NEW YORK — Poker champion Phil Laak has a good chance of winning when he sits down this week to play 2,000 hands of Texas Hold’em _ against a computer. It may be the last chance he gets. Computers have gotten a lot better at poker in recent years; they’re good enough now to challenge top professionals like Laak, who won the World Poker Tour invitational in 2004. But it’s only a matter of time before the machines take a commanding lead in the war for poker supremacy.

Just as they already have in backgammon, checkers and chess, computers are expected to surpass even the best human poker players within a decade. They can already beat virtually any amateur player.

“This match is extremely important, because it’s the first time there’s going to be a man-machine event where there’s going to be a scientific component,” said University of Alberta computing science professor Jonathan Schaeffer.

The Canadian university’s games research group is considered the best of its kind in the world. After defeating an Alberta-designed program several years ago, Laak was so impressed that he estimated his edge at a mere 5 percent. He figures he would have lost if the researchers hadn’t let him examine the programming code and practice against the machine ahead of time.

“This robot is going to do just fine,” Laak predicted.

The Alberta researchers have endowed the $50,000 contest with an ingenious design, making this the first man-machine contest to eliminate the luck of the draw as much as possible.

Laak will play with a partner, fellow pro Ali Eslami. The two will be in separate rooms, and their games will be mirror images of one another, with Eslami getting the cards that the computer received in its hands against Laak, and vice versa.

That way, a lousy hand for one human player will result in a correspondingly strong hand for his partner in the other room. At the end of the tournament the chips of both humans will be added together and compared to the computer’s.

The two-day contest, beginning Monday, takes place not at a casino, but at the annual conference of the Association for the Advancement of Artificial Intelligence in Vancouver, British Columbia. Researchers in the field have taken an increasing interest in poker over the past few years because one of the biggest problems they face is how to deal with uncertainty and incomplete information.

“You don’t have perfect information about what state the game is in, and particularly what cards your opponent has in his hand,” said Dana S. Nau, a professor of computer science at the University of Maryland in College Park. “That means when an opponent does something, you can’t be sure why.”

As a result, it is much harder for computer programmers to teach computers to play poker than other games. In chess, checkers and backgammon, every contest starts the same way, then evolves through an enormous, but finite, number of possible states according to a consistent set of rules. With enough computing power, a computer could simply build a tree with a branch representing every possible future move in the game, then choose the one that leads most directly to victory.

That’s essentially the strategy IBM’s Deep Blue computer used to defeat chess champion Gary Kasparov in their famous 1997 match. No computer can calculate every single possible move in a chess game, but today’s best chess programs can see an astounding 18 moves ahead.

Yet poker involves not just myriad possibilities but uncertainty, both about what cards the opponent is holding and more importantly, how he is going to play them.

“It’s mandatory for you to understand how the other guy approaches the game. This is critical information in poker, and it’s not true of any of these other games that we’ve studied in academia,” said Darse Billings, a recent Alberta Ph.D. who has worked on the robot for 15 years _ except for a three-year break to play poker professionally.

The game-tree approach doesn’t work in poker because in many situations there is no one best move. There isn’t even a best strategy. A top-notch player adapts his play over time, exploiting his opponent’s behavior. He bluffs against the timid and proceeds cautiously when players who only raise on the strongest hands are betting the limit. He learns how to vary his own strategy so others can’t take advantage of him.

That kind of insight is very hard to program into a computer. You can’t just give the machine some rules to follow, because any reasonably competent human player will quickly intuit what the computer is going to do in various situations.

“What makes poker interesting is that there is not a magic recipe,” Schaeffer said.

In fact, the simplest poker-playing programs fail because they are just a recipe, a set of rules telling the computer what to do based on the strength of its hand. A savvy opponent can soon gauge what cards the computer is holding based on how aggressively it is betting.

That’s how Laak was able to defeat a program called Poker Probot in a contest two years ago in Las Vegas. As the match progressed Laak correctly intuited that the computer was playing a consistently aggressive game, and capitalized on that observation by adapting his own play.

Programmers can eliminate some of that weakness with game theory, a branch of mathematics pioneered by John von Neumann, who also helped develop the hydrogen bomb. In 1950 mathematician John Nash, whose life inspired the movie “A Brilliant Mind,” showed that in certain games there is a set of strategies such that every player’s return is maximized and no player would benefit from switching to a different strategy.

In the simple game “Rock, Paper, Scissors,” for example, the best strategy is to randomly select each of the options an equal proportion of the time. If any player diverted from that strategy by following a pattern or favoring one option over, the others would soon notice and adapt their own play to take advantage of it.

Texas Hold ‘em is a little more complicated than “Rock, Paper, Scissors,” but Nash’s math still applies. With game theory, computers know to vary their play so an opponent has a hard time figuring out whether they are bluffing or employing some other strategy.

But game theory has inherent limits. In Nash equilibrium terms, success doesn’t mean winning _ it means not losing.

