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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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.

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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Poker Pro Annie Duke will testify before the House Judiciary Committee

Tomorrow the House Judiciary Committee will hold a hearing to examine the United States policies as they relate to Internet gaming. Annie Duke, one of the top poker players in the world will testify before the Committee on behalf of the Poker Players Alliance (PPA).
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Chairman Conyers and members of the Committee, I would like to thank you for the opportunity to testify before your committee. I am doing so as an American citizen who is concerned about personal freedom and personal responsibility. I am also here to express the views of the nearly 800,000 Americans who belong to the Poker Players Alliance.
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The last legislative news that appeared on PocketFives.com concerned the Poker Players Alliance
Fly In event, a three day affair that brought around 100 PPA members
from across the United States to Washington to meet with their members
of Congress and staffs about the major bills concerning online poker.
The event was a rousing success and received major national media
attention. Within only a few weeks, the fruits of the PPA’s labor can
be seen. The Justice Department is holding a hearing about internet gaming on Wednesday, November 14, at 10:00am.
This is a huge step for online poker’s future. PocketFives.com sat down
with PPA Executive Director John Pappas to get all the details.

Pappas comments on why
the Justice Department is holding a hearing about internet gaming in
the first place: “The PPA can take credit for this hearing as a result
of the fly in event we just held. The Judiciary Committee has always
been interested in the issue, but we weren’t able to get them motivated
to talk about it. We talked with Chairman John Conyers (D-MI) along
with some of our poker pros during the fly in. He pledged to hold a
hearing and we’re pleased that’s it’s happening.” If you haven’t read
PocketFives’ wrap-up of the PPA Fly In event, you should bring yourself
up to speed. Click here to read the article.

Specific names appearing
at the hearing have not yet been officially released, but you can
expect a witness who is an expert on WTO policy, a representative from
the Department of the Treasury, a representative from the Department of
Justice, as well as one Congressman on each side of the issue. Poker
pro and PocketFiver Annie Duke will also be in attendance as a witness.
Pappas expects hard-hitting questions: “Our goal is to have members of
Congress to ask tough questions of the Department of Justice
representative about their inconsistent enforcement of internet gaming.
We also want them to point to the statute that they used to claim that
playing internet poker is illegal. The WTO Expert is there to incite
both free trade Republicans and Democrats to action in order to
preserve our trading status and fulfill our WTO obligations. In
addition, we want to demonstrate there is appropriate and viable age
verification software out there. Finally, for Annie Duke, our goal is
to distinguish poker as something different than other forms of gaming,
show that it’s a skill game, and address the civil liberties issue.”

Chairman Conyers has
been a supporter of internet gambling regulation. He signed on this
week as a Co-Sponsor of Congressman Robert Wexler’s (D-FL) Skill Game
Protection Act. Pappas comments, “Chairman Conyers believes UIGEA is a
terrible bill and that regulation is a good approach. I wouldn’t be
surprised if, somewhere down the road, he introduces his own
legislation.”

This is a giant leap for
the PPA: “It’s one of many successes for the PPA. We’ve had bills
introduced as well as hearings, but our ultimate goal is to have a
vote.”  Pappas described the timing of the Judiciary Committee’s
hearing as “expedited” and the PPA has been working feverishly over the
past week to make sure the appropriate message is relayed within the
chambers of the Rayburn Office Building. The PPA has been prepping
members of Congress to ask the questions that will help clarify poker’s
future. What’s next is uncertain: “A hearing is just one step in the
process,” says Pappas. A vote may still be quite some time away, but
this is an important initial step to take.

The hearing on
Wednesday, November 14th, at 10:00am is open to the public, so if
you’re a concerned poker player, make your way to 2141 Rayburn House
Office Building. Pappas believes the hearing will be packed, so you’re
encouraged to get there early.

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A top European trade official in Washington this week gave the U.S. government an ultimatum: Allow Internet gambling companies overseas to operate here, or compensate for lost revenues of as much $100 billion.

