Poker News

Poker Players Alliance Thrilled With UIGEA Extension

UIGEA Regulations Officially Delayed Six Months

Online poker players in the United States have a lot to be thankful for this holiday season. On Friday, CNBC and the Associated Press confirmed that U.S. Treasury Secretary Timothy Geithner and Federal Reserve Chairman Ben Bernanke had granted requests to delay the mandatory compliance date of the regulations of the Unlawful Internet Gambling Enforcement Act (UIGEA) by six months to June 1st, 2010.

Word of a potential delay first broke on Wednesday from Interactive Media Entertainment and Gaming Association (iMEGA) Executive Director Joe Brennan. However, no official comment had been handed down from Geithner, Bernanke, the Poker Players Alliance (PPA), or the office of Congressman Barney Frank (D-MA). Around 12:15pm ET on Friday, cable station CNBC ran a segment touting the successful six-month delay and an Associated Press article had hit cyberspace 15 minutes earlier.

The six-month delay will take the internet gambling industry to June 1st, 2010. In the interim, the theory goes that sensible legislation governing the industry in the United States will be passed. Frank introduced HR 2267 back in May. The bill, which has attracted 63 co-sponsors, establishes a full licensing and regulatory framework for online gaming outfits to solicit U.S. customers.

An Associated Press article sourced both the Treasury and Federal Reserve as saying that the UIGEA’s regulations would indeed be pushed off until mid-2010. The news service explained, “The delayed rules would curb online gambling by prohibiting financial institutions from accepting payments from credit cards, checks or electronic fund transfers to settle online wagers. The financial industry complained that the new rules would be difficult to enforce because they did not offer a clear definition of what constitutes internet gambling.” Since the UIGEA was approved in 2006, a Third Circuit Court of Appeals ruling stated that the legality of internet gambling may depend on state law, similar to the way that the brick-and-mortar version is governed.

Next Thursday, December 3rd, the House Financial Services Committee will hold a hearing discussing the merits of HR 2266 and HR 2267. The former bill delays mandatory industry compliance with the UIGEA regulations by one year to December 1st, 2010. Its relevance given Friday’s confirmation that the regulations would be pushed back six months is up in the air. The hearing kicks off at 10:00am ET in Room 2128 of the Rayburn House Office Building. Witnesses for the informational hearing have not yet been announced and the proceedings can be followed via a live webcast accessible from the Committee’s website.

Potential overblocking by credit card companies like Visa and MasterCard led the PPA, two horse racing organizations, and members of Kentucky’s Congressional delegation to petition Geithner and Bernanke, urging that the regulations of the UIGEA be shuttled back to December 1st of next year. PPA Executive Director John Pappas told Poker News Daily, “Many believe what you’ll see is overblocking of legitimate transactions. It’s not a good thing for players. It won’t just affect poker; it’ll affect horse racing, lotteries, and other online entities.”

Around 1:00pm ET, the PPA confirmed the news. The organization’s Chairman, Alfonse D’Amato, commented in a press release, “The PPA is extremely pleased with the decision by the Federal Reserve and Treasury to grant the six month extension. This is a great victory for poker, but an even greater victory for advocates of good and fair public policy.”

Stay tuned to Poker News Daily for the latest news and events from Capitol Hill.

Andreas Oscarsson Murder Case May Be UIGEA Related

A report from Swedish newspaper Aftonbladet reveals some new details surrounding the tragic death of PokerListings.com founder Andreas Oscarsson.  The story, published last week, suggests that Oscarsson’s August murder could be connected to a business deal involving the popular poker website that was adversely affected by the Unlawful Internet Gambling Enforcement Act (UIGEA).

Oscarsson was shot six times while he was sleeping in his home in Trollhättan, Sweden on August 3rd and the initial investigation by police led them to believe that the murder could be a contract killing.  Police believed a silencer was used on the gun that shot Oscarsson and the report in Aftonbladet suggests that Oscarsson’s father and his two-year old son might have been drugged or gassed by the culprits to ensure that they did not wake up when the shots were fired.

Since the August killing, new details are emerging in the case, including how a man suspected of killing Oscarsson may be tied to his victim.  The police suspect a 44-year old unidentified man is the culprit in the case.  Oscarsson was scheduled to testify against him in court on racketeering charges, but was killed before he could take the stand.  The Aftonbladet report says the suspect worked with Swedish businessman Stefan Bengtsson, who previously invested in PokerListings.  Bengtsson is one of the major shareholders in H & M Hennes & Mauritz, or more commonly known as H & M, the popular Swedish clothing company.

The story reported that one of Bengtsson’s companies invested in the site in 2003 and later wanted to sell its stake in the company for 50 million Swedish Kronor (roughly $7.1 million).  Before the sale could be completed, the UIGEA was passed and the overall value of PokerListings.com dropped substantially.  Bengtsson’s stake in the site was worth only 36 million Kronor after the Act passed and the murder suspect was allegedly harassing Oscarsson about paying up the difference, which amounts to $2 million.  Supposedly, the suspect even arrived at Oscarsson’s door demanding money and also set up a meeting with PokerListings.com representatives and Thomas Moller, the former president of the Swedish Hells Angels motorcycle gang.  The suspect claimed to be working on Bengtsson’s behalf

Though the suspect is believed to be an employee of Bengtsson, the business mogul is currently not a suspect in the case, but he has spoken with police regarding the incident.  A recent letter drafted by Bengtsson also renounced any claims he or his company had with PokerListings.  Moller has not been indicted for any crimes related to the murder either.  The 44 year-old man has not been arrested in relation to Oscarsson’s murder, but will stand trial in the extortion charges this week.

Shortly before Oscarsson was murdered, a younger man by the name of Andreas Oscarsson was murdered in the same town.  The police believe it to be a case of mistaken identity and the killing supports their theory that the murder of the elder Oscarsson was a contract hit.  One of Oscarsson’s business associates was also shot and wounded around the same time when he stepped out of his front door to retrieve the paper.

