as being an expansion of gambling.

“I nominate this bill as being the worst bill of the session,” said Sen. Ken Hollis, R-Metairie. “If you want to have gambling all over Louisiana, vote for this bill. You will have minicasinos everywhere.”

Hollis also said the Texas Hold’em tournaments would hurt charitable organizations that hold such events as part of fundraising activities.

Sen. Charles D. Jones, D-Monroe, said the bars and restaurants hosting the Texas Hold’em tournaments could not take a cut of the proceeds. Participants would have to be at least 21.

Jones never got a chance to rebut Hollis’ criticism before Hollis moved to return the bill to the calendar.

HB484 barely squeaked out of the House and it took two tries. The first time there was a 48-47 vote — five shy of the 53 majority needed.  The House later passed it on a 53-47 vote.

Triche pushed the bill at the request of some bar owners who have had poker games raided as illegal gambling by law enforcement.

Texas Hold’em is a poker game that uses seven cards, two that an individual player uses alone and the other five all the players can use to make the highest hand. Televised tournaments have popularized the betting game. Triche argued that the poker games are no different than darts, billiard games and football pools when wagering is involved.

Who:  Congresswoman Shelley Berkley (D-Nev)
Date:  Wednesday, June 20th
Time:  7pm West 10pm East Coast
Where:  “Pumped On Poker” on Holdem Radio
 
Details: Congresswoman Shelley Berkley (D-Nev.) on “Pumped On Poker” on Holdem Radio to discuss the recent move by the U.A. to collect damages from the United States, and update poker players on The Internet Gambling Regulation and Enforcement Act (H.R. 2046).
 
How to tune in:  To tune in go to www.holdemradio.com and click ON AIR to listen live.  Private playback and iPod downloads will be available.  Internet brodcast will play live on your media player.
 
Hosts:  Marc aka Forrest Pump & Jason aka Wolf
 
Contact:  Marc at 916.344.7437 or info@suitedpockets.net

GENEVA – The United States should face commercial sanctions worth more than $3.4 billion each year for its failure to comply with a World Trade Organization ruling that its Internet gambling restrictions are illegal, the Caribbean nation of Antigua and Barbuda said Wednesday.

Antigua, which won a WTO ruling last year against the U.S. restrictions, is asking the trade body for authorization to target American trademarks and copyrights if the U.S. refuses to alter its legislation.

It said the sanctions would come into effect “shortly,” unless the United States requests a WTO arbitration panel on the level and scope of the sanctions.

“While we realize this is a significant step for Antigua and Barbuda to take, we feel we have no other choice in the matter,” Antigua’s Finance Minister L. Errol Cort said in a statement.

“Until such time as the United States is willing to work with us on achieving a reasonable solution to this trade dispute, we will continue to use every legitimate remedy available to protect the interests of our citizens,” he said.

The move by Antigua comes a day after the European Union told the United States it too wanted compensation for the U.S. ban on foreign online gambling sites.

U.S. trade officials were not immediately available for comment.

Antigua argues that before the ban was introduced, online gambling provided income for hundreds of its citizens and helped end its reliance on tourism, which was hurt by a series of hurricanes in the late 1990s.

Last year Washington stopped U.S. banks and credit card companies from processing payments to online gambling businesses outside the country.

The decision closed off the most lucrative region in a market worth $15.5 billion last year. About half of the world’s online gamblers are based in the United States.

The World Trade Organization ruled in December that the law unfairly targeted offshore casinos, telling the U.S. it could keep restrictions against sport betting in place if they were also applied to American businesses.

The European Union told the United States on Tuesday that it wanted
compensation for a U.S. ban on foreign online gambling sites, which
doesn’t comply with global trade rules.

British online gaming operators such as Sportingbet PLC and Leisure
& Gaming PLC were forced to quit the profitable U.S. market last
year when Washington stopped U.S. banks and credit card companies from
processing payments to online gambling businesses outside the country.

The decision closed off the most lucrative region in a market worth
$15.5 billion (11.6 billion euros) last year. About half of the world’s
online gamblers are based in the United States.

But an EU official said the concessions Europe was looking for would likely be “commitments” to open up other trade sectors.

“We need new concessions that would be equal with the benefits
lost,” he said, speaking on condition of anonymity because he is not
authorized to be quoted by name in media reports.

Initial negotiations would focus on measuring the loss to European businesses, he said, warning that talks would take some time.

The World Trade Organization ruled in December that the law unfairly
targeted offshore casinos, telling the U.S. it could keep restrictions
against sport betting in place if they were also applied to American
businesses.

The EU – the world’s largest consumer market – joins the tiny
Caribbean nation of Antigua and Barbuda in seeking compensation. The
twin-island nation argued that online gambling had provided income for
hundreds of its citizens and was helping to end its reliance on
tourism, which was hurt by a series of hurricanes in the late 1990s.

After losing the case, the U.S. announced that it would take the
unprecedented legal step of changing the international commitments it
made as part of a 1994 treaty regulating trade in services among the
150 members of the WTO. As a result, the U.S. declined to challenge the
WTO ruling, because it says that its legal maneuver effectively ends
the case.

U.S. Rep. Barney Frank, the Democratic congressman who chairs the
committee that oversees financial services, introduced a bill in April
that would reverse the Unlawful Internet Gambling Enforcement Act – but
his plan faces long odds in Congress and likely opposition from the
Bush administration.

Associated Press Writer Bradley S. Klapper in Geneva contributed to this report.

The Poker Players Alliance are looking for volunteers who are
interested in the raising awareness of the PPA, its mission, and
helping with membership drives on the local level, for example:

• working with local cardrooms
• working with local poker leagues
• coordinating local PPA activities
• distributing membership materials
• creating local PPA chapters
• contacting local media
• getting involved with local elections

PPA President Michael Bolcerek has set a goal for 1 million members
for 2007. We are over 100,000 strong now, so imagine if we played Doyle
Brunson’s hand (10-2) and had each member talk to 10 poker players for
2 minutes about the PPA.

As the Member Action Network is in the planning stages, we would
like to get feedback from our members and talk to those interested
volunteering at the local level. Check out the PPA Member Action Network forums.

Please send ideas, feedback, interest to: volunteers@theppa.org

The Poker Players Alliance also invites artists and anyone else to
create logos, slogans, online banners, print designs (bumper stickers,
t-shirts), videos, and even songs. There are numerous ways to
creatively express our voice about protecting poker player rights and
making online poker legal.

While we can’t print and distribute these to supporters and members,
we can put them in one central place online for others to download,
print, and use at the local level. Spread the word about the PPA and
defend your right to play poker.

Feel free to take a look at our key points in creating your work.

Send us your creations at volunteers@theppa.org and thanks for supporting the PPA and poker players everywhere.

For more ideas on what can be done, click here

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