Poker News

Christmas Time with Annie Duke

Poker News Daily: We heard that you’ll be launching a new trail mix company, MyMixedNuts.com, just in time for the holidays. Can you tell us about it?

Duke: It’s a custom mixed nuts and trail mix company that I started with my boyfriend, Joe, and Ryan Sympkins. You have your choice of nuts and all sorts of dry fruits and candies. Ryan had this idea for a long time. Ryan is one of the producers on “The Apprentice” and we became very good friends during the show. Ever since, we’ve wanted to work together. I spend all of my time picking things I don’t want out of my trail mix, so I’ll go and buy individual ingredients from the store.

At MyMixedNuts.com, you add items into your cart. We’ll have personal and corporate gifting. There are also ready-to-go mixes where $1 goes to charity. If you buy my mix, for example, $1 goes to Ante Up for Africa. There’s one that goes to an AIDS hospice and one that goes to a rain forest preservation charity.

PND: That’s quite an undertaking. What kind of marketing are you doing for it?

Duke: Our marketing is through social media to start with. Once we get going and things are going smoothly, then we’ll do placements in health magazines and parenting magazines. It’s ironic that Ryan and I met on a show about fake business and now we’re doing a real business. Trail mixes run 14 ounces each and will be between $8 and $15.

PND: We noticed that you weren't at the World Poker Tour’s (WPT) Doyle Brunson Five Diamond World Poker Classic.

Duke: Christmas comes up on me and I have four kids. I literally looked at my schedule and said I can’t do it. Christmas won’t happen if I go to the tournament. This is the kind of decision I have to make a lot. Sometimes I have to choose my kids over poker. I’d rather make sure my family has a good holiday.

PND: What have your kids asked Santa for this year?

Duke: Nelly asked Santa for a computer and I think that’s totally appropriate. All of my kids have laptops except for her and she wants a netbook, which is inexpensive, and some earrings. Lucy asked for a hermit crab. Santa might consider whether he could transport a hermit crab from the North Pole. Lucy’s other big request was a Kindle. Leo, outside of a Kindle, is really interested in anything having to do with the Denver Broncos. Maud is into anime stuff, so maybe some sort of comic book or graphic novel would be good.

PND: What did you ask for?

Duke: I asked for a trip to Mexico for New Years Eve because Annie Duke hates New Years. I have never had a good New Years. How can you possibly have a good time when there’s a huge pressure to have a good time? There’s no spontaneity. My good times are unexpected. I don’t drink, either. The goal on New Years is to get so plastered that you vacate your body and that’s not fun. For someone who is not drinking to speak to someone who is really drunk is not fun. If we go to Mexico, there’s no pressure. The odds of that coming through are good since Santa was asking me for places to stay.

PND: Give us your thoughts on the UB.com-sponsored poker news show “Poker2Nite,” which airs on Fox Sports Net every Wednesday night.

Duke: It’s really good. I think that Joe Sebok is going to grow into it. Scott Huff is incredibly talented. The set is great and I was pleasantly surprised. I like it better than “ESPN Inside Deal.” Joe just needs to get off the prompter. He’s very good just going with the flow.

PND: How tough is it to balance providing a credible news show with accepting guests from other online poker sites besides UB.com?

Duke: You have to do it. It’s one of the things that Full Tilt was ahead of the market on. They’ve done this back to the “Learn from the Pros” days on Fox Sports Net. They didn’t let you wear a logo, but they gave you a shout out. What Full Tilt understood was that it’s their show, but it’s going to be more credible if it has pros from other brands. It’ll be a higher quality show if you open it up to the world. They’ve done it with “Poker After Dark” and that was a mistake they made with “Face the Ace.”

“Poker2Nite” is supposed to have quality coverage of the poker industry. If its guests are from PokerStars, that’s fine. If they’re from Full Tilt, that’s fine. If they’re from UB, that’s fine too.

PND: We understand you just had an interesting experience with eBay.

Duke: At UB, one person can’t make multiple accounts. As a policy across the industry, it’s one player to an account and there are strong reasons why you have to do that, which have to do with fraud.

On eBay, my ex-husband used to have an account associated with my e-mail. I went onto eBay to check on some things for Christmas and wrote in to get the User ID. I called up my ex-husband and he gave me some passwords that could have been right and couldn’t remember the security questions, so I got onto Live Chat and asked for help. They said that he was the owner of the account and asked that he get in touch with them.

Finally, they said, “What you need to do is create a new e-mail address and open a new account with it.” So, I could open up a new account even though they knew I had an account? I asked them if I could do that 20 times and they said yes. At that point, I started screaming into the chat. The policy of allowing someone to have more than one account is mind-boggling. This is one huge site that the Federal Government seems to be okay with, but they are concerned with online poker.

Are Poker Players a Good Fit for the Business World?

Perhaps focusing on a subject that many in the poker community would view as obvious, many news outlets have recently begun to discuss the skills of top poker players not only on the tables, but also in the business and financial worlds. They have also analyzed the pros of regulated internet gaming, reflecting that the added revenue could reduce strain on the budgets of state and federal governments.

One of the members of the 2009 World Series of Poker (WSOP) Main Event November Nine, Steven Begleiter, was a guest last week on Bloomberg Financial News. The sixth place finisher in the WSOP Main Event, who had a previous career on Wall Street as an employee at the now-defunct Bear Stearns stock firm, entertained questions from Bloomberg news hosts Mark Crumpton and Lori Rothman and stated that there were many players he met during his run who were qualified to work in the business field.

“I got to meet a lot of people in their 20s who were very good card players that, were we still at Bear Stearns, I would have tried to get them to come join the firm,” Begleiter opined. He especially pointed out that the overall skills of his coach, former World Poker Tour (WPT) Player of the Year Jonathan “FieryJustice” Little, would have made him an excellent businessman: “People like him would do very well here on Wall Street.”

In a November 25th article in the Newark Star Ledger, the discussion of poker players in the business world was discussed. In an interesting point, it was brought out that a number of hedge fund companies and brokerage houses were looking to the younger players in the poker world to be potential analysts. In the article, former poker pro Aaron Brown, who now works on Wall Street as a risk manager at AQR Capital Management, said, “Someone who has made a successful living as a poker player for a few years would more likely be a good trader than someone who hasn’t. They know to push when they have the edge and they know how not to bust, and that’s a tough combination to find.”

Meanwhile, another cable business program, CNBC’s “Closing Bell,” discussed what the world of poker could do for the country’s financial state. During a discussion last week on the Unlawful Internet Gambling Enforcement Act (UIGEA), two analysts, Andrew Parmentire of Height Analytics and David Katz, an Oppenheimer gaming analyst, agreed that the online poker world, if regulated and taxed by the government, would be a boon to the business world. The duo focused on tax benefits, stating that the extra revenue could be put towards several problematic issues and increase activity in the markets.

These thoughts are well-known by many in the poker community due to the number of players who have come from the business side and been successful in the world of poker. One of the top female players in the world, Kathy Liebert, graduated from college with a business and finance degree and worked with Dun & Bradstreet before embarking on a highly successful poker career. Phil Hellmuth and Howard Lederer are a couple of players who have been able to parlay their business acumen beyond poker.

Perhaps the success of not only the “Old Guard” of the poker world, but also its “Young Guns” is best explained by Brandon Adams, who teaches behavioral finance at Harvard University’s Department of Economics. In the article in the Ledger, Adams explains, “They’ve essentially been the survivors in the system, a very difficult system where 95 percent of people lose money. Anyone smart enough and disciplined enough to survive that system is probably going to do very well in the trading world.”

Australian Productivity Commission Recommends Legalization of Online Gaming and Repeal of the Interactive Gambling Act

In what looks like a big win for online poker The Australian Productivity commission, the Australian Federal Government's independent advisory for the body on microeconomic reform today released a draft report supporting the managed liberalization...

Anurag Dikshit Sells Remaining Stake in Party Gaming

According to an article that appeared in eGamingReview (EGR) on Tuesday and filings to the London Stock Exchange, Party Gaming Co-Founder Anurag Dikshit will sell his 28% share in the company for at least ?188 million.

It’s a curious twist on a story that began developing last December, when Dikshit appeared in the Southern District Court in New York. The Party Gaming personality pled guilty to violating the Wire Act of 1961 and agreed to fork over $300 million to the U.S. Government. He also faces up to two years behind bars, with sentencing scheduled for 2010. Dikshit’s spokesperson, Shimon Cohen, told EGR, “Anurag has paid the $300 million fine that he was asked to pay by the U.S. authorities and has decided it is time to move away from the company.” The Wire Act has traditionally applied to online wagering on sports, not online poker. Read the entire EGR Anurag Dikshit article.

Dikshit was originally rumored to be selling two-thirds of his 28% stake in Party Gaming; however, EGR later reported that the entirety of his shares would be unloaded. PartyPoker, the online poker arm of Party Gaming, withdrew from the U.S. market in 2006 shortly after the passing of the Unlawful Internet Gambling Enforcement Act (UIGEA), which was attached to the SAFE Port Act in the waning moments of that year’s Congressional session at the urging of then-Senate Majority Leader Bill Frist (R-TN). The regulations of the UIGEA were approved as midnight rules by the outgoing Bush Administration and will be fully enforced on December 1st.

In a filing to the London Stock Exchange on Tuesday, where Party Gaming is traded under the symbol “PRTY,” Anurag Dikshit, under the names BT Nominees Limited and Crystal Ventures Limited, is listed as selling 75 million shares of PRTY, or two-thirds of his original total. The filing explains, “Crystal Ventures Limited is wholly owned by BT Nominees Limited who hold shares in PartyGaming Plc under a declaration of trust in favor of Mr Dikshit.” Dikshit owned 113 million shares prior to the sale posted on Tuesday in London and retained nearly 39 million “indirect voting rights.” The sale of the remaining interest has not yet been posted.

At the close of trading on Tuesday in London, shares of PRTY were fetching 240.10p and EGR noted that Dikshit expects to pull in at least ?188 million as a result of the transaction; the sum will be donated to charity. On Monday, PRTY was trading at 284p before Dikshit’s sale, which promptly sunk the share price by 15%. All told, Dikshit’s agreement with the U.S. Government last December ballooned the firm’s stock, which sat at below 140p before quickly climbing above 200p. Exactly one year ago, shares of PRTY were valued at 123p.