The tabloid Aftonbladet is not the only publication reporting these new details surrounding Oscarsson’s murder.  The website for Sweden’s public broadcasting system, Sveringes Radio, also reported on the story, suggesting that blackmail and Oscarsson’s pending testimony appeared to be the primary motivations behind the killing.

UIGEA regulations postponed by six months

UIGEA Delayed

Report: UIGEA Regulations Postponed Six Months

The regulations of the Unlawful Internet Gambling Enforcement Act (UIGEA) have been delayed six months from December 1st, according to Interactive Media Entertainment and Gaming Association (iMEGA) Chairman Joe Brennan.

Neither U.S. Treasury Secretary Timothy Geithner nor Federal Reserve Chairman Ben Bernanke had made any official comment regarding a six-month delay at press time. The two government officials received petitions to stay the UIGEA’s regulations by one year in letters filed by the Poker Players Alliance (PPA), National Thoroughbred Racing Association, the American Greyhound Track Operators Association, and members of Kentucky’s Congressional delegation. Congressman Spencer Bachus (R-AL) and Senator Jon Kyl (R-AZ) asked the two officials to uphold the original December 1st industry compliance deadline in a dissenting opinion.

The news comes one week ahead of a hearing in the House Financial Services Committee regarding two internet gambling bills introduced by Congressman Barney Frank (D-MA) in May that would alter the landscape of the industry in the United States. The first, HR 2266, would have postponed the regulations of the UIGEA by one year to December 1st, 2010. Its viability given today’s news of a likely six-month postponement is up in the air. The measure had attracted 53 co-sponsors on both sides of the aisle.

HR 2267, claiming 63 co-sponsors, creates a full licensing and regulatory framework for the internet gambling industry in the United States. It marks Frank’s latest attempt to undo the UIGEA, which was passed in 2006 after being attached to an unrelated port security measure at the prompting of then-Senate Majority Leader Bill Frist (R-TN). In the Senate, the SAFE Port Act was passed by unanimous consent.

On the hearing next week, which will be held at 10:00am ET in Room 2128 of the Rayburn House Office Building on Thursday, Safe and Secure Internet Gambling Initiative spokesperson Michael Waxman told Poker News Daily, “Chairman Frank is clearly indicating his commitment to switch the government’s position on Internet gambling, replacing attempts to prohibit the activity with a regulatory framework where consumers are protected. Chairman Frank’s commitment is further reinforced by scheduling this hearing and taking up this issue on the heals of the push for financial industry reform, which has been the committee’s exclusive focus the last six months.”

The six-month window will take the internet gambling industry to June 1st, right before election season in the United States in 2010. While issues like health care and a sagging economy have taken center stage since late 2008, internet gambling may finally see its day in the sun. Brennan explained his thoughts on the breaking news: “It’s encouraging that you’ve had this stay on the compliance, but it’s unfortunate that it took this long. We should all hope that in the next six months, a bill that already has 63 co-sponsors can be heard.”

To be clear, no official comment from the Treasury or Federal Reserve was available at the time of writing. With December 1st occurring next Tuesday, a stay likely had to be granted today or Monday, November 30th given the Thanksgiving holiday in the United States. Word breaking on Black Friday was also a possibility.

Stay tuned to Poker News Daily for the latest on this developing story.

No Markup Planned for December 3rd Internet Gambling Hearing

On Tuesday night, it was revealed that a hearing will occur next Thursday, December 3rd in the House Financial Services Committee. Taking center stage are two bills related to the Unlawful Internet Gambling Enforcement Act (UIGEA).

Poker Players Alliance (PPA) Executive Director John Pappas told Poker News Daily that no markup will occur at the hearing, which will be purely informational in nature: “It’s just an informational hearing. I don’t think the witnesses have been set yet and we’ve been in touch with the Committee about that. The PPA has been building the groundwork for this hearing for some time now. We look forward to it.” A representative from the House Financial Services Committee confirmed that no markup will occur. The hearing will take place in Room 2128 of the Rayburn House Office Building at 10:00am ET.

Depending upon the outcome of the internet gambling hearing next Thursday, either HR 2266 or HR 2267 could be scheduled for markup, potentially within a week. Congressman Barney Frank (D-MA) introduced both bills back in May. HR 2266 delays mandatory financial services industry compliance with the regulations of the UIGEA by one year to December 1st, 2010. It has attracted 53 co-sponsors on both sides of the aisle and is dubbed the Reasonable Prudence in Regulation Act. As it stands now, the financial services industry must fall into line with the UIGEA by Tuesday, December 1st.

When asked if the December 1st compliance date passing makes HR 2266 moot, Safe and Secure Internet Gambling Initiative (SSIGI) spokesperson Michael Waxman told Poker News Daily, “It could be unless Frank decides that the financial services sector needs a reprieve. Many companies have already expressed concern that the implementation of the law will be burdensome. I believe we’ll hear back from them again as they are forced to abide by the rules.”

HR 2267, the Internet Gambling Regulation, Consumer Protection, and Enforcement Act, establishes a full licensing and regulatory framework for the internet gambling industry in the United States. It boasts 63 co-sponsors and, when coupled with a tax bill introduced by Congressman Jim McDermott (D-WA), could bring in as much as $42 billion over a 10-year period, according to a study by the Joint Committee on Taxation.

Many in the industry have pondered the status of the internet gambling and online poker industries in the United States after December 1st. Interactive Media Entertainment and Gaming Association (iMEGA) Chairman Joe Brennan told Poker News Daily, “Poker players are going to have to get used to the kind of speed of deposit and withdrawal that online sports betters have had to get used to. To my knowledge, all of the top sports books have moved their processing offshore. I don’t expect there to be the wealth of electronic transfer methods and you’re probably going to see an increased use of checks drawn on international banks.”

One possible outcome in the post-December 1st internet gambling industry is overblocking by credit card companies like Visa and MasterCard. The 12-letter term began popping up earlier this year, when legal online lottery purchases in North Dakota and New Hampshire were denied. In essence, credit card companies could disallow any transaction that appears to look remotely like internet gambling in an effort to comply with the 2006 law. Overblocking also led several members of the Kentucky Congressional delegation to petition U.S. Treasury Secretary Timothy Geithner seeking the delay of UIGEA regulation enforcement. The group fears that legal online wagering on horseracing could come to a screeching halt as a result.