“You basically compute a formula that can at least break even in the long run, no matter what your opponent does,” Billings said.

That’s about where the best poker programs are today. Though the best game theory-based programs can usually hold their own against world-class human poker players, they aren’t good enough to win big consistently.

Squeezing that extra bit of performance out of a computer requires combining the sheer mathematical power of game theory with the ability to observe an opponent’s play and adapt to it. Many legendary poker players do that by being experts of human nature. They quickly learn the tics, gestures and other “tells” that reveal exactly what another player is up to.

A computer can’t detect those, but it can keep track of how an opponent plays the game. It can observe how often an opponent tries to bluff with a weak hand, and how often she folds. Then the computer can take that information and incorporate it into the calculations that guide its own game.

“The notion of forming some sort of model of what another player is like … is a really important problem,” Nau said.

Computer scientists are only just beginning to incorporate that ability into their programs; days before their contest with Laak and Eslami, the University of Alberta researchers are still trying to tweak their program’s adaptive elements. Billings will say only this about what the humans have in store: “They will be guaranteed to be seeing a lot of different styles.”

Even so, Laak and Eslami are top-notch players with a deep understanding of poker’s mathematical fundamentals. They should be able to keep up with the computer this time.

Part I.
Robert Wexler is a Congressman from the 19th District in Florida who recently introduced what could be a very important piece of legislation for poker players. The Skill Game Protection Act seeks create a ‘carve out’ in the current legislative environment such that poker could be classified as a game of skill, and in turn citizens would be permitted to play poker on the Internet. Carve outs currently exist for things like horse racing, and lotteries on the internet, and the Skill Game Protection Act seeks to add poker to that list. We sat down with Congressman Wexler recently to get his views on the state of the union of poker on the hill.

John Caldwell (Pokernews): Congressman Wexler, thanks for joining us, I appreciate you taking the time. You recently introduced the Skill Game Protection Act into the Congress. I know this is a piece of legislation you have very high hopes for. What motivated you to take on this cause?

Congressman Robert Wexler: In the last Congress when Republicans controlled the Congress, we passed a very bad piece of legislation. I voted against it as did most democrats. In essence, it’s the newest form of prohibition. The prohibition is consenting adults cannot play poker over the Internet. Ironically, the Congress, the last Congress, said you can gamble on horses over the Internet, you can play State lotteries over the Internet but you can’t play games of skill over the Internet. I thought as really a matter of personal freedom more than anything else, Congress should not be telling consenting adults in America what games they can play on the Internet. I was motivated to file legislation once the Democrats got control of the Congress; I knew there would be a more amenable environment to do this type of thing. What I’ve learned is that poker is even far more popular than I ever dreamed it was. Apparently, more Americans watch poker on television that watch college football or NBA basketball, which is an extraordinary statement. Presidents have played poker in the White House, members of Congress played poker in the capital, and obviously millions of Americans played poker at their kitchen tables and dining room tables and have played poker on the Internet. It’s the 21st century – there is no reason in the world why people can’t play poker, play chess, play Mahjong, play bridge, any game of skill on the Internet as long as we have protections, which we do, to make sure teenagers, young people aren’t on there gambling, and that we prevent money laundering from happening, and we have the technology to do that.

Pokernews: That’s an interesting question, an interesting point. You’ve obviously taken the skill based approach. Your piece of legislation is essentially an attempt to exempt skill based games from a prior piece of legislation. Why did you feel that was the best approach to accomplish the in goal of allowing these personal freedoms take place?

Wexler: Politics is the art of trying to analyze what is possible. There are some people that have a moral or ethical issue with gambling of any sorts. I would respectfully suggest they were a bit hypocritical when they voted for this bill, because the bill that is currently in effect, allows gambling on the Internet for lottery and for horses. However, I thought it would be most palatable if we said, “games of skill such as poker are American institutions – poker is an American institution just like baseball.” When put in that context I thought it would be a more palatable political issue for many people. I happen to also think that the Chairman of the Financial Services Committee, Barney Frank, has a bill that would apply to credit card transactions of all type of wagering on the Internet. I think that’s a great bill too. I’m a sponsor of that bill. I think that should pass and that would be a very important legislation to pass.

Pokernews: That was actually my next question. There are two other pieces of legislation in addition to your legislation that are currently out there. Can these pieces of legislation co-exist? Do they actually help each other? Or is there is sort of a mitigating effect involved with them being in play at the same time?

