Late Wednesday night, for the first time in several years, HPD’s Vice Division raided a large gambling operation.

After an undercover investigation that took more than a month, vice detectives and HPD SWAT surrounded a building in southwest Houston. HPD said SWAT was needed because the building was secure and guarded by a private security firm.

Once inside, investigators found dozens of people allegedly playing the popular poker game Texas Hold’em. This is a game that is legal in Texas, unless the house is taking a cut.

HPD told 11 News at the scene that the people running this gambling operation was taking a cut to the tune of at least $10,000 a night.

The gambling room had 14 poker tables, some of them with cards and poker chips.

Officers spent more than an hour counting and seizing cash.

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Imagine that you’ve just won $100,000 in a poker tournament. But before you can pocket the cash, the casino swoops in to collect $25,000 to pay Uncle Sam.

That was the worst-case scenario feared by casinos and players after the Internal Revenue Service issued a bulletin last month saying that casinos would be required to withhold 25 percent of poker tournament winnings over $5,000.

The notice sent a shock wave through the poker community, which feared short-circuiting tournament growth in Las Vegas and beyond. Withholding taxes could have devastated legions of professional poker players who require a large cash bankroll to ply their trade, driving them from land-based casinos to offshore Internet competitors that allow players to dodge U.S. tax laws.

Or so everyone feared.

Negotiations between the IRS and the casino industry as recent as last week appear to have yielded the rarest of all outcomes: a win for all parties.

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After UIGEA proposed rules were published this week, Congressman Barney
Frank’s Internet Gambling Regulation and Enforcement Act (IGREA), bill
H.R.2046, gained another co-sponsor. Congressman Raul M. Grijalva
[AZ-7] on Wednesday joined Frank and 37 others to become the 38th
representative of the United States House to join in the fight to
regulate online gambling.

Rep. Grijalva serves on the Committee on Natural Resources and
is Chairman of the National Parks, Forests and Public Lands
Subcommittee, the Committee on Education and Labor, and on the
Committee on Small Business.

Rep. Grijalva is also on the Homeland Security Task Force, as
well as the Jobs and the Economy Task Force, among other committees,
and he serves on Congressional caucuses regarding Port Security,
Addiction, Treatment, and Recovery, the STEM (Science, Technology,
Engineering and Mathematics) Caucus, and is the pending co-chair of the
Congressional Progressive Caucus, and is a member of many other
congressional caucuses.

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Rep. Barney Frank, D-Mass., though he is a co-sponsor of Nevada-backed legislation to study Internet gambling, on Tuesday questioned its value.

“Studies don’t do much,” said Frank, who is chairman of the House Financial Services Committee.

“What’s to study? Whether or not I should be able to make my own bet with my own money?”

Frank made his comments in a brief interview after he addressed members of the Las Vegas Chamber of Commerce at the Library of Congress. The chamber was meeting with lawmakers and federal officials in a series of briefings this week.

Frank told the Las Vegas group he is working with Rep. Shelley Berkley, D-Nev., on legislation to overturn an Internet gambling ban enacted by Congress last year.

Berkley and Jon Porter, R-Nev., introduced a bill in June calling for a one-year study of the $15 billion Internet gam- bling industry by the National Academy of Sciences.

So far, 64 members of the House, including Frank, have signed onto the Nevadans’ bill as co-sponsors.

Frank introduced his own bill in April to repeal the ban and require the Department of Treasury to regulate online wagering sites.

Frank’s bill has 37 co-sponsors including Berkley but not Porter.

Asked if he intends to move forward with his bill even though the study bill seems to have more support, Frank said, “Of course.”

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State Rep. Robert E.
Belfanti Jr. said Monday he will co-sponsor legislation that would
allow volunteer fire departments, veterans organizations and other
nonprofits to hold card tournaments as fundraisers.

“The popularity of Texas Hold ‘em, blackjack and other card games has skyrocketed,” said Rep. Belfanti, D-107 of Mount Carmel.

“These represent an important potential source of fundraising revenue for nonprofit groups.”

Volunteer fire companies and other
nonprofit organizations are already permitted to raise funds through
raffles, drawings, punch cards, bingo and other small games of chance
under Pennsylvania law.

Belfanti said the legislation he is co-sponsoring would add card games to Pennsylvania’s Local Option Small Games of Chance law.

Nonprofit groups already licensed to hold
raffles and other small games of chance under the law would also be
permitted to apply for a special permit to hold card game contests.