Peter Mandelson, trade commissioner for the European Union, urged Congress to pass legislation that would bring the U.S. in line with World Trade Organization (WTO) requirements that it permit online gambling.

“What we need to see is a change in U.S. legislation” to clear the way for foreign operators, Mr. Mandelson told Reuters this week.

The European Union and other trading partners are demanding concessions from Washington to compensate for lost revenues. Requests put forth by gambling industries in Europe could top $100 billion, a figure that is disputed by the U.S. If the parties fail to reach an agreement, the matter will go before a WTO arbiter.

The U.S. is involved in a separate but related formal WTO dispute with Antigua and Barbuda, a small Caribbean nation seeking $3.4 billion in compensation. The issue is scheduled to be decided by Nov. 30. That dispute, initiated four years ago, led the U.S. to withdraw commitments to open its online gambling markets under the 1994 General Agreement on Trade in Services. In accordance with WTO procedure, that action allows other WTO members to request compensation.

Negotiations between the U.S. and complainants are scheduled to end Dec. 14 after being extended twice.

“From purely a trade point of view, this is the right thing to do,” Nao Matsukata, a former director of policy planning for U.S. Trade Representative Robert B. Zoellick, who now is a senior adviser for Alston & Bird LLP. “I think we’ve really reached a turning point here in the direction of these negotiations.”

Mr. Mandelson met Thursday with Rep. Barney Frank, Massachusetts Democrat, who has sponsored a bill that would soften the ban on Internet gambling and create a regulatory framework under which foreign operators could obtain licenses to serve customers in the U.S.

If U.S. lawmakers don’t bring the country into WTO compliance on the issue, European gambling industries have called for as much as $100 billion in some form of compensation. The sum wouldn’t be paid through a fine. Rather, negotiators would identify a comparable market that isn’t yet open or agree to tariffs on other goods to make up the difference, said Lode Van Den Hende, a Brussels lawyer who handles EU cases.

“I think [$100 billion] is a pretty fair assessment,” Mr. Van Den Hende said. That figure is based on annual revenues of the U.S. gambling market – $85 billion – and an additional $15 billion for Internet gambling services, which don’t appear in official statistics, he said.

But an official with the U.S. Trade Representative’s Office called the number “highly exaggerated.”

“We don’t know where thesenumbers are coming from,” said the official, who added that negotiations are “going quite well.”

But the stakes of the WTO gambling dispute aren’t high only when it comes to money. Withdrawing commitments from a trade agreement could set up similar refusals, some say.

“It’s an awful precedent,” said Brian Pomper, former chief international trade counsel for the Democratic staff of the Senate Finance Committee who now is with lobbying firm Parven Pomper Schuyler Inc. “What if China withdrew intellectual property concessions? In every WTO dispute, the country that lost could just say, ‘Well, I didn’t mean to do that.’ “

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Even as Governor Deval Patrick seeks to license three resort casinos in Massachusetts, he hopes to clamp down on the explosion in Internet gambling by making it illegal for state residents to place a bet on line. He has proposed jail terms of up to two years and $25,000 fines for violators.

The provision, buried deep in Patrick’s bill to allow three casinos to the state, puts the governor at odds with a fellow Democrat: US Representative Barney Frank, the sponsor of federal legislation to license and regulate online gambling nationally. Yesterday Frank strongly criticized the governor’s plan to punish online gamers while inviting casino operators to set up shop.

“Why is gambling in a casino OK and gambling on the Internet is not?” Frank said. “He’s making a big mistake. He’s giving opponents an argument against him.”

A 46-year-old federal law prohibits betting using telephone lines, which the US Department of Justice has interpreted as prohibiting all online gambling. The government’s policy has been to prosecute the operators of Internet gambling sites, but not the gamblers.