Wexler: There is the Barney Frank’s legislation, which I am a sponsor of, which would permit credit card transactions regarding wagering on the Internet. There’s Congresswoman Shelley Berkley’s bill, which would study the broader issue of Internet gaming, which I’m also very supportive of. And there is my bill, which would provide for, as you say, the added exemptions for games of skill. I think all three actually work well together. Because of what they have done and we need to do even more, is that we’ve raised the level of awareness as to how absurd the current law is and that we need to fix it. The fix I hope will be to ultimately permit adults, consenting adults, to play whatever games they wish, wherever they wish it, in a consenting fashion. Every American, whether they are Conservative Republican or Liberal Democrat, or anywhere in between should be asking themselves with all that is going wrong in the world, whether it’s Iraq, whether it’s Iran’s nuclear quest, whether it’s social security, not having enough money necessarily to make it through the next century, medicare short falls, education problems… Why would Congress invest itself so to create this extraordinary prohibition of preventing consenting adults from playing poker on the Internet when we know in past experience prohibition doesn’t work? The net result unfortunately will be, people will be forced to play the Internet, playing poker on the Internet on offshore sites where they’re not secure. They will be playing on Russian sites, or Caribbean sites. There will be no regulation by American governmental structures; there will be no revenue to American governmental structures. It’s counterproductive and also in my mind it violates the very personal freedoms that we cherish as Americans.

Pokernews: That leads me to another question I find interesting. Why now? What do you think? Can you put your finger on one thing that has caused there to be so much interest on the Hill on this specific issue? If there is one thing you put your finger on what would it be?

Wexler: I’d say two things. One, poker is a national pastime in America. Congress has stepped over the line, threatening that national pastime. The second thing, which has to be said, is there is new leadership in Congress. Under the old leadership, under the Republican leadership, this would have never been reconsidered. But under the Democratic leadership, under the leadership of Barney Frank – is Chairman of the Financial Services Committee – there is an opportunity for Democrats to make a change and for Democrats, like me and Shelley Berkley, to have a bigger impact on the process.

Part II.
In part one of our interview with Congressman Robert Wexler yesterday, we discussed the piece of legislation that he recently introduced into Congress. In part two of the interview, Wexler talks about the process that must be undertaken to get bills like his ‘Skill Game Protection Act’ passed.

Pokernews: Do you actually feel a sense of movement among your colleagues? Do you feel people gravitating towards this issue, and people becoming interested? Even people who were opposed, or people that voted for the legislation that was passed last year, do you feel sort of a tide, a ground swell if you will, of real interest that can enact real change?

Wexler: It’s hard to feel a ground swell in Washington over few issues or many issues, it’s hard, but the bottom line is there are thousands of poker players in every Congressional district in America. If people who are interested and enjoy playing poker, if one one-hundredth of those people take a small amount of time to contact in one way or another their member of Congress and say, “Hey, Mr. or Mrs. Member of Congress, why in God’s name would you vote to prohibit me, a adult, to choose to play whatever game I want to play on the Internet?” The more people engage in the political process in that fashion, the more compelling it will be, and Congress will react. What I think most Americans don’t appreciate, letters DO matter to members of Congress. Emails DO matter, form letters, personal letters DO matter, telephone calls do matter. There has been an article or two about this issue. There was an article in the Wall Street Journal, there have been articles on others, and it is just anecdotal. But I got a bigger response from just being in one line in an article about a poker issue than I have in just about any other issue I’ve been involved in, in my twelve years in Congress.

Pokernews: And that’s really what causes people in your position react, right?

Wexler: Yeah, absolutely.

Pokernews: And you as a member of Congress get this sense that these people really want this thing and you have to help make it happen.

Wexler: People enjoy playing poker. They enjoy playing whatever games they’re accustomed to playing, and when the Federal Government steps literally into your home and says “Were telling you from Washington you can’t play poker on the Internet!” People get offended, rightfully so.

Pokernews: What’s next? What’s going to push it over the top? Is it a revenue issue like figuring out a way to monetize and gain revenue or at least get the Federal Government involved from the revenue side? Is it simply a personal privacy issue? What’s the next step?

Wexler: Like most things in politics, it’s a combination of things. I think the issue of personal freedom and privacy is very important. I think the idea that we would in effect create another category of prohibition in this country in people think about it will say, “That’s insane!” When you boil it down to its very bottom line, which is “I can’t play poker on the Internet!” that it will have a big impact, and a whole host of things. There will be some people that say, “You know, the Internet is the venue of the 21st century for everything. So, the idea that we would prohibit poker and other games of skill, is not only just counterproductive, it’s antiquated! So I think there is a whole host of different things. And, yes there will be a question of regulation and revenue. There will be a question of …most people say “This isn’t going to stop it anyway, it will just force people into a different venue that is less safe, less secure and will cause more problems than we were designing to cure in the first place.”

Pokernews: One thing I’ve been fascinated with and I assume you talk to these people, what’s the position of big gaming on this issue? Have you talked to people from MGM/Mirage, from Harrah’s? Where do they stand and what are you feeling from them? Is this a business they want to enter? Do you get any sense of where they’re at on this issue?