Ruth Parasol and Russ DeLeon, who founded Party Gaming along with Dikshit, were not expected to follow suit, according to EGR. In the meantime, PartyPoker officials have heralded the election of its ambassador, World Poker Tour (WPT) Host Mike Sexton, to the Poker Hall of Fame. Sexton is the lone representative of the Class of 2009 and will be officially inducted in ceremonies taking place on November 7th during the World Series of Poker (WSOP) Main Event final table. Sexton is a WSOP bracelet holder and re-signed with PartyPoker in April.

In August, Party Gaming acquired the WPT for $12.3 million, outbidding a subsidiary of Playtech, which owns and operates the massive iPoker Network. Four months earlier, the company entered into a Non-Prosecution Agreement with the U.S. Attorney’s Office for the Southern District of New York, agreeing to pay the Federal Government $105 million. In the process, Party Gaming admitted that it solicited U.S. customers prior to the UIGEA’s passage and agreed not to do so in the future until the industry is licensed and regulated.

PIC Club CEO Chuck Kidd Discusses Company’s Growth, Legality

Making poker news headlines this week was word that Players Investment Company, more commonly known as PIC Club, had severed its relationship with the Merge Gaming Network. PIC Club CEO Chuck Kidd sat down with Poker News Daily to discuss the company’s formation and its compliance with U.S. law.

Poker News Daily: Thanks for joining us. For those unfamiliar with PIC Club, can you tell us what it is and how the company was formed?

Kidd: A group of players and I were customers of Hollywood Poker. I usually had a second screen up and running during my job and poker was entertainment for me. I wasn’t a movie watcher or a television watcher. Instead, poker was my form of entertainment. In October of 2006, when they came out with the Unlawful Internet Gambling Enforcement Act (UIGEA), I took offense to that. I felt like they had stepped into my business. A week after the UIGEA passed, we got thrown out of Hollywood Poker.

My friends and I who played on a social basis had nowhere to go. I’m an old software geek and so I built a forum and a chat room. It was during that time that I contacted a Congressman and asked him to send me a copy of the UIGEA. I sat down and read through it with a couple of pretty smart business guys and realized that they hadn’t outlawed gambling, just the transfer of funds. It was also up to the banks to enforce it. On the very first page of the UIGEA, in its list of exclusions, there is a reference to trading companies. That put an interesting thought into my mind: what if we had a company that traded in poker? I found an international trading company called Ledvil for sale and we went and bought it. We’re licensed to trade everything from precious medals to durable goods.

PND: How does PIC Club avoid violating the UIGEA?

Kidd: We never violate the UIGEA. When you deposit money into a PIC Club account, you have an “available shares account,” which is money you can use to purchase shares in the pooled commodities we are currently trading in. We sell at the rate of $1/share. When you say you want to send money to DoylesRoom, for example, the player is actually buying shares of the pooled commodity that we will sell to DoylesRoom on your behalf and then DoylesRoom places money in an account for you to play in. At no point does a U.S.-based financial institution ever do business with an online poker site.

PND: Has the Federal Government ever approached you?

Kidd: They gave me the permits to operate and we just filed our taxes. We’re not doing anything against the law. To quote one of my sources, the Department of Justice is scratching their heads as to what to do with us and just ignores us for the time being. Last year, we paid out 10.5% interest to people who used PIC Club through their available shares account. The year before, we did 14.25%.

PND: Explain how the transfer of funds to an online poker site works.

Kidd: It’s all an electronic transaction. We are required by law to keep a copy of the certificates for shares. At the end of the day, we are transferring money for the poker industry, but we do it in such a way that we don’t violate UIGEA because we’re not transmitting money from a player to a site. We’re not like Neteller.

PND: How does PIC Club make money?

Kidd: We make money off poker rooms, not players. The processing costs are charged to the player, so when the money goes into PIC Club, it’s breakeven. When money goes to an online poker room, they pay me a percentage of every dollar. It’s pretty much the same fee for every site and I haven’t had to do much negotiating there.

PND: How can PIC Club help you manage your bankroll?

Kidd: You can see every dollar you have online at PIC Club rooms. You just push a button and your balance will be fed back to you. You can then choose to move money around as you see fit.

PND: What does the future hold for PIC Club?

Kidd: PIC Club will keep growing like it is. I’ve let it grow at a very nice pace. I’ve refused to compromise on my customer support. I was angered as anyone when I would call poker room support and be put on hold. I decided that would never happen at PIC Club. One of the things I’m proud of is that we’ve had online support since 2007 and our support has never been down for more than six hours. Personally, I am launching PokerProsNetwork.net. We’re putting a whole new spin on the idea of playing with pro players.

iMEGA Readies for Kentucky Supreme Court Internet Gambling Hearing

In one week, attorneys for the Interactive Media Entertainment and Gaming Association (iMEGA) will take to the floor of the Kentucky Supreme Court to argue why the Commonwealth did not have jurisdiction to seize 141 internet gambling domain names, including those belonging to PokerStars and Full Tilt Poker.

Next Thursday marks an important day for the internet gambling industry in Kentucky and around the world. One year ago, the Kentucky Justice and Public Safety Cabinet, under the leadership of J. Michael Brown and the direction of Governor Steve Beshear, seized domain names belonging to some of the online poker industry’s giants. Arguments are scheduled for 11:00am on Thursday, October 22nd. Each side has 15 minutes to state its case and the proceedings are the final order of business on the docket for next week, leading iMEGA officials to believe that arguments may run longer than the scheduled time.

iMEGA Chairman Joe Brennan told Poker News Daily, “Since there’s no law as to how to approach this, the Governor and his attorneys went out and came up with a process on their own. They never named who was being served and basically asked people to come to court and identify themselves.” A total of 141 internet gambling domain names were seized under the grounds that they were “gambling devices,” a term that commonly refers to roulette wheels, dice, and other tangible items found in an underground casino.

In January, the Kentucky Court of Appeals ruled by a 2:1 margin that the Commonwealth did not have jurisdiction to act, while the lone dissenting judge argued that a domain name was part of a larger “gambling device.” Brennan explained, “Appellate Courts tend to take a conservative, narrow, statutory look. The gambling device statute is one thing, but there is ample case law regarding due process. I am absolutely certain that you’re going to see the Governor’s attorneys get up and talk about what crooked operators we’re dealing with.”

The trade organization argues that the Commonwealth violated due process by seizing the 141 domain names in question. Its brief to the Kentucky Supreme Court explains, “No real defendants were named, no process was issued, and no owner of any domain names was notified. In short, this was an action by the Commonwealth to seize property without the slightest pretext of complying with the fundamental dictates of due process.” Judge Thomas Wingate upheld the Commonwealth’s actions in a court ruling submitted last October.

Kentucky law describes a “gambling device” as “a machine or mechanical device… designed and manufactured primarily for use in conjunction with gambling.” iMEGA added in its brief that if Kentucky does not wish to permit internet gambling within its borders, then it should pass laws through the General Assembly. Brennan expects a decision by the Kentucky Supreme Court to be handed down in “a matter of months” following Thursday’s hearing, which will take place in Frankfort. A diverse group of organizations have submitted amicus briefs, including the Poker Players Alliance (PPA), American Civil Liberties Union (ACLU), the Center for Democracy and Technology, the Electronic Frontier Foundation, the Internet Commerce Association, eBay, and Network Solutions.

iMEGA is fresh off a mostly positive ruling in the Third Circuit Court of Appeals, which clarified the Unlawful Internet Gambling Enforcement Act (UIGEA) by noting that internet gambling’s legality depends on the laws of individual states. iMEGA claims that legal internet gambling is possible in 44 states, while its brief to the Kentucky Supreme Court explains that eight criminalize the industry to some degree: Illinois, Indiana, Washington, Louisiana, Oregon, Nevada, Montana, and South Dakota.

The Third Circuit disagreed with iMEGA’s assertions that the UIGEA trampled on First Amendment and privacy rights and dismissed the notion that it should be void for vagueness. Neither the Federal Government nor the trade organization has announced an appeal to the U.S. Supreme Court.

We’ll have a full recap of the iMEGA Kentucky Supreme Court hearing right here on Poker News Daily.

ESPN Inside Deal Welcomes Phil Ivey, Steven Begleiter

This week, “Inside Deal,” which airs on ESPN.com, welcomes two of the 2009 November Nine, Phil Ivey and Steven Begleiter, both Full Tilt Poker pros. “Inside Deal” is released every Tuesday.

The show began with a recap of the 2009 World Series of Poker (WSOP) Europe Main Event, which saw November Niners Antoine Saout and James Akenhead reach the final table. Last year, Ivan Demidov became the first player to make the feature tables of the WSOP Main Events in Las Vegas and London, prompting “Inside Deal” host Bernard Lee to comment, “I previously said that I never thought Ivan Demidov’s performance making the WSOP final table and making the WSOP Europe final table would ever happen again in the same year.” Sure enough, two players proved Lee wrong this year.

“Inside Deal” then recapped three legal battles raging in the industry, headlined by the closure of Pitbull Poker, a Flash Poker Network site, amid superuser allegations. In addition, Lary “pokergirl z” Kennedy and Greg Omotoy have sued Full Tilt Poker over bot use, while funds destined for internet gamblers in Maryland were seized from six bank accounts by the Federal Government. On the latter, Lee remarked, “Players must be able to trust that their virtual money is safe. If not and they can’t turn this money into cold, hard cash at any moment, the money is pointless.”

Begleiter then joined Lee and “Inside Deal” host Laura Lane donning Full Tilt Poker and 1-800-WIRELESS logos. He’s seen fellow November Niners excel since play concluded in July, including Kevin Schaffel finishing as the runner-up to Prahlad Friedman in the World Poker Tour (WPT) Legends of Poker in August; Begleiter finished ninth. Begleiter noted, “I’m rooting for these guys. We’re all going to be linked forever and as time goes on and we’ve had this joint success, it raises the profile of the table.”

An exclusive interview with Phil Ivey then aired. In it, Poker Edge host Phil Gordon asked the November Nine member about his recent success. Ivey explained, “I was very prepared and I was on a very good schedule. I was very in tune with poker.” On what makes him a force to be reckoned with at the tables, Ivey remarked, “There’s no perfect way to play against me because I make a lot of adjustments. I’m pretty good at adjusting to what my opponent is doing and I think that’s why I’ve had a lot of success heads-up.”