Patrick’s provision takes aim at both and would levy the same penalties on either end of the transaction. Courts have been divided over the legality of placing bets on line, and state laws vary on the issue. Massachusetts currently has no prohibition, and if its ban is adopted. it would join such states as Utah, Nevada, and Washington.

Patrick officials declined yesterday to explain the governor’s rationale for including the provision in the proposed legislation. They also would not respond to Frank’s comments.

“Several of the provisions of the governor’s proposed resort casinos bill seek to clarify the laws relating to gaming in Massachusetts, including online gaming,” said Kofi Jones, spokeswoman for the governor’s chief gambling adviser, Daniel O’Connell, secretary of economic development. Others suggested the provision was included to make casino licenses more lucrative by preventing competition from online operators.

“If you were cynical about it, you’d think that they’re trying to
set up a monopoly for the casinos,” said David G. Schwartz, director of
the Center for Gaming Research at the University of Nevada, Las Vegas.

Patrick’s
casino legislation, which has been introduced at the State House but is
not expected to get a hearing until next year, would license three
casinos in three regions of the state. Casino developers would bid on
the licenses, and Patrick expects they would attract 10-year licensing
fees of $200 million to $300 million for each casino.
Since the
first Internet casino went live in 1995, online gambling has exploded
nationwide. Users have flooded thousands of gambling sites, punching in
credit card numbers for the rights to play cyberbingo and real-time
poker from their homes. It still lags behind brick-and-mortar casinos,
but online gambling has become a formidable industry, totaling $12
billion in 2005, according to Christiansen Capital Advisors, a
Maine-based research firm.

Based on its reading of the 1961 Wire Act, which bans using telephone line to place bets, the US Department of Justice contends that operating online gambling sites is illegal, although most of the sites are operated offshore and do not fall under US laws. Last year, Congress approved a gambling bill that bars credit card companies from making payments to online gambling websites, making it more difficult to place bets. Frank’s bill, which was filed earlier this year, would effectively overturn that law and license and regulate online gambling in the United States.
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“I believe in personal liberty,” Frank said. “Adults should be able to do what they want. I wish my fellow liberals would not be so inconsistent on this issue.”

Patrick’s provision, which is described in three paragraphs of the bill, applies to anyone in Massachusetts who places or receives a wager of any type using a telephone, cellphone, Internet, or local wireless networks. It also applies to anyone who knowingly installs equipment for transmitting wagers. The provision also specifically exempts the proposed casinos from the law.

It does not say specifically how the state would enforce the ban, but the bill would establish an independent Gaming Control Authority and a division of Gaming Investigation and Enforcement within the attorney general’s office, which would have broad powers to enforce regulations and investigate crimes.

But in trying to ban online gambling while expanding casinos, the governor’s administration appears to be alienating a constituency that might otherwise support his gambling expansion.

The Poker Players Alliance, a group that says it represents the interests of online gamblers, began a letter-writing campaign last week and has generated 1,700 letters to the governor and various state legislators. The Washington-based organization has 16,000 members in Massachusetts, which is a fraction of what the alliance estimates are the 250,000 online poker players in the state.

“I feel betrayed by the very existence of this legislation,” the letter read. “It’s especially aggravating that this language is contained in a larger bill to expand casino gambling in the Commonwealth. This contrast is utter hypocrisy.”

The organization, which recently campaigned against Governor Ernie Fletcher of Kentucky for nixing a proposed casino referendum, supports the governor’s proposal for three Massachusetts casinos, but plans to oppose the overall bill.

“It makes absolutely no sense to me,” said Randy Castonguay, director of the Massachusetts chapter of the Poker Players Alliance. “It’s actually kind of laughable if you think about it.”

Laura Everett, spokeswoman for Casino Free Massachusetts, a coalition of anticasino advocates, said that while some in the group may oppose online gambling, the organization is focused on fighting brick-and-mortar casinos. “We think the whole bill is a problem,” she said. “One provision is not going to make a difference.”

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