Wexler: I’m not an expert on the gaming industry. What I do know is that the gaming industry is not monolithic by any means. There is a variety of opinions, but the one thing I think everyone in the gaming industry does believe is that the current law is hypocritical, because it exempts out state lotteries which, if I understand the statistics correctly, the poorest people are more likely to engage in gambling in the lottery than there are in poker or any other form of gambling. So the terrible irony is we permitted the one form of gambling that actually hurts the poorest people, that we made an exception for where the payout is the least and so forth. What the gaming industry also rightfully recognizes is the horses were given a special exemption. I think what the gaming industry, more than anything, wants there to be in Washington an understanding that the gaming industry is an industry like all other industries, and it should be treated like part of our economy, an important part of our economy, and it shouldn’t be treated in any specialised fashion, neither singled out for certain types of punitive regulations or otherwise. I think if that were to happen, the gaming industry in general would be satisfied. In the short term, I think what they would like to see is a very punitive, hypocritical counterproductive law overturned.

Pokernews: Okay, fair enough. As you may have learned in your time of being exposed to poker players. Poker players are not the most patient breed of people. The question I’m asked the most, actually when people come to me they assume I have more knowledge about this issue. Time line – is there any way to put any type of time line towards any decision in either direction, whether it’s real change on this issue, or status quo, or whatever?

Wexler: I wish there were, but in Washington it’s a very difficult thing to do. Right now we’re in the hearing process. We’re just energizing. It’s going to take a significant amount of effort, public awareness, and energy on behalf of the poker playing public to move Congress. Congress hasn’t set a date yet and much for us to get our troops out of Iraq. I hope we’re playing poker at the same time, before we’re getting out of Iraq. I think we should be out of Iraq yesterday.

Pokernews: Absolutely…I appreciate your time. You’ve already touched on this but I would like you to just reiterate it because I want people to listen to what you say. What can the average poker player do who lives in the 19th district or anywhere, with respect to getting some movement on this issue?

Wexler: The 19th district of Florida, they could just continue to vote for me and everything will be fine. {smiles} But in all the other 434 districts what they ought to do is let their opinions be known to their member of Congress. One – let them know that they’re aware of the current law that was passed by the last Congress, which hopefully they think is ludicrous. They don’t need to spell out in specifics everything that needs to be done. They just need to tell the member of Congress “We think the law that was passed last Congress is awful! You should support Wexler’s bill that creates the ability for people to play games of skill on the Internet. Support that bill, and support Barney Frank’s bill, and support Shelley Berkley’s bill. But most importantly, to give Americans their freedom back, their freedom of choice when it comes to playing games on the Internet.”

Pokernews: Great. Congressman, we really appreciate your time. Thanks for joining us.

Wexler: My pleasure.

Dear PPA Members,
We have accomplished so much in so little time! Our membership has grown more than 500% since the first of the year, to over 600,000 members — thanks in no small part to you telling your fellow poker enthusiasts to join our cause. We are well on our way to our One Million Member target, and I again ask for your help by encouraging your family, friends and tablemates to join the PPA.
Read the rest of this entry »

“I think we all should support poker, you know some people play poker professionally; they play for a living. And there is nothing wrong with that. And something that we can do to support our family and to support our community and do something good. We all should join together and fight for its right, and do something good about it. So I plan to be there and whatever I can do to support poker, I will be there”

Jerry Yang, 2007 WSOP Main Event Champion

Poker News (07/18/07)

House of Cards |

With the recent news that the Conference of the Caribbean Community (CARICOM) has joined the EU, Japan, and India in supporting tiny Antigua in its WTO case against the US regarding the cross-border provision of gambling services, we thought the time was right to finish our interview with Mark Mendel, lead counsel for Antigua in this landmark trade case, that we began back at GIGSE in Montreal.

Q: Mark, you’ve been Antigua’s counsel on this case for a while now, and I thought maybe you could give us a little history of the case for our readers who might not be familiar with it.

A: Antigua brought this case in 2003, primarily as a result of increasing efforts of the United States Department of Justice to prevent Antiguan companies from providing remote gambling and betting and services to consumers in the United States. We had evaluated the legal issues and determined that under the WTO’s General Agreement on Trade in Services (the “GATS”), the United States had made an unrestricted commitment to allow the cross-border trade in gambling and betting services from other WTO members, such as Antigua. Thus, the actions by the DOJ to stop the industry amounted to a violation of an international treaty.

The real objective of the case was to bring the United States to the negotiating table for some fair and reasonable solution that would allow Antiguan operators to provide services to consumers in the United States on some agreeable middle ground. Although, frankly, under the GATS Antigua is entitled to have the United States repeal its offending legislation, that was never really our plan or expectation. We just wanted some fair and reasonable treatment.

Unfortunately, from the beginning of the case to the current date, the United States has shown no willingness to compromise at all. So, we have tested them at the WTO through its dispute resolution process and have won at every stage. There is enormous and very complicated history here, but basically as the United States would not compromise we had to prosecute our case, which we had assessed as very sound. Through the smoke and chaff, the WTO has consistently said the United States had agreed to allow these services and by prohibiting them, the United States was in violation of the GATS.