According to Wicked Chops Poker, Ivey placed a $20,000 bet with Andy Bloch at 200:1 odds that he’d take down the Main Event. The bet was made when 2,500 players remained and may soon pay off to the tune of $4 million. Ivey would not discuss his various Main Event prop bets with Gordon, saying that he wasn’t comfortable talking about them on camera.

Begleiter once again took center stage and commented on the similarities between the poker world and his profession in the financial industry: “Understanding risk, understanding limits, and understanding your bankroll matter when you make a [decision] at the felts or [a decision about] your IRA.” He revealed that he folded pocket kings pre-flop on Day 1 to a 5bet (his opponent showed aces) and flopped a flush on Day 5 to double up. On Day 7, he was all-in with A-Q and cracked pocket kings to vault him into the November Nine.

Begleiter earned his $10,000 WSOP Main Event seat from a recurring home game and owes league members 20% of his earnings, a figure that currently stands at nearly $250,000. Begleiter’s league boasts a buy-in of $300, $60 of which is reserved for a year-end prize pool; the other $240 is allocated for that week’s game. The 27 player league has played out three seasons, with Begleiter winning seven of 36 games, recording one final table title and one regular season championship.

Check out the rest of “Inside Deal” by visiting ESPN.com.

Senator Wyden Withdraws Proposal to Use Internet Gambling to Fund Health Care

The debate on Capitol Hill rages on over health care reform, which, according to Senator Orrin Hatch (R-UT), will likely come with a nearly $1 trillion price tag. Senator Ron Wyden (D-OR) proposed using internet gambling revenue to defray some of the cost, but withdrew his amendment this week.

In a column that appeared in the Deseret News, Hatch noted, “At a time when we have trillion-dollar-plus deficits and an unemployment rate reaching double digits, [this health care reform] is a colossal mistake I cannot support.” With the massive cost turning many off, Wyden suggested using tax revenue from Congressman Barney Frank’s (D-MA) Internet Gambling Regulation, Consumer Protection, and Enforcement Act (HR 2267). The bill establishes a full licensing and regulatory framework for the internet gambling industry in the United States.

Michael Waxman, spokesperson for the Safe and Secure Internet Gambling Initiative, commented in a press release shortly after the amendment was introduced, “We applaud Senator Wyden’s proposal to collect and put to good use tens of billions in internet gambling revenue that would otherwise be lost in the underground marketplace. The Senate Finance Committee should approve this resolution, finally putting to an end a failed prohibition on Internet gambling that leaves Americans unprotected and unlicensed offshore operators as the only beneficiary in a thriving marketplace.”

HR 2267 was introduced in May and has attracted 58 cosponsors, the newest of which are William Lacy Clay (D-MO), Christopher Murphy (D-CT), and Adam Schiff (D-CA). Interactive Media Entertainment and Gaming Association (iMEGA) Chairman Joe Brennan told Poker News Daily, “There are not many places you can go to find ‘free money’ right now. Internet gambling is one of them. You’re not going to have many industries wanting to be taxed.” Also in Congress is HR 2268, the Internet Gambling Regulation and Tax Enforcement Act. The measure, introduced by Congressman Jim McDermott (D-WA), assesses a tax of 2% of deposits on licensed internet gambling outfits in the United States. HR 2268 was introduced on the same day as HR 2267 and has attracted four cosponsors.

A recent study by PricewaterhouseCoopers indicated that over $60 billion could be generated from taxing the internet gambling industry over a 10 year period. However, that figure includes legalized online wagering on sports. On Wednesday, “The Hill” published an article noting that Wyden had withdrawn his proposed amendment. The Senator’s Communications Director told the publication, “The last thing Senator Wyden wants to do is make it more difficult to expand subsidies for working families by introducing a new contentious issue to the debate. So when he offers the amendment, he will do it with other funding mechanisms.”

Wyden’s attempt to demonstrate tangible uses for internet gambling revenue comes on the heels of McDermott’s introduction of HR 6501 in July of 2008. McDermott’s bill, dubbed the Investing in Our Human Resources Act, provided up to $40 billion in assistance for those currently or formerly in foster care and those in declining job markets. HR 6501 was not acted on during the 110th Congress. McDermott’s proposal was not well-received, as Congresswoman Shelley Berkley (D-NV) labeled it “a classic case of putting the cart before the horse.” Former Congressman Jon Porter (R-NV) piled on, saying that HR 6501 marked “a frivolous attack on the gaming community to pay for services that local governments, states, and the federal government should already be providing.”

Last month, Senator Robert Menendez (D-NJ) introduced S 1597, the Internet Poker and Games of Skill Regulation, Consumer Protection, and Enforcement Act. The bill, as its name implies, focuses on licensing games such as poker, bridge, chess, mahjong, and backgammon “in which success is predominantly determined by the skill of the players.” Menendez’s measure has not attracted any cosponsors.

Congress is targeting October 30th as its adjournment date for the 2009 calendar year.

National Council on Problem Gambling Holds HR 2906 Press Conference

Last Thursday, the National Council on Problem Gambling held a press conference in the Canon House Office Building to debrief media and Congressional staffers on HR 2906, the Comprehensive Problem Gambling Act.

Congressmen Jim Moran (D-VA), Lee Terry (R-NE), and Frank Wolf (R-VA) introduced the bill back in June. Since then, a dozen cosponsors have signed on, including Congressman Barney Frank (D-MA), who is pushing bills to delay the regulations of the Unlawful Internet Gambling Enforcement Act (UIGEA) by one year to December 1st, 2010 (HR 2266) and to establish a comprehensive licensing and regulatory framework for internet gambling in the United States (HR 2267).

Congressmen Moran and Wolf turned out for the press conference and issued opening remarks. Also in attendance was Congressman Patrick Kennedy (D-RI). A total of 25 interested parties were present, including members of the media and staffers from offices around Capitol Hill. National Council on Problem Gambling Executive Director Keith Whyte told Poker News Daily, “It was bigger than we thought. It seems that there is a heightened level of interest in problem gambling and gambling in general. Part of it is people thinking about Frank’s internet gambling bills. We want to talk about the hope and help around this problem rather than just about the negatives. Hopefully, that’s a message that Congress will hear a lot more.”

Whyte spoke during Thursday’s proceedings, as did Tim Christensen, President of the Association of Problem Gambling Service Administrators, and Chuck Maurer, President-Elect of the National Council on Problem Gambling. Two problem gamblers also took to the podium. In the wake of the successful turnout, National Council on Problem Gambling officials are seeking a Senate sponsor of HR 2906. Whyte explained, “We may be within a couple of weeks of taking it on in the Senate. It’s been referred to the Energy and Commerce Committee, which is currently working on health care reform. Everything else is competing for scarce time. The more cosponsors we get, the more likely we’ll be able to get committee time.”

Two films were shown last week following the one-hour long affair. “Shake ‘M Up Break ‘M” told the story of gambling addiction through song, while “Game Over” served as a promotional vehicle for the Washington State Problem Gambling Helpline. HR 2906 allocates up to $14.2 million per year for problem gambling public awareness, research, and treatment for the fiscal years 2010 to 2014. Its language was used in Senator Robert Menendez’s S 1597, the Internet Poker and Games of Skill Regulation, Consumer Protection, and Enforcement Act.

HR 2906 notes that over six million adults in the United States met the criteria for problem gambling last year. The estimated “social cost” from legal proceedings and financial distress as a result of problem gambling was $6.7 billion in 2008, and “there are no agencies or individuals in the Federal Government with a formal responsibility for problem gambling.” The organization characterizes problem gambling as a health disorder.

Several individuals, including Joseph Dunne and Robert Custer, founded the National Council on Problem Gambling 37 years ago. According to its website, the Council seeks “to increase public awareness of pathological gambling, ensure the widespread availability of treatment for problem gamblers and their families, and to encourage research and programs for prevention and education.” Each March, the organization hosts the National Problem Gambling Awareness Week and, in 2009, utilized social media outlets like Facebook and YouTube for the first time in order to disseminate its message.

Read the text of HR 2906 on the Library of Congress website for more information.

Legal Online Poker’s Biggest Obstacle: Nanny Democrats

One might think that when Republicans suffered much-deserved humiliation in the last general election, the notorious Unlawful Internet Gambling Enforcement Act (UIEGA) would soon be history.  Remember, it was back in 2006 that Senate Republican leadership effectively guillotined the “Moneymaker Effect.”  Whatever one’s views are on other worldly issues, the popular perception within the poker community was that Democratic political gains would be very good for players.

With Democrats now in complete control of all branches of the Federal Government, we can no longer limit our anger and disappointment to those musty old Republicans.  Indeed, trampling on the rights of poker players now appears to cut across party lines.  While Senator Jon Kyl (R-AZ), Representative Bob Goodlatte (R-VA), and Representative Frank Wolfe (R-VA) continue to merit our universal contempt, the sad fact is that the “out-of-touch brigade” now has plenty of company on the other side of the partisan aisle.

Consider the positions of many powerful Democrats.  The fact is that many national Democratic leaders happen to be women from western states.  Virtually all of these influential Democratic women are opposed to overturning the UIEGA.  In other words, these proud liberals march lock and step with the most repulsive elements of the religious right.  These same Democratic women champion countless progressive causes and wouldn’t agree with the likes of Kyl, Goodlatte, or Wolfe on anything except, peculiarly enough, smothering the freedoms of millions of American citizens who want to play online poker.  These Democrats are just as bad as the Republicans.

For your displeasure, here’s a list of the guilty:

Representative Nancy Pelosi (D-CA) – The Speaker of the House has repeatedly stated that she is dead-set against any expansion of gambling.  She remains stubbornly opposed to legalizing poker on the internet because a family member reportedly once had a gambling problem.  Pelosi may be the worst House Speaker in my lifetime (note that this opinion comes from an avowed political liberal), but her powerful influence on introducing bills and the legislative process unquestionably remains the biggest obstacle to overturning the UIEGA.

Senator Diane Feinstein (D-CA) – The senior U.S. Senator from California recently demonstrated her appalling confusion on the issue of internet gambling.  Consider her response to a constituent in a published letter.  She wrote, “Internet gambling has become too easily accessible to minors, subject to fraud and criminal misuse, and too easily used as a tool to evade State gambling laws.” Aren’t these the very reasons we desperately need legalization, licensing, and regulation of online gambling?