The PPA, National Thoroughbred Racing Association, and the American Greyhound Track Operators Association issued a letter to Geithner and Federal Reserve Chairman Ben Bernanke seeking delay of the UIGEA’s regulations. As of the time of writing, the request had not yet been acted on.

Stay tuned for the latest from Capitol Hill right here on Poker News Daily.

UIGEA Hearing Scheduled for December 3rd in Financial Services Committee

In breaking news from the House Financial Services Committee, a hearing to discuss two pieces of legislation related to the Unlawful Internet Gambling Enforcement Act (UIGEA) will be held on Thursday, December 3rd at 10:00am ET.

Interested online poker players can check out the hearing via a webcast found on the official website of the Committee. The hearing, which will be held in Room 2128 of the Rayburn House Office Building, will cover two pieces of legislation introduced by Committee Chairman Barney Frank (D-MA), HR 2266 (Reasonable Prudence in Regulation Act) and HR 2267, the Internet Gambling Regulation, Consumer Protection, and Enforcement Act. The longtime Massachusetts Congressman introduced the measures on the same day in May.

On December 1st, two days prior to the hearing, the financial services industry in the United States must come into full compliance with the regulations of the UIGEA, which were officially approved as midnight rules by the outgoing Bush administration back in January. Several days ago, Poker Players Alliance (PPA) Executive Director John Pappas told Poker News Daily that he expected a hearing to come soon: “Chairman Frank has told us that he intends to have a hearing and mark up HR 2267 as soon as he’s done with financial regulation reform bills. We think it might be in January, but there’s a good chance we could have a hearing in December. It depends on the Congressional schedule.”

Christmas has come early for the PPA, which has lobbied on several fronts for HR 2266 and HR 2267 to be marked up. It is unclear at the time of writing as to whether any markup will occur, as the proceedings next Thursday appear to be purely informational in nature. HR 2266 delays the regulations of the UIGEA by one year to December 1st, 2010. As it stands now, the industry has merely a week to brace for their effects on payment processors. HR 2266 has 53 co-sponsors on both sides of the aisle, including Steve Cohen (D-TN), Jim McDermott (D-WA), Ron Paul (R-TX), and Robert Wexler (D-FL).

Frank’s other bill, HR 2267, has 63 co-sponsors and creates a full licensing and regulatory framework for internet gambling and online poker outfits to solicit real money customers from the United States. A companion bill introduced by McDermott in May, HR 2268, taxes online gaming operators 2% of deposits. Although several estimates have been made as to how much revenue internet gambling could bring to the United States Government, the most recent study, which came from the Joint Committee on Taxation, pinned the figure at $42 billion over a ten-year period.

Witnesses for the December 3rd hearing and their prepared testimony were not given on the House Financial Services Committee website at the time of writing. Next Thursday will mark the first major movement on the internet gambling front in the Financial Services Committee since September of 2008, when Frank’s HR 6870 was approved by a 30-19 margin. The bill sought to clarify what activities were permissible under the UIGEA. It was not acted on during the 110th Congress and therefore was declared dead entering 2009.

A total of 41 Democrats and 29 Republicans make up the Financial Services Committee. The latter are headed by Spencer Bachus (R-AL), who, along with Senator Jon Kyl (R-AZ) recently authored a letter to U.S. Treasury Secretary Timothy Geithner and Federal Reserve Chairman Ben Bernanke urging that the regulations of the UIGEA be enforced on December 1st as scheduled. Recently, members of the Kentucky House delegation implored Geithner and company to delay UIGEA regulation enforcement due to overblocking by credit card companies, potentially stunting legal online horseracing wagers.

We’ll have more information on the December 3rd hearing as it unfolds right here on Poker News Daily.

Six Kentucky Congressmen Support Pushing UIGEA Deadline Back One Year

Poker News in Brief: Nov. 16-22, 2009

The 21-year-old generated some major mainstream press coverage this week by appearing on the Late Show with David Letterman and CNN's American Morning.

There was plenty of news that didn't involve Cada, however, and as part of our ongoing Poker News in Brief Feature we're going to break some of it down for you today.

This week we'll look at another man winning a ladies event, the end of Fair Poker, more support for an online poker bill, an upgrade for Cake Poker and more.

Man wins Ladies Championship at Lake Tahoe

Greg Sessler became the latest man to enter and win a female poker tournament last week.

Sessler won the Ladies Championship at the World Series of Poker Circuit stop in Lake Tahoe by outlasting all 95 players that entered the tournament. Of that total, four were men.

Although organizers encourage only women to play, Harrah's cannot exclude any player based on gender. After winning the tournament Sessler defended his decision to play.

"Me playing in this tournament really had nothing to do with trying to take advantage of the ladies or thinking it was a softer field," he said.

"If Jennifer Harman would have come and played in the ladies event, she would have been much tougher competition than me. I came here because I only had one day and I really like the structures and the payout."

Back in September Abraham Korotki entered a ladies event at the 2009 Borgata Poker Open and went on to win it. Former baseball star Jose Canseco also famously entered a women's tournament a few years ago.

More support for Frank's pro-online poker bill

The U.S. bill that would both legalize and regulate online poker has another co-sponsor.

Rep. Anthony D. Weiner of New York's 9th district signed on board this week as the 63rd co-sponsor of the legislation.

Rep. Barney Frank originally introduced the bill last spring but it has yet to be heard before committee.

Frank's bill would essentially repeal the Unlawful Internet Gambling Enforcement Act that was passed in 2006 and put a regulatory system in place for the online gambling industry.

Unfair outcome for Fair Poker

Lesser-known online poker room Fair Poker disappeared this week, but its players found a new home at Noble Poker.

Both sites were members of the iPoker network and were merged into one site earlier in the week. Fair Poker players had their account balances and the iPoints they had earned transferred to Noble Poker.

iPoker remains one of the busiest online poker networks in the world with Titan Poker, ChiliPoker, Bet365, CD Poker, William Hill, Mansion Poker and numerous others all under the iPoker banner.