The WTO rejected a so-called “morals” defence pushed by the United States at the very last moment of what might be called the original “trial” of the dispute at the WTO on the basis that the United States – which had said it prohibits all remote gambling throughout the country – could not establish that it did indeed prohibit all domestic remote gambling as well as that from foreign countries.

In essence, if the United States was going to say that “remote” gambling was so bad that it was necessary to prohibit it across the board, then it indeed needed to be consistent about that, and not use the claim as a way to discriminate against foreign trade. Although the discussion of this issue in the earlier rulings is somewhat impenetrable to the non-WTO literate (and was even so to many of them as well), the most recent ruling that came out in March of this year made it crystal clear. The United States has a wide variety of legal, domestic-only remote gambling operating currently.

Further, something that so many people have not realised but this last panel finally got right, and that is that federal law doesn’t prohibit remote gambling at all – just remote gambling that crosses a state or international border. By leaving states free to have as much intrastate remote gambling as they want, but prohibiting services that cross a border, the federal government cannot possibly say that it prohibits all remote gambling. And, of course, the crossing of a border is, by itself, not a logical basis for discriminating against services. At least not under international law.

Q: And how about the procedures at the WTO – in a step-by-step kind of way, how do those work? Certainly the terminology is quite different, at least as far as the procedure goes. You don’t go to court, since this is more like an arbitration proceeding than a typical court case, you convene a panel, for example. What does that consist of? Who’s on it? It’s not the most transparent process- what are the inner workings of the WTO like?

A: It is a very European process. The first “panel” – really, the initial or trial court – is selected from a large panel of international volunteers with good trade credentials. In our case, the panel consisted of a lawyer from England, a diplomat from Thailand, and a trade academic from India. You present your case substantially by written submission. There are no witnesses and no testimony. In the first process, you have two presentations before the panel, which are really oral presentations of written statements, followed by a question and answer session that can be good, bad, or useless, depending upon your panel.

A loss at the panel stage leads to a binding decision unless the loser quickly appeals, which the United States did in our case. An appeal goes to the WTO’s “appellate body”, which is a standing body of seven members from a number of countries, all of whom must be lawyers in their home countries. Your case is assigned to a random panel of three of the members, and it is much like an American appellate process – submission of briefs and counter briefs followed by an oral hearing where you make a presentation and then may or may not be subject to rigourous or not-so-rigourous questioning.

The appellate body is supposed to consider matters of law only and not make new findings of fact or survey new evidence. The one key power the appellate body lacks is the ability to “remand” a case – that is, send it back to the panel for reassessment based upon the proper legal standards and reasoning as adopted by the appellate body. All that it can do is approve or reverse a case, in whole or in part. I was very disappointed in the appellate body’s treatment of our case. While we maintained our victory, the reasoning was so opaque and the review of many issues so shoddy or inconsistent, it was really very poor work. But there is no further appeal of a case after the appellate body has its go, so both sides are stuck with it.

After we won the appeal, the United States was supposed to change its laws to accommodate the decision. I could describe for hours the various delaying tactics and twists and turns that have gone on since then, but I can summarise by saying that the WTO gave the United States a period of time to bring itself into compliance. During this period, the United States did nothing, but at the end of the period announced to the WTO that they were indeed in compliance. So, once again we brought them before a panel to assess the status of their so-called “compliance”.

It was here that we won clearly and decisively in the decision announced on 30 March of this year. After that ruling, it was really impossible for the United States to argue any more that it had “won”, or that its prohibition had been “broadly upheld” or that it just needed to “clarify the Interstate Horseracing Act”, as the United States had publicly been saying. I was and remain very happy about that ruling, and am extremely grateful for the excellent work done by the panel. That panel, by the way, had the original panelist from Thailand, a trade lawyer from Chile and was chaired by a distinguished businessman from Sweden.

Q: So where are we at now? The US keeps losing, but nothing has happened yet. The Antiguans have formally requested to be allowed to suspend their obligations to the US, but when can we expect something concrete to come out of this? Clearly, the WTO in uncharted waters here.

A: We are no doubt headed to an arbitration to determine the trade concessions that Antigua can levy against the United States until it complies with the decision – or until we can finally negotiate a fair settlement. That process will start in September probably. The trade concessions process is provided for in the WTO’s rules in order to make a hesitant dispute loser to speed up the compliance process. It has not been used very much, because generally losers either comply or they negotiate reasonable settlements. Here, the United States has done neither, so we really have no choice but to see what type of sanctions we can get and whether these sanctions can motivate the American government to act.

What you basically do with these trade sanctions is punish an “innocent” sector of the loser’s economy to compensate for the damage done to the winner’s economy on an annual basis by the failure of the loser to comply. Thus, the loser makes a completely unrelated sector of its economy suffer for its protectionism in another sector – here, to prop up its domestic gambling economy, the United States is in essence offering up other sectors for punishment. Not really a very smart political decision, usually, so most countries don’t let it get to this stage.

