Online gambling firms want European Union trade chief Peter Mandelson to change tack over a controversial move by the United States to close its multi-billion dollar gambling market to foreign firms.

EU companies, many of them world leaders and including PartyGaming, Bwin, Sporting Bet and 888.com, saw their stock market value plunge in 2006 after the United States shut off their biggest market.

In May this year, after being defeated at the World Trade Organisation, Washington took the rare step of withdrawing its WTO commitment to allow foreign firms into its gambling market.

Since then the EU and smaller countries have been haggling with the U.S. administration over compensation it must offer in the form of concessions in other areas of trade.

This week the talks were extended until December 14.

Naotaka Matuskata, senior policy advisor with U.S. law firm Alston & Bird, said Washington was not making meaningful compensation offers and it was time for the EU to turn to the U.S. Congress in an attempt to reverse the online gaming ban.

Matsukata’s firm represents UC Group, a British company which processes online payments including for the gaming sector.

“The EU should explore the legislative options available at this moment, largely because USTR (United States Trade Representative’s office) is so dug in,” Matsukata, a former USTR official, told Reuters during a visit to Brussels.

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As a U.S. citizen and policy junkie, I love to lobby Congress and have done so on a variety of issues for over 30 years. In a past life as a social service administrator, it was about children’s’ issues, and as a “river rat” on the Mississippi, I’ve lobbied on issues related to that. But since 1997, I’ve often trekked to Washington, D.C., on the issue of Internet gambling regulation.

Having just finished up a whirlwind three-day jaunt to Capitol Hill, I can say that we, as an industry, have missed the boat by not doing this more over the past two or three years. Affecting change in any nation’s legislature is an arduous process, but having your issue in front of legislators (and presented by voters) and their staff (and presented by voters) is the only way it will work.

Both at the April 2007 committee meetings on the Leach bill and in this most recent lobbying effort, the pro poker players as well as amateur aficionados have stepped up to the plate. We owe the Poker Players Alliance (PPA) a debt of thanks for organizing this Fly-In. Special thanks should go to pros like Howard Lederer, Andy Bloch, Chad Brown, Barry Greenstein, Chris Moneymaker, Vanessa Rousso, Victor Ramdin, Annie Duke and Chris Ferguson, among others who participated. They’ve used both well-reasoned arguments as well as their celebrity status in public relations and political settings to further the cause of regulation.

Perhaps more importantly, the everyday folks for whom poker is a passion took off from their jobs and paid their way to Washington from all around the United States–some from as far away as Alaska–to tell the tale. There truly is a grassroots effort in place and I witnessed it firsthand the last few days in D.C. Mobilized now, hopefully they’ll be able to activate their fellow players to speak out on this issue to their elected officials. If they’re successful, we will affect change; if players remain silent, we can expect the status quo.

And we are making inroads with some representatives. While we may have heard supportive comments from a few Judiciary Committee members in the past, it was not often that legislators made a point of voicing their support. But, at a Capitol Hill reception this week, at least six of the 40 co-sponsors of the Frank bill stopped by to speak to the packed room. They voiced what many around the world thought when the Unlawful Internet Gambling Enforcement Act passed last year . . . that its passage meant a serious blow to individual Americans’ senses of freedom and responsibility, and that a regulated environment was preferable to what we have now. They were heartening words and ones that I’ve waited for 12 years in this business to hear in such a public setting.

So, is there a “sea change” as PPA Executive Director John Pappas noted? Personally, I think it’s too soon to say. But from my perch in the middle of the country, I can say unequivocally that players are aware of the stunt that Congress pulled, they’re unhappy about it and we now have a channel for those voices.

Let’s not wait a year to do this again. Let’s plan another in six months and gear up for prospective changes that are likely to occur in Congress and the administration in 2008.

Times are changing and, as Americans, we need to rediscover our nerve and our voices and keep them loud and clear so that we’re prepared when the opportunity presents itself.

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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.

No doubt they’d rather be in Vegas holding a pair of aces and waiting on the flop in a game of Texas Hold ‘Em.

But some of the country’s top professional poker players are in Washington this week doing a different kind of gambling – trying to convince lawmakers to buy in on some changes to the Unlawful Internet Gambling Enforcement Act (PL 109-347), which bars online wagering on poker and other games.

Aside from seeing the Internet gambling industry “decriminalized,” they’d also like to have poker declared a game of skill instead of chance, as some in Congress view it now.

“A game like poker, it truly is a game of skill that should have been exempted [from the Internet gambling law],” said John Pappas, executive director of the Poker Players Alliance.

