Congress’ decision last year to outlaw online poker harms poker players by leaving their activities unregulated, speakers at the Poker Players Alliance’s issue advocacy event said Oct. 24.

The panelists said that regulation of online gaming, rather than an outright ban, is a better means to protect consumers and recover revenue from online poker that has been driven offshore by the Unlawful Internet Gambling Enforcement Act, 31 U.S.C. §§ 5361-5367.

UIGEA was “not a serious piece of legislation passed through the traditional legislative hearing process,” Kenneth Adams, an attorney with Dickstein Shapiro in Washington, said.

Harvard Law School Professor Charles Nesson agreed, stating that UIGEA was “a disreputable piece of legislation pushed through as a rider not grounded in any statutory basis and showed the weakness of an executive decision to go after Internet gaming …. It was not a sensible approach.”

 
UIGEA Deputizes Financial Institutions
The UIGEA prohibits any person engaged in the business of betting or wagering from knowingly accepting, in connection with participation of another person in “unlawful Internet gambling,” credit, electronic funds transfers, checks, or the proceeds of any other form of financial transaction.

Howard Lederer, a poker player, said that UIGEA failed to define “unlawful Internet gaming” and had the effect of requiring financial institutions to determine which online activities they should block, leading to “overblocking”–blocking funds transfers for lawful online activities.

Radley Balko Sr., an editor at Reason Magazine, said that UIGEA “deputized” financial institutions in the government’s fight against unlawful gambling.

 
Panelists Say UIGEA Sets Troubling Precedent
Because the UIGEA vested authority in private companies to determine the legality of online activities, UIGEA set a troubling precedent because it should not be the job of private industry to define the law, Lederer said.

Lederer said that, over the past couple of weeks, Visa and Mastercard have stopped accepting payments for online bridge game transactions, which is evidence of the slippery slope created by UIGEA.

“UIGEA was only able to put a small dent in online poker” and pushed online gaming offshore and away from regulated sites, which made it more difficult for victims of gaming fraud to seek recourse, Balko said.

According to panelist John Pappas, executive director of Poker Players Alliance, “The United States has lost at every level at the World Trade Organization and faces billions of dollars in trade sanctions” because of UIGEA.

In March, a WTO panel concluded that UIGEA violated the U.S. scheduled commitments under the WTO’s General Agreement on Trade in Services.

 
Panel Praises Two Bills
“Poker can have a positive influence on society,” Pappas said, and the panelists all agreed that regulating Internet poker, such as with one of two bills currently before Congress, would be a more effective means to protect consumers from dangers associated with online poker.

The Internet Gambling Regulation and Enforcement Act of 2007 (H.R. 2046), as introduced by Rep. Barney Frank (D-Mass.) April 26, would get the United States “back in line with the WTO, respect the privacy of American citizens to engage in online gaming, and bring in revenue,” Lederer said. The bill would create a licensing and regulatory regime for Internet gambling and would provide protections against underage gambling, compulsive gambling, money laundering, and fraud for individuals who gamble online.

Using Skill Argument Not Always Best Approach
Panelists discussed the benefits of a bill introduced by Rep. Robert Wexler (D-Fla.) June 7, the Skill Game Protection Act (H.R. 2610), which would exclude “games of skill” from the definition of “unlawful Internet gambling” in UIGEA.

Lederer said that “looking at poker over a reasonable period of time, it is obviously a game of skill” and should be treated as such, rather than as a game of chance.

Other panelists agreed that poker is a game of skill, but argued that excluding Internet poker under a skill-game exception using logical arguments will not get a measure passed because arguments for gaming prohibitions are grounded in moral, rather than logical, arguments.

Balko said that a skill-based exception for online poker may not be the best strategy for attacking online poker restrictions because individuals pushing a ban see it as a moral issue, and said that it is not a proper function of government to regulate it in the first place because it gives the government too much power, which, particularly when UIGEA is viewed more broadly, raises strong civil liberty concerns.

Panelists Also Recommend Self-Regulation
Nesson said that industry self-regulation would be “far preferable” to government regulation of Internet poker.

Professional poker player Vanessa Russo said poker is safer on the Web. She said that online players can be protected against dangers of gambling, such as losing more money than intended, because players can only lose the amount of money they add to their online accounts.

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Author Contact Info: Amy E. Bivins, The Bureau of National Affairs