And now, the United States has really upped the ante by trying to solve the dispute by withdrawing the commitment to gambling services that it had initially made some ten years ago or more. Although we had not planned on this being the case, our dispute has presented a virtual plethora of firsts in WTO litigation. It is incredible to me to think that in the dozens and dozens of disputes – some very, very big – the United States has had at the WTO, they are taking unprecedented actions in this simple case brought by tiny Antigua.

Although we of course were aware of all of the possibilities when we brought the case, we had surveyed the United States’ actions in all of its dispute cases at the WTO, and found that it had always either complied or was on its way to compliance. But in the 25-plus cases it had expressly lost, it never once had refused to comply, much less try to withdraw its treaty obligations in the affected sector. So, particularly given the Antiguan government’s willingness to compromise to some extent, we fully expected the United States to do the same here.

Given the massive prevalence of gambling in the United States, this “moral issue” thing is simply a red herring. It really is amazing that the United States is willing to risk the sanctity of the WTO’s dispute resolution process on this case. But then again, when I was assembling this case back in 2002, we didn’t yet know just how intransigent this administration could be in virtually everything it does. Maybe that is playing a role here, I just don’t know.

Q: And what about our other trading partners – the Europeans, the Japanese, and the Chinese? You mentioned at GIGSE that you were in contact with the Europeans on this. Have you talked to the Japanese representative, or the Chinese?

A: We have spent some time talking to a number of other countries who are either allies or with which we share some common interests. I led a group meeting of the European Union, Japan, Macao, Costa Rica, Canada and India this past week to discuss our joint interests in this case, and in particularly the threats to the system that the United States behaviour poses. For a wee tiny country, we have actually gotten quite a bit of important support in the WTO. While a number of members aren’t so hot on the whole issue of gambling, very clearly this case poses a test of the fairness of the overall system, and virtually everyone is following it closely.

Q: The US has really taken the nuclear option on this. I’m sure it’s as hard for you to believe as it is for me – I mean, the US spent years negotiating GATS, and they were difficult negotiations. What is left of GATS if the US decides to redefine its own commitments? How far can other nations go in redefining their commitments? I really can’t believe that the USTR would throw all that hard work away- there are probably some career guys in there that worked on those negotiations.

A: Yes, as I noted earlier, it really is unbelievable that the United States would risk the whole system over this case – again, particularly where some ground for compromise existed. A number of countries we have talked to are angry about the hypocrisy on display – in the current Doha round of treaty negotiations, the Americans are apparently really leaning on some smaller countries to liberalise their services commitments, but at the same time, the United States is wanting to limit their own services commitments because a small country has won a WTO case based upon those commitments! The absurdity does not go unnoticed.

Q: What role does the DOJ play in this? The USTR represents the US at the WTO, but they still work with the DOJ on establishing the legal position of the US government, correct? The DOJ has taken a very hardline position on the internet gambling industry, and that seems to be reflected in this case.

A: In the hours I have spent thinking about this case and the intransigence of the United States I have been searching for a key to why they have chosen this case to be the one where they risk everything they have invested in the WTO’s dispute resolution process. And believe me, the process has been very much a “net-winner” to American economic interests. Why risk scuppering something that has worked so well for you and, in fact, is rightly viewed as the most successful International judicial body ever, over this issue?

Again, it really isn’t a moral issue. Although you hear a bunch of that nonsense from the halls of Congress, all you need to do is look at gambling in America to know that the morality thing, if it ever was an issue, has long been thrown out the window.

In some ways it is a federalist issue, as the United States is almost unique among nations today in the powers it gives to its member states. On the other hand, the WTO agreements are member-to-member only and countries like Antigua are entitled to look to the central government for redress. That being said, it drawing its commitments schedule to the GATS, the United States could have addressed the gambling issue on a state-by-state basis, as it did in other areas such as financial services and legal services. But here, it did not do that, so whatever a state says about gambling is, from a completely legal perspective, irrelevant to Antigua and its rights under the GATS.

Although I could very easily be wrong, what I have finally concluded is that this case is almost 100 per cent about the DOJ. One or more DOJ members have been present at almost every meeting we have held with the United States over the past four years, at almost every WTO session – their footprint is big in this case. This may sound odd, but I think that this issue – remote gambling – has been hijacked of sorts by a kind of dated old crowd in the DOJ who are still lost in the days of Bugsy Malone and smoky backrooms, when gambling was run by the mob.

Seriously, the one DOJ guy who has been a lingering presence in this case from the beginning even looks and talks like he stepped off a movie set about 50s-era gambling. I think this crowd has gotten the ear of senior DOJ officials, and are not going to budge one bit. And nobody else in the administration has had the courage, fortitude, or perhaps just the interest to take them on over this.