Pappas led a group of top poker players – Chris Moneymaker, Annie Duke, Howard Lederer, Barry Greenstein, Andy Bloch, Vanessa Rousso, Chad Brown and Victor Ramdin – on a lobbying tour of Capitol Hill on Tuesday. They’re pushing for passage of two bills. One (HR 2610) by Rep. Robert Wexler, D-Fla., would amend the law to define poker as a game of skill. The other (HR 2046), written by Financial Services Chairman Barney Frank, D-Mass., would regulate online gambling by licensing Internet companies to accept wagers.

One of the tricks to being a good poker player, though, is to accept reality. And the reality right now is that neither bill is likely to pass. “It is the ultimate game of poker we’re playing,” Pappas said. “We’re in an uphill climb.”

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.

More than 100 poker players and advocates attended the first Poker Players Alliance (PPA) “Fly-In” in Washington, D.C., this week, including professionals Chris Moneymaker, Vanessa Rousso, Victor Ramdin and Howard Lederer.

PPA Chairman Alphonse D’Amato rallied the troops saying that while progress is slow, proponents shouldn’t be discouraged because opponents see what’s coming and poker fans’ persistence will pay off. During the opening remarks, PPA Executive Director John Pappas said that there was a sea change brewing in Washington with the tide moving toward a regulated industry. At least one player couldn’t attend but had a message message for Congress.

Attendees then fanned out for meetings on Capitol Hill to thank the 39 co-sponsors of Barney Frank’s, D-Mass., bill as well as the 19 co-sponsors of Florida Democrat Robert Wexler’s skill games bill. There were also meetings with those members of Congress to be convinced to sign on. Many of the pros were also scheduled for a variety of press engagements, including Chris Ferguson’s appearance on Fox News, with Howard Lederer taking on a Family Research Council representative on CNBC.com.

At an evening reception on Capitol Hill, a steady stream of Congressmen came into welcome the proponents. These included John Conyers, D-Mich., Wexler, Shelley Berkeley, D-Nev., Sheila Jackson Lee, D-Texas, and Bobby Scott, D-Va.

Berkley called the Unlawful Internet Gambling Enforcement Act (UIGEA) “outrageous,” arguing that its existence constitutes an infringement of freedoms, which “tries to tell Americans what they can do in the privacy of their homes.” The fiery Jackson Lee said that Congressmen and women were “problem solvers” who were there to ensure that the industry was there for Americans who could make decisions on their own. And Scott said that the PPA could count on their support in the battles on Capitol Hill.

At a policy forum on Wednesday, the panel included pro player Lederer, libertarian Radley Balko, attorney Ken Adams and a duo from Harvard, law professor Charles Nesson and law student Andrew Woods, who have together formed the Global Poker Strategic Thinking Society (GPSTS). Collectively, they offered a lively debate for the packed room on the UIGEA, its effects and how it could be corrected.

Balko, who is a senior editor of Reason Magazine and a columnist for Fox News, was quick to point out that the UIGEA did put a small dent in the market and was on its way to creating a black or gray market, but said the legislation “won’t stamp it out” as supporters had hoped. He also felt that the bill sets a dangerous precedent in the United States by deputizing banks to monitor the personal recreational habits of citizens as well as having financial institutions define what constitutes illegal activities.

Lederer, who is clearly taking a lead role among the increasing activist pro players, characterized the bill as vaguely written. “It tiptoes around the fact that we are a nation of gamblers who should have their privacy respected as well as their ability to make adult choices,” he said.

A hot topic on the panel, in Congressional meetings and in the corridors was the implications of the World Trade Organization (WTO) case. What some have dismissed in the past as “meaningless,” the WTO case has clearly become a force in the equation. No longer are the arguments about Internet gambling just about domestic (but valid) concerns such as underage and compulsive gambling; now, the talk is shifting to the implications with U.S. trade partners such as Japan, China and Brazil, as well as actions like the copyright sanctions being sought by Antigua and Barbuda.

However, according to Adams, the key to changing minds on this issue continues to be constituent response. Adams argued that until poker players tell elected officials that they’re voting them out due to this issue and remind them again after they lose an election, little progress will be made.

Discussion of the Absolute Poker also bubbled to the forefront during the forum. Annie Duke and Vanessa Rousso, both professional players, offered to the audience that online gaming was uniquely suited to provide the controls that are necessary to keep the play fair since every hand is electronically recorded. “The hand histories which are public domain are protected online and refunds can be made to players,” Duke said. “That can’t happen in a card room. But if it’s regulated in the United States, the players are truly protected.”

With the increased media attention and personal meetings on the Hill, this effort by the PPA apparently did achieve their goal of heightening awareness on the issue.

In other Washington news, a Judiciary Committee oversight hearing on the UIGEA is being scheduled for early November.

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