Senator Barbara Boxer (D-CA) – It’s unclear precisely why Senator Boxer remains strictly opposed to online poker.  Unlike her contemporaries Pelosi and Feinstein, Boxer has not widely expressed her views on the subject other than making her opposition known.  However, California’s junior Senator has backed major initiatives on behalf of tribal resorts.  Perhaps tribal opposition to legalized online poker (the Pachanga Tribe, for example) has influenced her position.

Representative Maxine Waters (D-CA) – Oddly enough, Representative Waters represents a Congressional district in Los Angeles that has reaped enormous financial rewards for various municipal projects directly from casino tax revenues.  Hollywood Park is located within her district.  Waters’ opposition to online poker and internet gambling appears to be based on her view that gambling activities disproportionally harm poor people.  That said, to date there has been no word from Waters’ office as to when she plans to start fighting to dismantle the California State Lottery.

Governor Christine Gregoire (D-WA) – This politician is guilty of supporting and ultimately signing into law the most draconian sanctions against poker in more than a century.  It’s eerily reminiscent of what many Southern states did in the 1830s when gamblers were rounded up and hanged publicly.  Gregoire made Washington the first state in the nation to make gambling on the internet a Class C felony (contrary to the opinion of many courts, poker is considered gambling in Washington state).  A poker player living in Seattle or Tacoma is risking far more than a few dollars when he or she plays online.  Thanks to the Governor, the poker playing vermin could very well receive the same punishment doled out to child molesters and drunk drivers.

For far too long, groups like the Poker Players Alliance (PPA) believe they can win the political debate with simple logic.  Sure, our argument is better than their argument and most rational people would agree after listing to a five-minute exchange, but this isn’t a high school debate class.  It’s a political street fight versus powerful forces camped out on both the right and the left.  Until the PPA rolls up its sleeves and dives into the trenches with an all-out media bombardment aimed directly at the oblivious mainstream voter, nothing is going to change.  Sure, we might sway a few Ivy League professors and political columnists from time to time.  A few poker players might get five minutes of airtime on MSNBC or FOX.  That’s all good, but online poker is not going to be legalized and regulated in the United States until some significant changes in strategy take place.

The first rule of politics is that “right” and “wrong” have little to do with any issue of significance.  The debate you see on C-SPAN is pretty much scripted and irrelevant.  No Congressman or Senator is swayed one way or the other on any legislation without either coercion or compromise.

Indeed, Washington is nothing more than a gigantic power plant fueled by the only lubricant of any real action – money.  Lots of money.  Whatever your political views may be, I strongly advise against poker players donating money to national party organizations.  If you support a political candidate, donate to the person directly and not to the Democratic National Committee or to the Republican National Committee.  If you make a donation to either of these organizations, there’s a good chance some of your money is going to be funneled into the re-election campaigns of Kyl and Pelosi.  Just say no.

iMEGA, Poker Players Alliance React to UIGEA Ruling

Twenty-four hours ago, the Interactive Media Entertainment and Gaming Association (iMEGA) came up short in its bid to overturn the Unlawful Internet Gambling Enforcement Act (UIGEA). In the process, internet gambling may now become an industry governed by state law.

The Third Circuit Court of Appeals emphasized that the legality of internet gambling transactions may ultimately depend on where the bettor and operator are located. If the industry is permitted in both jurisdictions, then online poker players may be able to return to the felts in droves. The opinion, which was penned by Judge Dolores Sloviter, read in part, “Whether the transaction…constitutes unlawful internet gambling turns on how the law of the state from which the bettor initiates the bet would treat that bet, i.e. if it is illegal under that state’s law, it constitutes ‘unlawful internet gambling’ under the Act.”

In a press release distributed by iMEGA following Tuesday’s historic ruling, Chairman Joe Brennan noted, “The court made it clear - gambling on the internet is unlawful where state law says so. But there are only a half-dozen states which have laws against Internet gambling, leaving 44 states where it is potentially lawful. It’s not perfect, but it’s a good start.” Internet gambling law varies by state based on the type of transaction, number of times the consumer is raked, and game type, among other factors. Several states allow online lottery transactions and wagering on horse racing, while others like Utah and Hawaii ban all forms of commercial gambling.

What happens next is anyone’s guess. States may soon find it prudent to clarify laws and statutes related to internet gambling. In the meantime, a push by the Poker Players Alliance (PPA) on Capitol Hill for legalized and regulated online poker may come to fruition through future passage of a bill by Congressman Barney Frank (D-MA). PPA Executive Director John Pappas told Poker News Daily, “While I am disappointed that iMEGA’s full arguments did not prevail, it was encouraging to see the courts reaffirm that the UIGEA does not make playing internet poker illegal. The PPA and our legal team have long argued that the UIGEA should not force banks to block poker transactions in a vast majority of states. This decision might very well help as banks make those determinations on what to block; simply follow state law.”

On handing over the determination of whether internet gambling is permissible to the states, Brennan commented in the same press release, “States have always held the power to regulate gambling in this country, not the Federal government. The court’s ruling seems to say ‘back to the future’ when it comes to regulating internet gambling, so we will turn our attention to the states to make the case that this industry can be properly regulated and produce badly needed tax revenue.” Land-based gambling is already governed at the state level, with Nevada, New Jersey, and Mississippi leading the way. A bevy of riverboat casinos have also sprung up in states like Illinois, Indiana, and Missouri.

Brennan told Poker News Daily that the organization has not yet decided whether it will appeal the three-judge panel’s decision. The magistrates dismissed iMEGA’s claims that the UIGEA violated the First Amendment, Tenth Amendment, privacy rights, and treaty obligations over the course of its 10-page ruling. In the end, the cloudy law, which was passed during the waning moments of the 2006 Congressional session, was not declared unconstitutional, as iMEGA had hoped. However, the court’s ruling may have ultimately led to the same endgame, clarification of the legality of internet gambling and online poker in the United States.

Stay tuned to Poker News Daily for the latest reaction to iMEGA’s UIGEA challenge.

Senator Robert Menendez Introduces S 1597 Legalizing Online Poker

On Thursday, Senator Robert Menendez (D-NJ) officially unveiled S 1597, the Internet Poker and Games of Skill Regulation, Consumer Protection, and Enforcement Act. Congress remains on recess until after Labor Day in the United States.

As its name implies, Menendez’s legislation explicitly legalizes and regulates games of skill like online poker, which should come as a welcome sign to players in the United States who question the legality of the game. The bill notes that poker, bridge, mahjong, backgammon, and chess are examples of games in which a player’s skill dominates the outcome: “While each of these games contains an element of chance, over any substantial interval, a player’s ultimate success is determined by that player’s relative level of skill.” Menendez’s measure weighs in at a hefty 89 pages.

The bill focuses heavily on online poker, noting, “Poker is part of the cultural and recreational fabric of the United States and has been since the founding days of the United States. United States poker aficionados have included presidents, judges, and statesmen.” S 1597 calls for the continuance of laws against sports betting online in a similar fashion to Congressman Barney Frank’s (D-MA) HR 2267, which establishes a complete licensing and regulatory framework for the internet gambling industry in the United States. HR 2267 was introduced exactly three months ago and is up to 54 co-sponsors.

The Secretary of the Treasury is responsible for overseeing the licensing process for skill game operators and prescribing regulations. Each applicant for a license must submit a comprehensive financial background, an outline of the company’s structure and that of its affiliates, criminal and credit histories of executives, and how each licensee plans to combat underage gambling and compulsive gambling. In addition, they must convey how the games offered will be fair. All gamblers must be at least 21 years-old.

Licenses run for five years and can be renewed at the end of each term. Like other recent internet gambling legislation, Menendez’s S 1597 calls for a list of “persons self-excluded from gaming activities at all licensee sites.” States have a period of 90 days to opt out of the legislation after it becomes law; Indian tribes can also exempt themselves from the bill. S 1597 addresses problem gambling, allocating $14.2 million per year between 2010 and 2014 for awareness, treatment, and research.

S 1597 clearly states, “Nothing… shall be construed to repeal or amend any provision of State or Federal law prohibiting, restricting, or otherwise addressing bets or wagers on sporting events.” Professional sports leagues like the NFL have expressed a desire for Frank’s HR 2267 to contain clearer language outlawing sports betting. During a working dinner as part of National Poker Week, the Poker Players Alliance (PPA) claimed it was part of a “broad coalition” that included the NFL.

The Federal Government and State Governments will each reap 5% of a licensee’s deposits during each calendar month in taxes. Unauthorized gambling is subject to a 50% fee. Menendez’s S 1597 is similar in scope to last session’s S 3616, the Internet Skill Game Licensing and Control Act. However, Thursday’s version focuses on consumer protections. The PPA reviewed a draft of the bill in mid-July with what the organization called a “commitment” from Menendez to introduce it. The online poker measure was scheduled to be released before August 1st. However, it was ultimately revealed to the world on Thursday.

The 1.2 million member strong PPA will likely push its members to call their Senators and urge support of Menendez’s S 1597. As of the time of writing, no companion bill exists in the House of Representatives. Frank’s HR 2267 encompasses all forms of internet gambling except sports betting, whereas Menendez’s only legalizes games of skill. Congressman Robert Wexler (D-FL) introduced the Skill Game Protection Act (HR 2610) during the last Congressional session. It exempted player versus player games from internet gambling law, including the Wire Act of 1961 and Unlawful Internet Gambling Enforcement Act (UIGEA).

The PPA had not released an official statement on S 1597 as of press time. We’ll have full industry reaction to Menendez’s online poker legislation on Poker News Daily.

Senator Menendez to Introduce Online Poker Legislation on Thursday

In breaking news from Capitol Hill, Senator Robert Menendez (D-NJ) will introduce legislation to license and regulate online poker in the United States on Thursday, according to Dow Jones Newswires.

During National Poker Week, which occurred from July 19th to 25th, it was revealed that Menendez would likely drop legislation during the festivities or the following week. Then, Poker News Daily learned that a bill similar to last Congressional session’s S 3616 would likely be introduced this week. Poker Players Alliance (PPA) Executive Director John Pappas stated during a working dinner to open National Poker Week, “Pushing poker will be an immediate lift and will be easier than [legalizing] other things.” He also reminded over 30 of the PPA’s State Directors, a handful of poker pros, and media in attendance, “Poker has always been played in people’s homes. We are the Poker Players Alliance. We aren’t the Roulette Alliance. We love the Menendez bill because it focuses on our core beliefs.”