This is particularly more interesting given that until 1998, the official DOJ position was completely different. The official DOJ spokesman said on many occasions in the mid- to late-1990s that United States laws did not cover this kind of gambling service offered from and under the sanction of government in foreign countries. In fact, as we told the WTO as late as 1997, the United States government was affirmatively working with the Antiguan government on ways to ensure the fairness of gaming services and protection of American consumers. For some reason, that all changed in 1998 and this gambling crowd at DOJ has been very successful at establishing the myth of America having “had strong laws against this activity” since forever. As regards licenced, regulated services from foreign countries, the current United States policy is less than ten years old.

Q: The DOJ seems to view this case – which centers primarily on cross border remote wagering on horse racing – as a kind of trojan horse for the broader internet gambling industry. How true is that? Why not just concede on that narrowly defined issue and move on?

A: Because it is not “that narrowly defined issue”. As I mentioned earlier, the United States tried to spin its loss in this case as being only about horse racing, but that was simply not the case. Now they are having to face the reality of the case for the first time, and it is making things much more difficult for them. It is indeed about “the broader internet gambling industry” and by refusing to engage with Antigua over the issue in a timely manner, they may have opened the Pandora’s box that can never again be shut.

In particular, they have now gotten the European Union seeking massive economic concessions, and if they thought that we were a problem, the EU is going to be a much more difficult monster for the United States to wrestle. While Antigua is going to have to work hard and be creative to find ways to effectively retaliate against the United States, the EU won’t have any trouble at all. The United States is literally facing multi-billions of trade retaliation from the EU in all sorts of trade completely unrelated to gambling.

All of a sudden, for example, American exporters of auto parts, electric guitars or cotton sweaters to the EU are going to be shut or priced out of the market. All of those sectors stand to be sacrificed or at least severely compromised by the United States in this case, all so the United States can protect its domestic gambling industry. Or, perhaps even worse, to satisfy some dated little constituency in the DOJ. Simply boggles the mind.

Q: You have intimate knowledge of this case – just where do you think it really goes from here?

A: To paraphrase The Dude, Antigua abides! We are going to press on here. Everything we are facing currently is unchartered territory, and the good thing about that is that you are free to make whatever claims you feel you can justify and take whatever trail you think you can convince the WTO to follow. Our thinking in this case has never been square-headed and it is not about to get to be at this point. What we really hope for here is that the United States will gain some reason and look to compromise, finally.

Antigua didn’t bring this case so it can sell cheap Microsoft products or DVDs. This case was brought on behalf of a regulated, fair domestic gambling and betting industry. Antigua wants to be able to provide these services to American consumers, who very clearly want them. While there is still large ground for compromise, at the end of the day Antigua wants and deserves to be able to offer these services on some agreed and rational basis. Let’s hope that wisdom prevails here, and this whole dispute becomes just a footnote to WTO history rather than a defining moment.

Burke Hansen, attorney at large, heads a San Francisco law office

The speedy passage last fall
of legislation making it more difficult for Americans to gamble online
has led to three bills that take aim at the restrictions.

They are finding robust support from Internet gambling enthusiasts,
but garnering little attention from politicians, who face more pressing
policy issues than the right to gamble from home.

Indeed, some experts say, the shadowy world of Internet betting will
remain that way for some time, or at least until a new president is
elected. For most lawmakers, pushing for legislation benefiting what
some call a “sin” industry isn’t a way to win votes.

“People in Nevada think its our inalienable right to gamble,” said
David Cherry, press secretary for Rep. Shelly Berkley, D-Nev. “But it’s
a different world outside of Nevada.”

Moreover, the American Gaming Association, which represents casinos
and the power of millions of casino-generated dollars in federal
campaign coffers, doesn’t explicitly support Internet gambling
legalization, instead supporting the most cautious of the three bills.

That bill, co-sponsored by Berkley and Rep. Jon Porter, R-Nev.,
would authorize the American Academy of Sciences to study whether
Internet gambling can be regulated and would assess the federal
government’s de facto ban. Another bill, sponsored by Rep. Robert
Wexler, D-Fla., would specifically legalize Internet poker. A third
bill, sponsored by Rep. Barney Frank, D-Mass., would repeal last year’s
legislation and regulate all forms of online gambling.

The gaming association’s caution is understandable because it
represents land-based casinos rather than the companies now operating
Web casinos from offshore, more loosely regulated locations.

Some Nevada operators say the online gambling industry lacks
credibility and first needs an independent study showing that the
business can and should protect against underage and problem gambling
through regulation.

Casinos have another reason to reserve support for legalization.

The prospect of federal oversight and taxation of online betting is
troubling for an industry that has spent more than a decade keeping
commercial casino gambling regulated and governed by the states.

The primary role of the gaming association, born from the threat of
a federal casino tax, has been to avert federal legislation rather than
lobby for it.