The 2009 BC Poker Championships, starring Liz Lieu, will be televised.

HeadsUp Entertainment to televise BC Poker Championships

HeadsUp Entertainment, operators of the Canadian Poker Tour and Canadian Poker Player Magazine, will help televise coverage of the 2009 BC Poker Championships in Vancouver.

"We are very pleased to be part of Canada's premier poker tournament," said HeadsUp President Kelly B. Kellner. "We consider it a privilege to be able to cover the event through both our magazine and on television."

HeadsUp Entertainment made a deal with The Score Television Network, which is the exclusive broadcast partner of the Canadian Poker Tour, to show highlights from the tournament.

The 2009 BC Poker Championships began this week with 606 runners. The event received the attention of some big name poker players including Tiffany Michelle, Liz Lieu, Maria Ho, Greg "FBT" Mueller, Gavin Smith and Brad Booth.

Last year Canadian poker super-star Daniel Negreanu outlasted 689 players to win the 2008 BCPC for $300,708.

Cake Poker adds players, synchronized breaks

Cake Poker had a busy week adding synchronized breaks to its software and taking players from Third Bullet Poker.

Third Bullet was already a member of the Cake Network and the company's executives made the decision to merge the player base onto Cake Poker for better technical support and customer service.

Meanwhile, Cake's synchronized breaks will let multi-table tournament players take a break no matter how many tables they are running. The breaks will occur at 55 minutes past the hour, every hour.

The breaks do not affect Sit 'n' Go tournaments with less than 30 players.

The feature is quickly becoming an industry standard as Absolute Poker and UltimateBet recently added synchronized breaks as well.

Spencer Bachus, Jon Kyl Issue Letter to Timothy Geithner, Ben Bernanke

Recently, two high-powered, longtime opponents of internet gambling issued a letter to Federal Reserve Chairman Ben Bernanke and U.S. Treasury Secretary Timothy Geithner calling for the compliance date of the Unlawful Internet Gambling Enforcement Act (UIGEA) regulations (December 1st) to be enforced.

The date is now 10 days away and approaching rapidly. Last month, the Poker Players Alliance (PPA) teamed up with the National Thoroughbred Racing Association and American Greyhound Track Operators Association to issue a letter to the same two government officials. Following the letter by the PPA was one authored by 19 Congressmen belonging to the House Financial Services Committee, of which Barney Frank (D-MA) is the Chair.

Congressman Spencer Bachus (R-AL) and Senator Jon Kyl (R-AZ) explained in their own letter, “We strongly oppose this request and believe there is no justification for delaying the compliance deadline of the UIGEA regulations.”

The letter, dated earlier this month, outlines the passage of the UIGEA and the approval of its regulations, which went into effect on January 19th as so-called “midnight rules” by the outgoing Bush administration. The Republican duo notes, “If the Final Rule represented an ‘unreasonable burden on regulators and the financial services industry,’ as certain other Members have claimed, then the Treasury Department and the Federal Reserve could have reconsidered the regulations.” The letter adds that the Truth in Lending Act, whose regulations were issued in August, accommodated the UIGEA.

All told, Kyl and Bachus, staunch opponents of internet gambling, give their stance on the letter writing campaign by the PPA and Financial Services Committee members: “This is a blatant attempt to circumvent the democratic process by influencing the Treasury Department and the Federal Reserve to take action that cannot possibly be enacted by Congress.” On Capitol Hill, the United States legislative body is in the midst of a debate about massive health care expansion.

Two bills, both introduced by Frank, have the potential to change the landscape of the internet gambling industry in the United States as December approaches. The first, HR 2267, establishes a full licensing and regulatory framework for the online gaming outfits in the United States. The measure received its 63rd co-sponsor last week after its introduction in May. The second piece of legislation, HR 2266, delays mandatory compliance with UIGEA regulations by one year to December 1st, 2010. HR 2266 is up to 53 co-sponsors on both sides of the aisle. The House Financial Services Committee has scheduled neither HR 2266 nor HR 2267 for markup.

The letter from the two lawmakers concludes, “Simply delaying the compliance date serves no interest except that of the internet gambling enterprises that have long evaded American gambling laws and will continue to do so until effective enforcement is in place.” Kyl is a third term Senator from Arizona and the current Senate Minority Whip. His counterpart in the Western state is also a Republican, former Presidential candidate John McCain. Bachus was elected to the House of Representatives in 1992 and is the Ranking Member of the Financial Services Committee, which includes 30 Republicans and 42 Democrats.

Neither Geithner nor Bernanke has responded to any of the three letters as of the time of writing. John Pappas, Executive Director of the PPA, told Poker News Daily that a January markup of HR 2267 is a possibility, although no timetable has been set in stone. Blocking of legal online gambling transactions led the two horse racing organizations to become involved. Similarly, in North Dakota and New Hampshire, major credit card companies denied legal online lottery purchases due to “overblocking.”

The effect that the December 1st deadline will have on the industry is not yet known. Stay tuned to Poker News Daily for the latest poker legislation headlines.

Jack McClelland on the State of Poker Tournaments

One of poker’s top tournament directors is the Bellagio’s Jack McClelland, master of ceremonies for some of the game’s top events. Gearing up for the World Poker Tour’s (WPT) Doyle Brunson Five Diamond World Poker Classic, McClelland sat down with Poker News Daily to discuss the state of the poker tournament world.

Poker News Daily: Thanks for joining us. Tell us how you’re getting ready for the upcoming Five Diamond World Poker Classic.

McClelland: The Five Diamond starts the day after Thanksgiving. We’ve been doing it for nine years now, so we have it down. We close down the Fontana Lounge and fill it up with poker tables. I’m expecting around 300 players for the first tournament and somewhere between 300 and 500 for the Main Event.

PND: Talk about how the ongoing recession has affected poker at the Bellagio.

McClelland: It’s just like the rest of the world. The people that were playing $200/$400 are now playing $80/$160. The people playing $10/$20 are now playing $5/$10. No one wants to admit that they had anything bad happen, so they just play lower, which is especially tough on the Bellagio-style tournaments because ours have been geared more towards the high-end player. This is the player who is going to make a bigger buy-in and also go out and spend $100 or $200 on a nice dinner. We’ve had to reduce our buy-ins and things like that to get more foot traffic, but we’ve also had to keep the big stuff to preserve our credibility.