The PPA had a draft of the bill in mid-July. Menendez’s S 3616 was introduced last September and dubbed the Internet Skill Game Licensing and Control Act. The bill’s definitions specifically included online poker, explicitly legalizing the game in the United States: “The term ‘Internet skill game’ means an Internet-based game that uses simulated cards, dice, or tiles in which success is predominantly determined by the skill of the players, including poker, bridge, and mahjong.” The bill called for the legalization of skill games not backed by the house, meaning that the action was primarily player versus player. Online poker rooms like PokerStars and Full Tilt Poker raise revenue by taking a percent of each pot or tournament buy-in, dubbed the “juice” or “rake.”

In order to apply for a license to operate a skill game online and solicit customers from the United States, complete financial information was required. Also required were an outline of an organization’s corporate structure and the “names of all persons directly or indirectly interested in the business of the applicant and the nature of such interest.” Background checks of individuals and directors associated with each licensee would have been conducted and betting on sports was specifically prohibited. S 3616 vanished from the record after the 110th Congress adjourned.

According to the PPA, the legislation to be introduced by Menendez on Thursday will be similar to S 3616. The Dow Jones report notes, “It would establish a regulatory framework that would allow online poker companies to register in the U.S.” A 10% tax on deposits would be added, 5% to State Governments and 5% to the Federal Government. During the last Congressional session, Congressman Robert Wexler introduced a similar measure in HR 2610, the Skill Game Protection Act, which exempted poker and other skill games from existing internet gambling legislation.

At the beginning of May, Congressman Barney Frank (D-MA) introduced HR 2266, which would delay industry compliance with the Unlawful Internet Gambling Enforcement Act (UIGEA) by one year to December 1st, 2010. In addition, the Massachusetts lawmaker unveiled HR 2267, which establishes a comprehensive licensing and regulatory framework for the internet gambling industry in the United States. HR 2267 currently boasts 54 co-sponsors, while HR 2266 has 35.

We’ll have full details on Menendez’s new Senate bill as soon as it’s released right here on Poker News Daily.

Company seeks seized winnings

Last week about $14Million was seized by the federal government. A payment processor for online poker players accounts wants a judge to reverse the order and return the almost $14 million that the company says the government seized illegally.

Third Circuit Court of Appeals Hears iMEGA UIGEA Case

On Tuesday, lawyers from the Interactive Media Entertainment and Gaming Association (iMEGA) argued in front of the Third Circuit Court of Appeals in Philadelphia. The objective: prove that the Unlawful Internet Gambling Enforcement Act (UIGEA) is unconstitutional.

iMEGA’s case was the second on the docket on Tuesday in the Third Circuit behind a legal battle over whether a Yeshiva school could be constructed on the grounds of a synagogue based on zoning rights. One of the central issues discussed by the trade organization and counsel  for the United States Attorney General’s Office was where a bet placed online actually occurs. iMEGA Executive Director Joe Brennan explained, “We argued that the bet took place in another country like Costa Rica. When a person enters into a bet, it comes from an account already placed on the site.” However, it could be argued that bets originate on a person’s computer, on a server, or somewhere along the way in cyberspace.

Also at the forefront of the debate on Tuesday was whether iMEGA had standing to sue, something Brennan noted was preserved at the District Court level. iMEGA has online poker sites and individual players as members. Brennan recalled, “There was a ruling from the Third Circuit that concluded whether or not third parties could come forward if members were harmed, but [U.S. Attorney General counsel] Nicholas Bagley wasn’t familiar with it.” On his overall impressions, Brennan admitted, “It’s tough to tell. The three judge panel spent a lot of time with us. They didn’t spend as much time with the Government’s attorneys.”

Also questioned was whether it would have been advantageous for iMEGA to find an internet gambler who was harmed to appear in court. It’s a similar quandary that the Poker Players Alliance (PPA) has found itself in with regards to the online poker funds seizure in New York. In essence, anyone who stepped forward would be required to testify under oath that they played online poker. Brennan noted, “We said that, per the language of the statute, a person would essentially incriminate themselves in order to challenge the UIGEA. While there are no criminal sanctions, there are civil penalties for players.”

Judges Dolores Sloviter, Thomas Ambro, and Kent Jordan listened to attorneys for iMEGA and the Federal Government on Tuesday. The panel will now deliberate and return one of a wide variety of verdicts. One of the questions posed concerned the status of bills to license the industry in the United States and delay the implementation of the UIGEA’s regulations. Both were introduced on May 6th and referred to the House Financial Services Committee. HR 2266, the Internet Gambling Regulation, Consumer Protection, and Enforcement Act, is up to 40 co-sponsors. HR 2267, the Reasonable Prudence in Regulation Act, has attracted 23 co-sponsors. Neither has been scheduled for mark-up or discussion on the floor of the House of Representatives. One possible outcome is the Third Circuit deferring a resolution until Frank’s bills are acted on.

Many in the industry are now scrambling to ascertain when the Third Circuit will hand down a decision. Brennan revealed that the court’s average turnaround time is three months and iMEGA does not expect to hear back in the next 30 days. At the District Court level, the organization was left in the dark for nearly six months.

In the meantime, iMEGA will turn its attention to the Commonwealth of Kentucky, where briefs were filed to the state’s Supreme Court in May. To open the year, the Kentucky Court of Appeals in Louisville overturned a lower court ruling by a two to one margin and asserted that the Commonwealth did not have jurisdiction to seize 141 internet gambling domain names. The State quickly appealed. There has been no word on whether the Kentucky Supreme Court will take the case.

Visit the official website of iMEGA.

Costigan Media Files Suit to Open Warrant in Online Poker Funds Seizure

Amid the fanfare of the 2009 World Series of Poker (WSOP) Main Event in Las Vegas, Costigan Media, the parent company of Gambling911, has filed suit to open warrants in the case involving the seizure of $30 million in online poker player funds by the U.S. Attorney’s Office for the Southern District. It is the first legal action brought after the Southern District acted in June.

The reason for the Federal Government’s seizure remains a mystery. In the past, media outlets have been authorized to file legal action in matters of public record. Costigan Media’s filing notes, “Resolution of this issue will require the Court to define the scope of the public’s and the media’s First Amendment and common law rights of access to judicial documents.” The Southern District seized well over $30 million last month, adversely affecting more than 24,000 online poker players. Many rooms reimbursed players for difficulties cashing out and, in some cases, awarded an extra 10% cash bonus for any inconvenience.

Costigan Media is seeking the unsealing of the warrant, the affidavit for the warrant, and any other relevant documents that remain under wraps. The warrant in question was used to seize funds from a Wells Fargo branch in San Francisco, California on June 2nd. Magistrate Judge Theodore Katz signed the document, with an affidavit sworn to by Dana Conte, a Federal Bureau of Investigation (FBI) agent. Costigan Media’s filing reveals that Katz stated, “I am satisfied that there is probable cause to believe that the property so described is subject to seizure and civil forfeiture.” The parent company of Gambling911 added that the order sealing the warrant is also sealed, further complicating the situation. Funds were held in account 7986104185 under the name Account Services. The case is numbered 09-MAG-1320.

Gambling911 boasts affiliate links for UltimateBet, Players Only, Doyle’s Room, Absolute Poker, and a host of online sports betting sites. Noticeably absent are Full Tilt Poker and PokerStars, two of the heaviest hit sites by the funds seizure. Interactive Media Entertainment and Gaming Association (iMEGA) Executive Director Joe Brennan told Poker News Daily, “The government can’t even make a substantive claim that Gambling911 is acting on its own financial interest because of its own affiliate marketing. Instead, they want the news and opportunity.”

The court filing also questions, “The narrow but important issue presented in this case is whether the well-established First Amendment and common law rights to public proceedings and access to documents that ordinarily apply to judicial documents extend to a civil seizure warrant that has already been executed, but where no criminal charges have been brought.” On the media conglomerate’s chances of successfully opening the seizure warrants, Brennan told Poker News Daily, “It depends on who does the asking and where they do the asking. This is a little different in that there’s not a lot of precedent for new media outlets. It is a little groundbreaking for them to be doing this, but the precedent varies from district to district.”

Costigan Media also questions the reason for document being sealed. It speculates that “secrecy in ongoing investigations to protect confidential sources,” and “concerns of all of the un-indicted parties implicated by the Conte Affidavit” may be to blame. The company explains, “The public’s interest in criminal prosecutions should not be held hostage by a government’s blanket unsupported assertion of confidentiality or privacy concerns.” Brennan noted that the legal matter will take at least 10 days, which may be elongated by the upcoming Fourth of July holiday weekend in the United States.

Costigan Media is represented by Baruch Weiss and Matthew Trokenheim of Arent Fox in New York City. The action is dated July 2nd, just one day before the start of the 2009 WSOP Main Event from the Rio All-Suite Hotel and Casino in Las Vegas. The $10,000 buy-in tournament kicks off today with the first of four starting days.

Stay tuned to Poker News Daily for the latest news surrounding the online poker funds seizure.

Gambling Law Expert Nelson Rose Comments on Online Poker Seizure

The seizure of over $30 million in online poker payment processor funds has sent shockwaves through the industry. One of the foremost gambling law experts is Professor I. Nelson Rose of the Whittier Law School in Costa Mesa, California. Rose sat down with Poker News Daily to discuss the legal challenges of the seizure.

The U.S. Attorney’s Office for the Southern District of New York called for the freeze of over $30 million belonging to more than 24,000 online poker players. Authorities cited the Wire Act of 1961 and Illegal Gambling Business Act as statutes that legitimized their actions, which the Poker Players Alliance (PPA) claims violated due process. Rose told Poker News Daily that a variety of states, including New York, do not have legislation outlawing internet gambling: “There is no Federal law that applies to players and half of the states don’t have laws on the books that make it a crime to place a bet. It’s a tremendous gamble on the part of the U.S. Department of Justice to go after players and even more of a gamble to go after poker players.” Much of the enforcement until this point has been directed at online sports books and their payment processors.

The PPA is engaged in a dialogue with the Southern District over the contents of the accounts that were seized from banks in California and Arizona. However, the professor questions who will ultimately have standing to challenge the Southern District’s actions: “A lot of the payment processors are making good on the money that’s owed to players, which means they haven’t been injured and wouldn’t have standing. Payment processors won’t want to show up in court in the U.S. and, even if you could find a player, would they be willing to testify under oath?” In total, several obstacles exist on both sides in order to reach a resolution.