The industry isn’t facing any frontal attacks from the feds now that
state-run gambling has become mainstream. But fears that the federal
government could tinker with casino regulation linger.

That’s one reason why only one American casino company has openly and consistently championed Internet gambling.

“This is a step in the right direction,” MGM Mirage spokesman Alan
Feldman said of Frank’s bill. “Parts of the industry have some concerns
about it. But this is an important issue that’s moved beyond the ‘wait
and see’ approach. The current policy is unrealistic and irresponsible.
And we know from decades of history that prohibition doesn’t work.”

MGM Mirage, which folded a short-lived Web casino for foreigners
because it couldn’t compete against offshore sites courting Americans,
is hopeful that regulation of Internet gambling could be authorized by
the feds but still regulated by states.

The relative silence from casinos and their gray-market counterparts
online leaves a big vacuum for the Poker Player’s Alliance, the nascent
lobbying group that says it has signed up at least 600,000 poker
players. The alliance is pushing Wexler’s bill to specifically legalize
the game with arguably the most passionate following online.

Their ace in the hole is Alfonse D’Amato, the poker aficionado and
former New York senator hired to lobby for the alliance and Wexler’s
bill.

D’Amato, a Republican in a Democratic-controlled Congress, is a skilled political operator and consensus builder.

Instead of raining on last year’s prohibition bill, D’Amato’s critique is careful and measured.

“There’s been concerns about all these people gambling online and in
an attempt to deal with this issue I think there was an overreaching,”
D’Amato said. Last year’s bill, which made it illegal for banks and
credit card companies to process online bets, was “a well-intentioned
effort that wasn’t studied like it should have been,” he said.

“You’re not going to stop the Internet. By legalizing it, you can
keep the bad guys out and raise the revenues , by licensing , that are
necessary to police it.”

That doesn’t sway conservative Christians and others who oppose the spread of gambling on moral and philosophical grounds.

“Is the president, in an election year, going to say we want people
to be able to gamble in their homes? No,” said the Rev. Tom Grey of the
National Coalition Against Legalized Gambling.

Grey says making gambling more accessible will increase addiction, a view shared in bipartisan circles.

Democrats, now in control of Congress, don’t want to rile conservative voters during the campaign season.

Advocates say there’s more momentum for legalization this year, and it’s not just coming from the United States.

There are more disgruntled gamblers with frozen online accounts and
others who are waiting weeks to complete transactions by mail or wire
that used to occur with the click of a mouse.

Although Frank lacks broad support for his legislation, his
ascendancy to the chairmanship of the House Committee on Financial
Services, for an activist lawmaker with a libertarian bent, is a
positive outcome for the casino industry.

“Last year there was no real discussion about Internet gambling on
the floor of Congress,” said Jeff Sandman, a Washington attorney
representing the Safe and Secure Internet Gambling Initiative, which
formed this year to push for legalization. “But now there’s new
interest and a new Congress.”

The initiative represents accounting and processing firms involved
in online wagering outside of the United States in places such as the
United Kingdom, which is legalizing Internet gambling.

There’s also a new number being bandied about in the halls of
Congress: the more than $6 billion in taxes that could be raised from
Internet wagers annually.

Meanwhile, publicly traded casino operators have accepted defeat,
pulling out of the United States, while gray-market operators have
moved further underground, hosting fewer marketing and charity events
and refusing to fly to the United States for fear of being arrested.

Legalization may ultimately be decided by bigger forces beyond our borders.

Growing pressure on the United States to soften its position on Internet gambling “is huge,” Sandman said.

The European Union and a handful of individual countries recently
filed claims with the World Trade Organization seeking compensation in
the billions of dollars from the United States for unfairly prohibiting
foreign online gambling operators from accessing the U.S. market while
allowing U.S. horse-racing networks to accept online bets. The federal
government says that the trade agreement didn’t include gambling, a
unique form of commerce, and that the country can prohibit activities
that threaten public morals and safety.

“The stakes are much higher now,” D’Amato said. “We don’t want to be the country that says, ‘We will do what we want.’ ”

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Every good business survives by reaching out to its target audience. You have to market your products to your customers and show them you’re the best around. The Poker Players Alliance went straight to its audience this past week, the 6,300 participants in the 2007 World Series of Poker Main Event, to show the poker world what a class act it has become. Bringing a group of staff that included former three-time Senator from New York and current PPA Chairman Alfonse D’Amato, the organization hit the ground running at the Rio. It’s paid off recently as well. The Poker Players Alliance has grown to well over 600,000 members, a number that has ballooned rapidly in recent days. Not too bad for an industry group that stood at 100,000 members last fall.
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Dear Fellow PPA Member:
I have wonderful news to report! On Thursday, April 26, Rep. Barney Frank introduced HR 2046, the Internet Gambling Regulation and Enforcement Act of 2007. HR 2046 will lift the prohibition on playing poker online. Your efforts are making a difference!
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