It’s difficult because of the economy and because of the internet law change in 2006. Now, if one of the big sites wants to send us $3 million and 200 players, we send it back and say thanks, but we can’t accept it. The internet has been driving the tournament players towards Europe, China, and the Middle East. We’re at a severe disadvantage.

PND: What noticeable effects have you seen of the Unlawful Internet Gambling Enforcement Act (UIGEA)?

McClelland: It was passed at the end of 2006. We didn’t see an immediate drop-off and, for a year or so, everything was okay. Television still picks up the big tournaments and people still want to win the big ones. What the UIGEA did was take away from the preliminary events. For example, we’re giving away a $6,000 Rolex to the winners of some of our events. You can buy in for $500, win your share of the prize money, and also take home a $6,000 Rolex. That’s very enticing. It’s a combination of the current economy and the uncertainty of the future of the economy. If people have money, they’ll be more careful with it.

PND: Talk about an average day in the life of Jack McClelland.

McClelland: We go to the office and I have a tournament every day. We have meetings with different departments and people come up with new ideas for marketing and we have to sort through everything. We do a lot of stuff internationally with our property, so we make trips and advise them on how to do things. Las Vegas is very competitive and, with the current economy, the Bellagio is at a disadvantage because we cater to the higher buy-ins and the bigger players.

PND: How did you get started directing tournaments?

McClelland: In the early 1980s, I was playing 200 to 300 small buy-in tournaments a year. I was always complaining about how the tournaments are so badly run. My wife said, “If you’re such a genius, you should run them.” It worked out because I love the competition and the challenge of how to run an event. I’ve always been willing to adapt and my rules are more flowing than set in stone.

I have a wonderful staff. I hand-picked and hand-trained all of them. They worship the quicksand I walk on. They’re just a great group and I’m very proud of them. During the Bellagio Cup this year, I caught pneumonia. I maybe did 10 minutes of work on the television show and couldn’t make it. During the event, they just took the ball and ran with it. At most places, if your guy goes down, you’re going to have some rocky spots. In our case, our staff picked up the ball, ran with it, and scored a touchdown.

PND: What do you foresee as the future of poker tournaments?

McClelland: I believe that poker tournaments will be with us as long as we have the television exposure. If we lose television, it’s just going to revert back. The main thing that’s hurting the American poker industry is the internet law. In other countries around the world, you can play online, but not here. As much as our country needs the money, to pass up billions of dollars in revenue is criminal. If they change the law, I don’t know that we’ll get back up to 10,000 entries into a $10,000 buy-in event, but we’ll get our market share back. If they don’t change it, we’re just eroding.

CNBC Closing Bell Tackles Internet Gambling

The Global Gaming Expo is currently unfolding from Las Vegas and, as part of its coverage of the event, CNBC’s “Closing Bell” aired a four-minute segment entitled, “Odds Favor Online Gambling?”

Two industry experts joined CNBC “Closing Bell” host Melissa Francis on Thursday, Andrew Parmentire of Height Analytics and David Katz, an Oppenheimer gaming analyst. The former began the discussion, which did not take in a debate form, but rather featured both parties agreeing that legalized internet gambling in the United States is inevitable. Parmentire explained, “Barney Frank has put a bill out there and the stars are lining up in a lot of ways. Harrah’s has shown that they have an online strategy, Congress and states are in desperate need for money, and $50 billion can offset a lot of social programs that Democrats are pushing these days.” The proposed health care initiative, for example, could come with a price tag approaching $1 trillion.

Katz told CNBC viewers, “Gambling in the U.S. has become a far more acceptable consumer product than it was five or ten years ago. That said, we really are much more focused on the publicly traded companies and that would be the brick-and-mortars like Harrah’s as well as the game providers and the technology companies that support those industries.” Katz added that Harrah’s has become a major proponent of licensing online gaming. The Las Vegas-based private company recently launched Harrah’s Interactive Entertainment (HIE), based on Montreal, to oversee its online brand, with former Party Gaming CEO Mitch Garber as its lead figure.

Harrah’s inked an agreement with 888, the parent company of Pacific Poker, to fill its online gaming needs. 888 is a publicly traded company in London, where it can be found under the same three-number acronym. Katz explained that with casinos slowly reaching their limits in the live space, the switch to the Web is inevitable: “If you go to the Bellagio, they have a couple of hundred seats to sit in, so there’s a physical constraint. If you look at the number of states out there that are considering legalizing gaming, they’re going down every year. There’s a finite opportunity for the brick-and-mortar guys to expand in the United States and at some point, they have to start thinking globally.”

The CNBC spot occurred about two weeks prior to December 1st, the date by which the financial services industry in the United States must fall into line with the Unlawful Internet Gambling Enforcement Act (UIGEA). The Poker Players Alliance (PPA), the industry’s main lobbying voice, issued a letter to Federal Reserve Chairman Ben Bernanke and U.S. Treasury Secretary Timothy Geithner to postpone the date by one year while effective legislation can be crafted. However, the two government officials have not yet responded.

The UIGEA was passed during the waning moments of the 2006 Congressional session at the direction of former Senate Majority Leader Bill Frist (D-TN). It was approved by a 3:1 margin in the House of Representatives and by unanimous consent in the Senate after being attached to the SAFE Port Act. The Third Circuit Court of Appeals recently ruled that the UIGEA did not in and of itself make any sort of internet gambling activity illegal. Instead, the legality of an online activity depends on a player’s jurisdiction. Parmentire candidly explained, “There is a lot of anger as to how this happened in 2006.” The PPA has expanded its membership from 50,000 in 2006 to over 1.2 million today.

Concurrently with the Global Gaming Expo, 2009 World Series of Poker (WSOP) Main Event champion Joe Cada, who represents the online poker room PokerStars, has spread goodwill by appearing on mainstream outlets like the “Late Show with David Letterman,” ESPN’s “SportsCenter,” and USA Today. Cada, an online poker pro, became the youngest winner of the $10,000 buy-in tournament ever at age 21, breaking Peter Eastgate’s record of 22 years-old set in 2008.