The Obama Administration assumed office on January 20th, one day after the regulations of the Unlawful Internet Gambling Enforcement Act (UIGEA) were enacted. The entire financial services industry must come into compliance by December 1st, a date that is quickly approaching. Many in the industry were surprised by the continuing attack on the internet gambling industry by an administration that was assumed to be more amiable to the cause. Rose explained, “The unusual thing is that this is the Obama Administration. This isn’t the George W. Bush Department of Justice, so it’s unusual that they’re continuing to use intimidation.”

Rose shared several other explanations that have been floating around the online poker industry as to why the seizure occurred. One theory states that the National Football League (NFL), a longtime opponent of any expansion of internet gambling, pushed the Southern District to act in retaliation for the introduction of Congressman Barney Frank’s Internet Gambling Regulation, Consumer Protection, and Enforcement Act (HR 2267) on May 6th. Frank also introduced the Reasonable Prudence in Regulation Act (HR 2266) on the same day, which would delay the regulations of the UIGEA from being enforced until December 1st, 2010.

Another possibility is that the Southern District acted in order to boost the chances of either Frank bill passing. Rose explained the reverse psychology: “When Bingo was illegal in California, police raided a retirement home to help the public understand that the law was ridiculous.” Finally, Rose speculated that the Federal Government may have acted for monetary reasons given the difficulty of finding an opposing party to appear in court. Jeff Ifrah, attorney for the payment processors in New York, told Poker News Daily that the seizure could have been timed to coincide with the 2009 World Series of Poker (WSOP).

HR 2267 is supported by major industry companies like Harrah’s and YouBet.com. The measure is up to 30 co-sponsors, including four that signed on late last week: Steve Driehaus (D-OH), Raul Grijalva (D-AZ), Steve Israel (D-NY), and Jared Polis (D-CO).

Stay tuned to Poker News Daily for the latest legislative news.

PPA Director Reacts to U.S. Government Seizing Online Poker Funds

The month of June has been a roller coaster ride for the Poker Players Alliance (PPA), the poker industry’s primary lobbying group in the United States. Last week featured a seizure of over $30 million in online poker payment processor funds by the U.S. Attorney’s Office in the Southern District of New York.

The move marked one of the first shots fired at the online poker world, as past enforcement has focused squarely on sports betting. PPA Executive Director John Pappas told Poker News Daily, “We were confused by it and also believe the Government is on shaky legal ground in terms of being able to justify doing this under any act that has to do with gambling.” According to the PPA, the Southern District claimed that the Wire Act of 1961 and Illegal Gambling Business Act were both violated. Now, over $30 million and at least 24,000 online poker players are affected.

The PPA told the Wall Street Journal that 10 million Americans play poker on the internet and wager $6 billion annually. Although no formal legal action has been filed, Pappas questioned whether the Federal Government’s Wire Act charge would hold up in court: “The highest court to rule has concluded that the Wire Act applies to internet sports betting. Not to mention, in the state of New York, statutes say it’s not unlawful for players to place a wager. There are a lot of hurdles they have to face.”

Assistant U.S. Attorney for the Southern District Arlo Devlin-Brown has emerged as the driving force behind the seizures. The PPA sent a letter to Devlin-Brown questioning whether due process was violated in the seizure of funds from Citibank, Goldwater Bank, Alliance Bank of Arizona, and Wells Fargo. In addition, poker players have been speaking up in droves, firing off letters and e-mails to their Congressmen from the PPA’s website. Pappas revealed several key talking points: “Please cite the authority and precedent for the Southern District of New York to go after poker players’ winnings. Please cite the authority and precedent that playing poker on the internet is an unlawful activity. The appropriate response to all of this is to make policy to license and regulate the industry, not force poker players to be criminals and have their money seized.”

Jeff Ifrah, attorney for the payment processors affected, speculated to Poker News Daily that the seizure may have been timed to coincide with the running of the 2009 World Series of Poker (WSOP), which began back on May 27th. In response to the adversity, online poker sites such as Full Tilt Poker and PokerStars have fully reimbursed players and in some cases offered a 10% bonus for the inconvenience of a bounced check. Many poker players have recently reported that their checks and echecks are once again clearing without setback. On the online poker sites compensating customers, Pappas lauded, “It bolsters our argument that we’re not dealing with a rogue industry that is cheating people out of their money. It’s an industry that cares about its customers.”

In the meantime, the PPA and attorneys for payment processors are engaged in dialogue with the Southern District. On the possibility of a lawsuit or court order, Pappas told Poker News Daily, “It’s not a situation where poker players are out of money. Should there be further seizure attempts going forward, then perhaps we’d be forced to jump into it with a legal injunction, but the facts of it right now leave us to believe that we can come to some sort of immediate solution through dialogue.”

Congressman Barney Frank (D-MA) has introduced the Internet Gambling Regulation, Consumer Protection, and Enforcement Act to establish a complete licensing and regulatory framework for the industry in the United States. The measure was unveiled to the world on May 6th and has since attracted 30 co-sponsors, including four new additions on Friday.

PPA Director John Pappas Appears on Bloomberg

This week, Poker Players Alliance (PPA) Executive Director John Pappas appeared on Bloomberg television to break down Congressman Barney Frank’s (D-MA) Internet Gambling Regulation Consumer Protection and Enforcement Act.

The bill, numbered HR 2267, was introduced on Wednesday and calls for a complete licensing and regulatory framework for the internet gambling industry in the United States. Although similar to a bill that Frank introduced during the last Congressional session, HR 2267 focuses on how proper regulation can mitigate the perceived social ills of gambling. Pappas told Bloomberg’s television outlet, “We want to make sure that the Federal Government puts the standards in place so that there is safety for minors, that there are services for problem gamblers, and that adult consumers can enjoy the game without fear of fraud or abuse. A prohibition never stopped a child from getting online. A prohibition never stopped a problem gambler. Regulation is the only way to do it.”

Congressman Spencer Bachus (R-AL) and others have argued that a computer with the ability to gamble online may provide the outlet for children in the United States to begin playing at a young age. Bachus even quoted a non-existent McGill University study during a House Financial Services Committee meeting last July, claiming that one-third of college students who gambled online attempted suicide. Pappas explained that online poker sites currently employ safeguards to combat underage gambling: “Most of the online sites today already are using very high-tech, sophisticated age verification technologies. They have no interest in having children on their websites playing against adults. They want adult consumers playing on their sites. The only way to ensure that all sites have that is to pass a bill like Barney Frank’s.”

Pappas’ appearance on Bloomberg also included a discussion of whether playing online poker is illegal in the United States. Poker players can vividly recall the CBS News program “60 Minutes” stating that the game was against the law on multiple occasions after show producers allegedly contacted the Justice Department. However, Pappas revealed what the legal status of the game in the United States is: “For the U.S. player, it’s not illegal for them to go online and play internet poker. What the law in 2006 attempted to do was to make illegal the transactions. It puts the burden on the financial institutions, not the actual player.” The law in question is the Unlawful Internet Gambling Enforcement Act (UIGEA), which was ushered through Congress in the waning moments of the 2006 Congressional session by then-Senate Majority Leader Bill Frist (R-TN). The UIGEA’s text gave no indication of what was legal or illegal under it. Instead, it deferred to existing State and Federal laws.

Some would cite the Wire Act of 1961 as grounds that playing online poker is not allowed in the United States. However, the 48 year-old measure traditionally applies to online sports wagering. Pappas told Bloomberg, “The Wire Act states that illegal gambling is being in the business of betting or wagering. An internet poker site isn’t in the business of betting or wagering. They’re simply allowing a venue in which people can compete in games of skill like poker against each other.”

In recent months, the PPA has seen judges in Pennsylvania, Colorado, and South Carolina conclude that poker is a game of skill and therefore should be treated separately from online casinos, Bingo parlors, and sports betting outfits. During the last Congressional session, Congressman Robert Wexler (D-FL) introduced HR 2610, the Skill Game Protection Act, which would have exempted poker, bridge, chess, mahjong, and other player versus player games from the UIGEA and Wire Act.

At the time of writing, HR 2267 has 16 co-sponsors, including Wexler, Shelley Berkley (D-NV), Steve Cohen (D-TN), Peter King (R-NY), Jim McDermott (D-WA), Ron Paul (R-TX), and Melvin Watt (D-NC).

Jim McDermott Introduces Internet Gambling Tax Act

Shortly after Congressman Barney Frank (D-MA) introduced comprehensive internet gambling legislation on Wednesday, Congressman Jim McDermott (D-WA) introduced the Internet Gambling Regulation and Tax Enforcement Act, HR 2268.

The companion legislation to Frank’s bill will allow the United States Government to extract tax revenue from the internet gambling industry. The bill’s text notes, “Each licensee… shall be required to pay an internet gambling license fee by the end of each calendar month in an amount equal to two percent of all funds deposited by customers during the preceding month.” In terms of how the costs can be passed onto the end consumer, HR 2268 states that the 2% fee “may not be deducted from the amounts available as deposits by the person placing a bet.” Individuals are expected to pay income tax on any internet gambling winnings.

Unauthorized bets or wagers are taxed at a hefty 50% and all money is sent to the United States Treasury. Full disclosure of the names and addresses of licensees, the gross wins and losses by each person wagering, the total of “net internet gambling winnings,” the amount of tax paid, and account balances are required once per year. In terms of bookkeeping under McDermott’s proposed bill, “Each person liable for fees… shall keep a daily record showing deposits… in addition to all other records required.”

In a press statement released on Wednesday, McDermott explained his rationale for once again championing internet gambling tax legislation: “We are losing billions of dollars in federal and state taxes every year because a prior Administration and its supporters drove legitimate U.S. online gambling off-shore by passing an ill-conceived late-night amendment in Congress that has done nothing except make Americans more vulnerable to scams when they wager online and cost us billions in lost revenue.” During the last Congress, McDermott’s legislation came in the form of HR 2607, which also prescribed that 2% of deposits would be taxed.