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A bill that would allow gamblers to transfer money from their bank accounts directly to online gambling sites is picking up some congressional momentum.

The legislation, introduced by U.S. Rep. Barney Frank, D-Mass., in April, also provides for the federal regulation and licensing of Internet gambling. U.S. Rep. Jim McDermott, D-Wash., a co-sponsor of the bill, has introduced a companion bill that would tax reported gambling earnings and produce what he estimates is between $6 billion and $25 billion in federal revenue over the first five years.

Under Frank’s bill, states and Indian tribes would have the option to prohibit Internet gambling within their borders. And, sports leagues, both professional and collegiate, could prohibit wagers on their games. The bill also requires safeguards to counteract underage gambling and gambling addiction.

Thirty-six representatives have pledged their support as co-sponsors so far, including U.S. Rep. William Delahunt, D-Mass., who represents the Cape and Islands.

There are three other bills under review connected to online betting. Frank’s bill, which has the most co-sponsors, is still in the Financial Services Committee, which he chairs and which oversees the banking industry.

It has major support from the gambling industry, as well as payment companies such as Visa USA. The bill would actually repeal a 2006 federal ban on the knowing transfer of funds between American banking institutions and businesses that conduct gambling. In the 38 states, including Massachusetts, where Internet gambling is legal, gamblers can use their credit cards but not their debit cards.

Banks have been forced to play “the morality police,” said Steve Kenneally, vice president of payments and technology policy for America’s Community Bankers, a national trade association for banks. Rules from the Federal Reserve and the Treasury were expected in July, said Kenneally, but banks have not yet received them.

While not openly in support of the bill, Kenneally said something must be done to ease the burden on the banks.

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On behalf of the Poker Players Alliance, I am pleased to invite you to join some of the world’s top poker professionals and your fellow PPA members for a Policy Conference and two days of citizen lobbying in Washington DC on October 22-24.

The Conference
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Internet gambling regulations proposed by U.S. officials on Monday
stopped short of requiring U.S. banks to block checks their customers
make to online casinos while forcing banks to halt debit and credit
payments.

The Treasury Department and the Federal Reserve issued a plan
requiring bank policies and procedures that are “reasonably designed to
prevent payments being made to gambling businesses in connection with
unlawful Internet gambling,” they said in a statement.

The new U.S. regulations would make the banks responsible for
blocking credit and debit card payments for online gambling. It also
bars bank customers such as online casinos from receiving Internet
gambling proceeds.

“I think that that’s doable,” an industry source said of the proposal.

But industry officials said it seemed that regulators had addressed
their biggest concern about the new law. The agencies concluded it was
“not reasonably practical” for the banks to identify and block
customers from sending checks and making some other types of transfers.

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Washington, DC (October 1, 2007) – Earlier today, the Department of the Treasury and the Board of Governors of the Federal Reserve System announced the release of a joint proposed rule to implement the Unlawful Internet Gambling Enforcement Act.  While the Poker Players Alliance (PPA) is still fully reviewing the proposed rule a cursory review reveals that the NPRM continues down the misguided path set forth by the Unlawful Internet Gambling and Enforcement Act signed into law last year.  The PPA has released the following statement:
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The Department of the Treasury (Treasury) and the Board of Governors of the Federal Reserve System (Board) on Monday announced the release of a joint proposed rule to implement the Unlawful Internet Gambling Enforcement Act (the Act). The Act prohibits gambling businesses from accepting payments in connection with unlawful Internet gambling, including payments made through credit cards, electronic funds transfers, and checks.

The proposed rule would require U.S. financial firms that participate in designated payment systems to have policies and procedures that are reasonably designed to prevent payments being made to gambling businesses in connection with unlawful Internet gambling. The proposed rule would provide examples of such policies and procedures. For purposes of the proposed rule, unlawful Internet gambling generally would cover the making of a bet or wager that involves use of the Internet and that is unlawful under any applicable federal or state law in the jurisdiction where the bet or wager is made.

The Board and Treasury are required by the Act to develop jointly the proposed rule in consultation with the Department of Justice. Comments on the proposed rule are requested by December 12, 2007. The agencies request comment on all aspects of the proposed rule. The Federal Register notice is attached.

Click here to go to the press release.
Click here to read the proposed UIGEA regulations.
Click here to learn how to send your comments about the UIGEA