Online Poker May Be Coming to Quebec, British Columbia

Quebec, British Columbia, and the four Atlantic provinces of Canada may soon see legalized and regulated online poker headed their way, according to an article that appeared in the Montreal Gazette newspaper.

Loto-Québec has submitted a proposal to the province’s government “for an internet wagering initiative in partnership with British Columbia and the four Atlantic provinces, which already have limited online gaming,” according to the Canadian news outlet. Loto-Québec claims that Canadians are currently placating more than 2,000 offshore internet gambling outfits, sending nearly $700 million in wagers away from the country each year, a number that will likely top $1 billion in three years.

Quebec plays home to the Kahnawake Gaming Commission (KGC), which is located on the Indian reservation of the same name outside of the city. Although the KGC is not currently linked to Loto-Québec’s endeavors, the organization’s Chairman, Dean Montour, told the Montreal Gazette, “The fact that Quebec is now entering the online gaming business in partnership with the Atlantic provinces and British Columbia is an indication that the industry is thriving and is gaining wider acceptance. For over 10 years, the Kahnawake Gaming Commission has had a positive working relationship with online gaming regulators throughout the world and looks forward to sharing its knowledge and experience with the Régie des alcools des courses et des jeux.”

The KGC is fresh off completing the investigating surrounding Ultimate Bet, an online poker site that recently changed its name to UB.com. In a September report, the KGC continued to finger former World Series of Poker (WSOP) Main Event champion Russ Hamilton as the mastermind behind the scandal and noted that 31 other individuals were involved, but would not identify who they were. The KGC also issued over 100 screen names associated with the misgivings, a list that included “nvtease,” “Sleeplesss,” and the infamous “NioNio.”

Given the seemingly “Wild West” atmosphere of the internet, Canadian control of the online poker industry will likely bring a considerable amount of validity: “The integrity of the online games often is dubious, as it was for some lotteries and VLTs before Loto-Québec was mandated by the government to funnel them into controlled circuits and oversee them,” noted Loto-Québec President and CEO Alain Cousineau. Loto-Québec added $1.4 billion to the bottom line of the province during the last fiscal year.

Potentially adding to the pressure of Loto-Québec to legalize and regulate the internet version of the age-old card game is a move towards licensing in the United States, spearheaded by Congressman Barney Frank (D-MA). Back in May, the lawmaker introduced HR 2267, the Internet Gambling Regulation, Consumer Protection, and Enforcement Act, which establishes a full framework for legalized internet gambling in the USA. The measure is up to 63 co-sponsors, including Anthony Weiner (D-NY), who signed on four days ago. The Poker Players Alliance (PPA) expects HR 2267 to be marked up in the House Financial Services Committee, of which Frank is the Chair, in January. Other reports signal that markup is coming in December.

On December 1st, the financial services industry in the United States must fall into full compliance with the regulations of the Unlawful Internet Gambling Enforcement Act (UIGEA), which was passed three years ago. The PPA and other organizations have been feverishly working to delay the compliance date by one year, but so far, pleas to Federal Reserve Chairman Ben Bernanke, Treasury Secretary Timothy Geithner, and the U.S. Congress have not been heeded.

Earlier this year, it was revealed that the newly-created Harrah’s Interactive Entertainment (HIE), headed by former Party Gaming CEO Mitch Garber, would be based in Montreal. Former WSOP Commissioner Jeffrey Pollack was originally slated to be HIE’s President, but recently parted ways with the Las Vegas-based gambling giant.

WPT and PartyPoker begin fight for poker supremacy

"That's our stated aim," PartyGaming's chief marketing officer Chris Welch told PokerListings. "And until that time we will leverage both the World Poker Tour and PartyPoker as best we can to take that challenge to our competitors."

Before the Unlawful Internet Gambling Enforcement Act (UIGEA) was signed into U.S. law in October 2006 and PartyPoker effectively pulled out of the U.S. market, it was the number one site in poker.

Since that time, PokerStars has emerged as the industry leader with more than 28 million players worldwide.

A major catalyst for PokerStars' growth has been the emergence of the European Poker Tour. While the WPT has always been credited with helping spur on poker's boom, it has since been surpassed by the PokerStars EPT, which boasted a total prize pool in excess of $55 million over 11 events last season, making it the largest poker tour in the world.

However, Welch says PartyGaming subsidiary Peerless Media Ltd's $12.3 million purchase of the WPT, approved by shareholders earlier this month, now has the organization primed to compete in Europe and across the globe.

"We think there is certainly room for two big tours in Europe," said Welch. "And the World Poker Tour, we believe, is a global brand while the European Poker Tour exists only in Europe."

Particularly in Italy and France, the WPT plans on embarking upon an aggressive growth strategy to begin competing with the EPT.

"We're looking forward to more global expansion, more International expansion," added newly appointed WPT president Adam Pliska.

Welch said part of that expansion will include offering more online satellites into WPT events worldwide.

"It's a great opportunity to offer our European players more tournaments and land based events and of course we are going to run satellites on PartyPoker," Welch said. "But we are also going to encourage other online sites to do the same."

While sites other than PokerStars once ran satellites for EPT events, many stopped after PokerStars forced its competitors to use the site's branding.

Welch says the WPT and PartyPoker will be taking a different approach.

"PokerStars have gone down the route of it being the PokerStars EPT and you've got to have that on your site to run satellites or freerolls," he explained. "That's not our strategy. Our strategy initially will be that it's the World Poker Tour and you can come and qualify from any online site or direct buy in.

"What they are trying to do is leverage their brand. They have the biggest tour in Europe and they are trying to get other people to mention their brand name. We have an opportunity here to grow the World Poker Tour by offering other online sites a chance to get in there without necessarily mentioning PartyPoker and that's what we are going to do."

But the battle for online poker supremacy will not just be fought on European soil.