McDermott added, “These are merely the rightful collection of taxes where applicable. The billions of revenue that will be collected by the U.S. Treasury under my bill can be dedicated to pay for critically un-funded social safety net programs in America that could improve the lives of vulnerable children and others who deserve our help.” Also introduced during the last Congressional session by McDermott was HR 6501, which would have used revenue derived from internet gambling to fund programs for those currently or formerly in foster care as well as workers in declining industries. Although controversial in nature, HR 6501 was one of the first attempts to demonstrate what internet gambling tax revenue could potentially be used for.

HR 6501 was introduced last July and dubbed the Investing in our Human Resources Act. Congresswoman Shelley Berkley (D-NV) spoke out sharply against the bill. The author of the Internet Gambling Study Act called it “a classic case of putting the cart before the horse.” Fellow Nevada Congressman Jon Porter, who was not re-elected in 2008, called HR 6501 “a frivolous attack on the gaming community to pay for services that local governments, states, and the federal government should already be providing.” In the end, neither HR 2607 nor HR 6501 was acted upon during the 110th Congress.

A study by U.S.-based PricewaterhouseCoopers released this year revealed that up to $52 billion could be derived from internet gambling over a 10 year period. The report used a bill similar to McDermott’s HR 2268 as well as Barney Frank’s Internet Gambling Regulation and Enforcement Act. However, the potential revenue was largely based on professional sports leagues allowing online wagering on their games. At the time of writing, the number of co-sponsors for HR 2266, HR 2267, and HR 2268 were not available on the Library of Congress website.

Spencer Bachus Responds To Frank Bill

After the announcement on Wednesday of Massachusetts’ Democratic Representative Barney Frank’s bill to curb the Unlawful Internet Gaming Enforcement Act (UIGEA) of 2006, reaction has been quick. The ranking member of the House Financial Services Committee - of which Frank is the Chairman – has issued a negative response that should come as no surprise as he was one of the key players in the creation of the UIGEA.

Republican Representative Spencer Bachus of Alabama issued a statement after Rep. Frank’s announcement yesterday that insinuates that he will fight any legislation that Frank attempts to put into law. Rep. Bachus’ website trumpets proudly that he, “…is an author of the Unlawful Internet Gambling Enforcement Act (UIGEA) of 2006, which banned the use of credit cards and other financial instruments from being used for illegal on-line gambling.”

Rep. Bachus’ statement touches on many of the reasons that the Republican-led Congress used in 2006 for pushing the UIGEA through. “Illegal off-shore Internet gambling sites are a criminal enterprise and allowing them to operate unfettered in the United States would present a clear danger to our youth, who are subject to becoming addicted to gambling at an early age”, he states. He also offers that the passage of the UIGEA in 2006 was, “…commonsense, bipartisan legislation aimed at combating criminals from preying upon American’s youth. That legislation was supported by a broad coalition that included college presidents, the American Bankers Association, the American Psychiatric Association, and major sports organizations.”

Rep. Bachus does not comment, however, on how the UIGEA was tacked on to a piece of legislation that was viewed as a “must pass” portion of national security, the Port Act. He also fails to address that there was no debate over the UIGEA, either in committee or on either floor of Congress; in an important difference, Rep. Frank’s bill is being put to committee for discussion on its own merits and freely debated in the halls of Congress.

The bill that Rep. Frank is proposing is the H.R. 2267 - the Internet Gambling Regulation, Consumer Protection and Enforcement Act of 2009 - and it would be a significant change to current views of Washington regarding the regulation of online gaming and poker. Language of the bill states, “Internet gambling in the United States should be controlled by a strict Federal licensing and regulatory framework to protect underage and otherwise vulnerable individuals, to ensure the games are fair, to address the concerns of law enforcement, and to enforce any limitations on the activity established by the States and Indian tribes.”

The federal government – and in particular the Secretary of the Treasury – would be in charge of licensing and regulating the online gaming industry under the Frank proposal. Companies that pursue licensing would have to provide in-depth detail as to their personal backgrounds and the solidity of their companies. It also includes a proviso that ensures the potential licensee would vigorously work against, “fraud, money laundering, and terrorist finance.” The licenses would last for a five year period and would not allow the holder of the license to partake of any actions that are covered by the Professional and Amateur Sports Protection Act, which explicitly prohibits sports betting.

With Rep. Frank finally proposing his bill to curb the UIGEA, the debate can now begin. It is thought, with a Democratic-controlled Congress as well as the current Obama Administration in the White House, that the possibilities for change regarding the online gaming and poker industry can be achieved. Poker News Daily will continue to monitor the situation in Washington and report on any new developments.

iMEGA UIGEA Appeal to be Heard on July 6th

In breaking news out of the United States, it was revealed that the Third Circuit Court of Appeals will hear lawyers from the Interactive Media Entertainment and Gaming Association (iMEGA) argue why the Unlawful Internet Gambling Enforcement Act (UIGEA) is unconstitutional.

Last March, Judge Mary L. Cooper granted the organization standing to sue on behalf of the internet gambling industry. However, she disagreed with many of iMEGA’s arguments in the process, prompting the appeal. In a letter from the Third Circuit Court of Appeals, its clerk informed the parties involved that the case has “been tentatively listed on the merits on Monday, July 6, 2009 in Philadelphia [Pennsylvania]. It may become necessary for the panel to move this case to another day within the week of July 6, 2009. Counsel will be notified if such a change occurs.” Further information will be given as to whether oral arguments will be heard, and if so for how long, within one week of the disposition date.

Within seven days, iMEGA and attorneys for the U.S. Department of Justice must advise as to who will serve as counsel in the proceedings on July 6th. Each party must also identify whether its attorney is a member of the bar of the Court. iMEGA Chairman Joe Brennan is looking forward to the organization’s day in court, which is now just two months away. He told Poker News Daily, “The court is going to look at the entire case without technicalities and filing dates. They are going to solely decide it on the merits, not based on anything political or regarding procedure. That’s why you have a judicial system.”

iMEGA is in the midst of a spat with the Federal Government over whether information on the North Dakota and New Hampshire lotteries should be included in the record. Since its brief was filed, iMEGA has learned that customers trying to purchase legal lottery tickets with credit cards are being blocked from doing so. State lotteries have a specific carve-out from the UIGEA. The issues have arisen apparently due to the onset of the UIGEA regulations, which were enacted on January 19th and command full compliance by the financial services industry by December 1st. The regulations have caused Visa and MasterCard to engage in over-blocking rather than risk breaking the law.

The Department of Justice claims that because the new information was not filed by the proper deadline in iMEGA's brief, it should not be included in the record. Also absent from iMEGA’s official brief are the final regulations of the UIGEA, which were accepted by the White House Office of Management and Budget (OMB) in November as so-called “midnight rules.” Brennan told Poker News Daily why the request to supplement the record might be taken seriously by the Court of Appeals: “They are aware that their decision is going down in the history books. They know, we know, and the Department of Justice knows that not accepting our information may be grounds for an appeal.” If unsuccessful, iMEGA could appeal once again to the Third Circuit or seek the intervention of the U.S. Supreme Court.

Originally, the Third Circuit had asked iMEGA for its availability this month for oral arguments. On the two month delay, Brennan speculated, “It tells me that the Court is giving the case more serious consideration than a lot of people thought they were.” There has been no indication as to when the Court of Appeals will decide the future of iMEGA’s request to supplement the record. The case is numbered 08-1981 and is entitled “iMEGA v. Attorney-General USA, et al.”

iMEGA is also a leading party in the case pitting the Commonwealth of Kentucky’s Justice and Public Safety Cabinet against the owners of 141 internet gambling domain names, which risk forfeiture. iMEGA has until June 1st to file its brief in the case.

PPA Chairman D’Amato Sees Bipartisan Support for Internet Gaming Bill

In a recent letter authored by Poker Players Alliance (PPA) Chairman Alfonse D’Amato to The Hill, the former three-term Senator from New York forecasted bipartisan support for Congressman Barney Frank’s (D-MA) upcoming internet gambling legislation.

In a recent interview with The Hill, Frank alluded to introducing legislation favorable to internet gambling next week after Congress returns from its Easter recess. During the break, the PPA, the main lobbying organization for the poker industry, has gone on the offensive, headlined by D’Amato’s recent contribution to The Hill. The PPA surpassed the one million member mark last year in part due to the visibility and involvement of the former high-profile Senator.

D’Amato claims that both Democrats and Republicans have reason to disapprove of the Unlawful Internet Gambling Enforcement Act (UIGEA), which was attached to the SAFE Port Act and passed during the waning moments of the 2006 Congressional session. He noted in his letter to The Hill, “It does nothing to prevent children and problem gamblers from playing online; it overly burdens the banks, making them, not the federal government, policemen of the internet; it costs the taxpayers billions in unearned revenue, not to mention the loss of capital and jobs when these companies are forced to move out of the U.S.; and it’s simply unenforceable.” The UIGEA was not debated in the Senate; instead, the SAFE Port Act was passed by unanimous consent.

Frank was originally slated to introduce internet gambling legislation in March. However, a faltering economy has delayed the announcement of a bill that may outline a complete licensing and regulatory framework for the industry. The previous version was HR 2046, the Internet Gambling Regulation and Enforcement Act. It was introduced in 2007, but was not enacted into law. According to D’Amato, “Both conservatives and liberals alike know that UIGEA was simply a bad bill turned into worse policy, and it must be redone in order to put a more effective system in place.”

Frank’s two previous attempts to clarify the UIGEA both came with bipartisan support. The Massachusetts Congressman and former Republican Presidential Candidate Ron Paul sponsored HR 5767, the first version of the Payments System Protection Act. The bill was struck down in the House Financial Services Committee, of which Frank is the Chairman, last June. An amendment introduced by Congressman Peter King (R-NY) that called for a list to be developed of what was illegal and legal under the UIGEA failed by virtue of a 32-32 tie vote. The bill itself was then put to an oral vote, where the “Nays” outweighed the “Yays.”

HR 6870 marked the second version of the Payments System Protection Act. It was passed by a 30-19 vote in Committee last September. King once again spoke on behalf of the bill in its mark-up hearing, as did Congressman William Lacy Clay (D-MO). King was its lone co-sponsor, but despite bipartisan support, HR 6870 did not see time on the House floor due to the then-emerging financial crisis. A study recently released by PricewaterhouseCoopers noted that up to $52 billion could be generated by regulating and taxing the internet gambling industry over a 10 year period, although that figure relies heavily on the involvement of professional sports leagues.