In April of this year, PartyGaming entered into a $105 million settlement with the U.S. Attorney's Office to avoid prosecution for providing Internet gambling services to U.S. customers prior to the enactment of the UIGEA.

Under the terms of the agreement, PartyGaming agreed to stay out of the U.S. Internet gambling market under current legislation and is hoping, should the legislation change, it would be in a prime position to move back in.

Welch said the purchase of the WPT is yet another way PartyGaming is paving its road back into the United States.

"Should the United States open up, it's going to put us in a preeminent position, way ahead of the competition," he said. "We've taken the long view while some of the other players have taken the short view, and should the United States open up, we are going back to being number one again."

However, until U.S. Lawmakers get on board, Welch said the front lines of this fight will remain on the other side of the Atlantic.

"This provides us with a massive platform to bring PartyPoker back into the hands of millions of Americans," he said. "But in Europe, we can do that from day one."

The public face of both brands, 2009 Poker Hall of Fame inductee Mike Sexton, believes with PartyPoker and the WPT coming together, the sky is the limit.

"I think it can be a huge entity and a worldwide brand," he said. "Hopefully when online gaming becomes legalized in the United States, PartyPoker can come in and retain its status as the number one poker site in the world."

Poker Players Alliance Still Confident in Geithner

Joe Cada Dons PPA Logo for 2009 WSOP Main Event Final Table

When viewers tune into tonight’s broadcast of the 2009 World Series of Poker (WSOP) Main Event on ESPN, they’ll see eventual winner Joe Cada don a logo for the Poker Players Alliance (PPA), the industry’s grassroots lobbying force.

Over one million members of the PPA comprise its rank and file and the organization is based in Washington, D.C. On the level of exposure that Cada will bring the PPA when tonight’s two-hour plus broadcast airs, PPA Executive Director John Pappas told Poker News Daily, “We’re very excited that he wore our logo. Not only did he wear it, but he’s also expressed an interest in supporting the PPA and our mission. He’d bee an ideal spokesperson to reach out to the younger demographic, the young internet player who may be skeptical as to what the PPA is and what we’re trying to accomplish.”

The PPA has been working feverishly to delay the implementation of the regulations of the Unlawful Internet Gambling Enforcement Act (UIGEA). As it currently stands, the financial services industry in the United States must fall into full compliance with the muddled 2006 law by December 1st, which is now just three weeks away. Pappas noted that Cada’s presence might help bolster the organization’s legitimacy: “Someone with his poker skills and reputation is helpful to have promoting our cause.”

PPA Membership Director Bryan Spadaro roved the halls of the Rio on Saturday morning when play saw the November Nine become only two. Spadaro came armed with a handful of PPA patches, telling players and agents alike why they should be worn. In the end, Cada, Kevin Schaffel, James Akenhead, and Eric Buchman all wore PPA patches. Curiously, Akenhead obliged even though he’s British and Pappas explained, “The game itself isn’t an American game. Even in Europe, they’re starting to see some of the ideas of monopolies and protectionism. We’d like to see us being a global force at some point.”

About 1,500 fans turned out for Monday’s finale at the Penn and Teller Theater at the Rio, which saw the cards hit the air shortly after 10:00pm local time. The action from the green felt was broadcasted on two large video projection screens in the venue, meaning that all 1,500 fans were exposed to the PPA logo for hours on end. Heads-up play lasted for two hours and 21 minutes and the final table’s time of 17:16 marked the longest in WSOP Main Event history by nearly three hours. The longest WSOP table on record belongs to the 2008 WSOP Europe Main Event, which lasted 19 hours.

The PPA teamed up with the National Thoroughbred Racing Association and the American Greyhound Track Operators to author a letter to Federal Reserve Chairman Ben Bernanke and U.S. Treasury Secretary Timothy Geithner urging the delay of UIGEA regulations until December 1st, 2010. A similar outcome is the goal of Congressman Barney Frank’s (D-MA) HR 2266, the Reasonable Prudence in Regulation Act.

The industry will take a wait-and-see approach with the effects of the UIGEA’s regulations. One thing is for sure, however. The PPA is likely to receive a sizable membership boost as a result of the extended exposure on ESPN this evening. Free memberships to the lobbying organization are available.

The action begins at 9:00pm ET tonight on ESPN and will run for at least two hours. The network did not institute a “cutoff” time for programming, but the episode is not expected to last more than two and a half hours.

Chad Brown, Liv Boeree Join ESPN Inside Deal

The final installment of ESPN’s poker show “Inside Deal” before the 2009 World Series of Poker (WSOP) Main Event final table was released on Tuesday, featuring Chad Brown and Liv Boeree.

The “Inside Deal” crew moved to a new set to open the show and its attention immediately turned to Phil Ivey mucking the winning flush during last week’s WSOP on ESPN broadcast, which saw the field trimmed to 18 players. “Inside Deal” host Bernard Lee gave his take on the errant move: “It was shocking. That’s really all you can say. I’m sure it’s happened before, but not in the final 27 of the WSOP Main Event.” Ivey remains in the running for the $8.5 million first place prize despite the hiccup.

On Kara Scott being the new host of the GSN poker franchise “High Stakes Poker,” Lee quipped, “At least we know that Norman Chad will be watching;” Chad referred to Scott as “Kara Scott-Chad” throughout the 2009 WSOP Main Event broadcast. Poker News Daily can independently confirm that Scott is the new host of “High Stakes Poker” pending finalization of her contract and obtaining a working visa. No official announcement has been given by GSN.

A recent study released by the Joint Committee on Taxation, a U.S. Government agency, revealed that over $40 billion could be realized from taxing the internet gambling industry over a 10-year period. Lee explained the significance of the report: “That has to raise a lot of eyebrows in the government, knowing that amount of money could go into their coffers. This has to slowly move the pendulum toward us.” In the meantime, the financial services industry in the United States must come into full compliance with the regulations of the Unlawful Internet Gambling Enforcement Act (UIGEA) by December 1st.