The PPA held fundraisers at both the Democratic and Republican National Conventions prior to the general elections in the United States last year. In addition, the organization hosted a booth at the Conservative Political Action Conference in February. D’Amato concluded his call for bipartisan legislative support saying, “Now is the time to do what’s right for all interested parties, not based on party politics. That means protecting internet freedom and the public interest through taxation, licensing, and regulation - not prohibition.”

Barney Frank to Introduce Internet Gambling Legislation after April 20th

In a recent interview with The Hill, Congressman Barney Frank (D-MA) stated that he plans to introduce internet gambling legislation after the Easter recess. The Hill noted that the week of April 20th is a likely time frame.

Frank’s bill, which may create a complete licensing and regulatory framework for the internet gambling industry, will not be a rider to critical legislation, according to The Hill, which claimed, “The main proponent of a bill to regulate Internet gambling will introduce his legislation as a standalone bill and will not seek to add it to must-pass legislation.” Frank told the Washington, D.C. publication, “I want to do this with hearings, discussions, and votes.” The Unlawful Internet Gambling Enforcement Act (UIGEA) was passed in the waning moments of the 2006 Congressional session. It was not discussed in the Senate and instead approved by unanimous consent and attached to the SAFE Port Act.

Frank had originally indicated that he would introduce internet gambling legislation in March. However, an ongoing economic meltdown has hindered other bills from being introduced and addressed. Frank is the Chairman of the powerful House Financial Services Committee, whose industry members like banks and credit card companies have been ravaged by the struggles on Wall Street and around the world. Consequently, the timeline for the introduction of a standalone internet gambling bill has been delayed. Frank told The Hill, “After the break, definitely in April.”

Frank has long been a proponent of internet gambling on Capitol Hill. He was the author of HR 2046, the Internet Gambling Regulation and Enforcement Act, which was introduced in April of 2007, but was not acted upon and now must be reintroduced for consideration. The bill attracted 48 co-sponsors. Last September, the House Financial Services Committee approved HR 6870 by a 30-19 vote, the second version of the Payments System Protection Act, which would have clarified what was legal and illegal under the UIGEA. However, the collapse of the global economy occurred shortly thereafter and the bill was placed on the backburner.

Although a final text of Frank’s new legislation has yet to be released, The Hill speculates on what it may entail: “Frank’s bill would remove the ban on Internet gambling, which Republicans fought hard to institute after heavy lobbying from conservative Christian groups when they controlled Capitol Hill. His legislation would regulate the practice as well as tax it, providing new revenues for the federal government.” A recent study released by PricewaterhouseCoopers revealed that taxing and regulating the internet gambling industry may yield up to $52 billion in revenue for the U.S. Government over a 10 year period. The figure is ultimately contingent on whether professional sports leagues choose to allow betting on games.

Some have argued that a bill that legalizes only online poker would stand a better chance of being passed than would a multi-faceted approach like Frank’s. In July of 2007, Congressman Robert Wexler (D-FL) introduced HR 2610, the Skill Game Protection Act, which would have exempted poker, bridge, chess, mah jong, and other player versus player games from the UIGEA and Wire Act. The bill created an important distinction between online casinos, where the action is primarily player versus the house, and online poker, where contestants battle against each other. Like HR 2046, HR 2610 was not acted upon during the previous Congressional session and must now be reintroduced.

The regulations of the UIGEA went into effect on January 19th as a “midnight rule” by the outgoing Bush Administration. Banks and other financial institutions must come into full compliance with the law by December 1st. In the meantime, over-blocking of transactions by Visa and MasterCard has led to complications for state lotteries in North Dakota and New Hampshire, where customers attempting to purchase tickets online are being declined.

Stay tuned to Poker News Daily for the latest legislative news from Washington, D.C. and around the world.

Barney Frank to Introduce Internet Gambling Legislation after April 20th

In a recent interview with The Hill, Congressman Barney Frank (D-MA) stated that he plans to introduce internet gambling legislation after the Easter recess. The Hill noted that the week of April 20th is a likely time frame.

Frank’s bill, which may create a complete licensing and regulatory framework for the internet gambling industry, will not be a rider to critical legislation, according to The Hill, which claimed, “The main proponent of a bill to regulate Internet gambling will introduce his legislation as a standalone bill and will not seek to add it to must-pass legislation.” Frank told the Washington, D.C. publication, “I want to do this with hearings, discussions, and votes.” The Unlawful Internet Gambling Enforcement Act (UIGEA) was passed in the waning moments of the 2006 Congressional session. It was not discussed in the Senate and instead approved by unanimous consent and attached to the SAFE Port Act.

Frank had originally indicated that he would introduce internet gambling legislation in March. However, an ongoing economic meltdown has hindered other bills from being introduced and addressed. Frank is the Chairman of the powerful House Financial Services Committee, whose industry members like banks and credit card companies have been ravaged by the struggles on Wall Street and around the world. Consequently, the timeline for the introduction of a standalone internet gambling bill has been delayed. Frank told The Hill, “After the break, definitely in April.”

Frank has long been a proponent of internet gambling on Capitol Hill. He was the author of HR 2046, the Internet Gambling Regulation and Enforcement Act, which was introduced in April of 2007, but was not acted upon and now must be reintroduced for consideration. The bill attracted 48 co-sponsors. Last September, the House Financial Services Committee approved HR 6870 by a 30-19 vote, the second version of the Payments System Protection Act, which would have clarified what was legal and illegal under the UIGEA. However, the collapse of the global economy occurred shortly thereafter and the bill was placed on the backburner.

Although a final text of Frank’s new legislation has yet to be released, The Hill speculates on what it may entail: “Frank’s bill would remove the ban on Internet gambling, which Republicans fought hard to institute after heavy lobbying from conservative Christian groups when they controlled Capitol Hill. His legislation would regulate the practice as well as tax it, providing new revenues for the federal government.” A recent study released by PricewaterhouseCoopers revealed that taxing and regulating the internet gambling industry may yield up to $52 billion in revenue for the U.S. Government over a 10 year period. The figure is ultimately contingent on whether professional sports leagues choose to allow betting on games.

Some have argued that a bill that legalizes only online poker would stand a better chance of being passed than would a multi-faceted approach like Frank’s. In July of 2007, Congressman Robert Wexler (D-FL) introduced HR 2610, the Skill Game Protection Act, which would have exempted poker, bridge, chess, mah jong, and other player versus player games from the UIGEA and Wire Act. The bill created an important distinction between online casinos, where the action is primarily player versus the house, and online poker, where contestants battle against each other. Like HR 2046, HR 2610 was not acted upon during the previous Congressional session and must now be reintroduced.

The regulations of the UIGEA went into effect on January 19th as a “midnight rule” by the outgoing Bush Administration. Banks and other financial institutions must come into full compliance with the law by December 1st. In the meantime, over-blocking of transactions by Visa and MasterCard has led to complications for state lotteries in North Dakota and New Hampshire, where customers attempting to purchase tickets online are being declined.

Stay tuned to Poker News Daily for the latest legislative news from Washington, D.C. and around the world.

Online poker loses again in Washington

On Monday, the Division I Court of Appeals in the state ruled against Rousso's appeal to remove the law that makes it illegal to play online poker in Washington.

It was a unanimous decision from judges Stephen Dwyer, Ronald Cox and J. Robert Leach.

"Yes, I was surprised by the ruling," Rousso told PokerListings.

"I thought I had briefed the issues well and presented them well at oral argument. I also thought I had the law right. So I was surprised, but hardly shocked, as it is hard to get a law overturned."

Rousso, a lawyer in Washington as well as the Poker Players Alliance state director, first filed his case against the online gambling laws on the first day of the World Series of Poker in 2007.

His argument is that the state's law, which makes it a felony for people to play online poker, fails to comply with the federal government's Wire Act. The Wire Act has never extended criminal liability to the players.

Rousso also believes the law is in direct violation of the U.S. Constitution's Commerce Clause, which forbids individual states from passing protectionist laws against other states' business.

The three Appeals Court judges ruled that the state's interest in regulating gambling outweighs the burdens on interstate commerce.

"Ultimately, given the importance of the State's interests in protecting its citizens from the ills associated with gambling, and the relatively small cost imposed on out-of-state businesses by complying with the Gambling Act, Rousso has failed to meet his burden of showing that the Gambling Act is 'clearly excessive,'" wrote the judges in their decision.

However, Rousso did find a silver lining in the ruling.

"I was encouraged that the court accepted my argument that Congress has not given the states unambiguous authority to regulate Internet gambling," Rousso said.

"That was a big point of dispute in this case. Instead, the court found that although Congress has not granted this authority, the state's interest still outweighs the burden on interstate and international commerce. So the decision was not a total rejection of my opinion."

Although Rousso has spent nearly two years battling Washington's online gambling ban in the courts, he's not ready to give up yet.

"When I filed my case, I thought it would take about two years to get to the Washington State Supreme Court, so I'm right on schedule," he said.

Rousso is already planning to take that next step of submitting the issue to the state supreme court. He said his sense is that the court would probably accept review of the case since it involves constitutional issues.

At this point, with all the work that has gone into the case, Rousso said another appeal doesn't involve much more work. There isn't much he can add to the case either.

"Instead, as cases go higher, the issues get narrower. I will focus like a laser beam on those points where I think the court of appeals got it wrong," Rousso said.

"In particular, I think the court of appeals erred by failing to contrast what is illegal with what is legal. If one does so, the protectionist nature of the Washington statute becomes much more apparent."

Rousso is referring to the fact that other forms of gambling are legal in the state. Washington has legal casinos and a state lottery.

With respect to the constitutional issue, Rousso said everyone should be concerned about state efforts to control and regulate the Internet. The Commerce Clause was enacted to prevent exactly that type of state action.

"Personally, I think the issue is important because it reflects a willingness of the government to unreasonably intrude in our personal lives," Rousso said. "Nonplayers should be equally concerned about the Nanny State and should be objecting as loudly as I am."

That's why Rousso will keep taking the case as far as he can.

"I'll keep going until they close the courthouse doors in my face," Rousso said. "I really think this is an issue for the Supreme Court of the United States, so I'm hoping that court will accept review after the Washington Supreme Court rules on the case."

Related Articles:

• Washington court rules against Lee Rousso
• Lee Rousso on collision course with Washington state
• Hearing date set for Rousso case
• Rousso gives update on online gambling case
• Net gambling fight heads to governor race
• Net gambling lawsuit hits snag in Washington

 

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