Boeree them joined the show and revealed that she studied physics and astrophysics in school before being cast for a poker reality show featuring Ultimate Bet pros Annie Duke and Phil Hellmuth. Boeree has been competing on the tournament circuit for only one year and commented, “I definitely don’t think I could go back to hosting now. I find it very difficult being at a European Poker Tour (EPT) event and asking people what their strategies were.” Her favorite band is Metallica, whom she has met and seen in concert. Boeree, a Brit, also claimed that her worst pet peeve of Americans is “easting like idiots.”

Brown discussed being one-half of a “power couple” in poker along with wife Vanessa Rousso: “We both have our own careers. As a couple, [we] can be supportive of each other.” Brown was the 2006 Bluff Magazine Player of the Year on the strength of five Top 40 finishes in World Poker Tour (WPT) events and a fifth place showing in EPT London. On the accolade, which only takes into account $5,000 buy-in tournaments with more than 100 players, Brown told Lee and fellow “Inside Deal” host Laura Lane, “These are the best players in the world you’re competing against.” John Juanda and Barry Greenstein were on his heels throughout much of the competition.

Brown noted that he was cast to be part of a movie directed by James Woods, but the project was put on hold due to the lingering global recession. On his acting career, the Team PokerStars Pro member explained, “If you’re a movie star, you can do whatever you want. If you’re a working actor, you need to stay in Hollywood and pound the pavement.” While Brown has put his acting skills to use on the green felts, Boeree commented that exploiting her femininity is advantageous: “There are definitely times when you can use it to your advantage. If you can flirt with the guys, they’ll want you to stick around.”

“Inside Deal” now heads to Las Vegas for the finale of the 2009 WSOP Main Event. The show is released each Tuesday on ESPN.com.

Poker Magazine Strategies in a Down Economy

Given the age of the internet, owners of newspapers, magazines, and other print materials have struggled to survive. Add in an economy on the downswing and the environment is complicated even further. Poker News Daily sat down with John Wenzel of Poker Pro Magazine to survey the magazine scene.

Poker News Daily: Have magazine sales dropped significantly given the down economy?

Wenzel: Poker publications are unique not just because the industry so competitive, but also because we rely so little on actual sales. When the first poker magazine was rolled out 20 years ago, it was given away. Ever since then, players have expected to get it for free. Sales have never been a big part of a poker magazine’s business model. Of the big three, we probably have the largest distribution in card rooms and newsstands. Our sales haven’t changed much during the recession.

PND: You make money off of advertising then? Has that suffered?

Wenzel: We make most of our money off of advertising. We took a big hit in 2006 when the Unlawful Internet Gambling Enforcement Act (UIGEA) was passed and sites like PartyPoker left the U.S. market. Earlier this year, we also took a bit of a hit with the economy, but things are starting to turn around. Luckily, we’re a pretty lean and nimble company, so we can react quickly if the market changes. We can hunker down and hang in there.

PND: How was Poker Pro Magazine started?

Wenzel: I was a serious player my whole life. I always had a day job as a reporter or an editor and also was a designer, so I had a unique vantage point. I always read magazines and had some definitive ideas of things I wanted to do. Number one was making a professional and quality publication, not just as far as content, but also in basic production values, editing, attention to detail, and design. I wanted to make a slick publication that people would read outside of the card room, take home, and put on their coffee table.

Also, we’ve tried to show a lot of respect for the game and its history. We’re not afraid to tell it like it is. For example, we’ve criticized ESPN for giving self-promoters camera time and have campaigned against archaic laws against poker.

PND: How have you tried to differentiate Poker Pro Magazine from publications like CardPlayer and Bluff?

Wenzel: There is one magazine that targets high school and college kids. Every page has a message like, “Poker is cool.” In contrast, we try to have something for everybody. Poker is indeed cool, but we’re not strictly aiming at a high school and college market. There’s also an old school publication that is kind of behind the times. We try to strike a balance.

PND: Is bringing in third-party content essential to filling space and creating something for everyone?

Wenzel: We try to have all of the latest news, but as a monthly publication, it’s not like it used to be. We try to cover everything and we try to have a mix of up-to-date strategy, player profiles, poker history, and basically something for everyone. Entertainment is our number one priority.

PND: Are websites like Poker News Daily competitors to Poker Pro Magazine?

Wenzel: I only consider other magazines to be competition. We have our own website as well. I see a magazine as something that someone sits down with.

PND: What is the future of poker magazines?

Wenzel: All print media are hunkering down. The whole industry is contracting. However, there will always be a place for a good magazine.

Internet Gambling Revenue Analysis Released by Joint Committee on Taxation

Today, Congressman Jim McDermott (D-WA) released a study by the Joint Committee on Taxation (JCT) revealing that up to $41 billion could be generated by regulating and taxing the internet gambling industry over a 10-year period.

This is one of several studies to be released by various outfits, but is the first to be handed down by an agency of the United States Government. On the importance of the JCT’s findings, McDermott commented in a press release distributed on Thursday, “I suspect that many of my colleagues… will take more interest in this issue once they see $41 billion available that they can match up with any number of worthy programs.” Being debated on Capitol Hill is major health care reform, one social program that could conceivably be funded through internet gambling.

McDermott continued, “I would suspect it’s only a matter of time before Congress appropriately moves to regulate the industry in order to protect consumers and reverse the flow of billions of dollars currently lost offshore as Americans gamble billions online despite attempts to prohibit the activity.” In May, the Washington Congressman unveiled HR 2268, the Internet Gambling Regulation and Tax Enforcement Act. The measure imposes a fee of 2% of deposits on licensed internet gambling operators.

HR 2268 is a companion bill to Congressman Barney Frank’s HR 2267, which establishes a comprehensive framework for companies to solicit U.S. customers. The two bills were introduced on the same day and HR 2267 is up to 62 cosponsors on both sides of the political spectrum. Safe and Secure Internet Gambling Initiative (SSIGI) spokesperson Michael Waxman told Poker News Daily, “This is a very significant development in support of the push to regulate the industry. We would expect that there will be more conversation and more interest in internet gambling regulations as Congress is attempting to figure out funding for health care and other various programs.”

Today, Democrats in Congress unleashed health care reform that comes with a price tag of nearly $900 billion. While not able to cover the full amount, legalizing internet gambling could, in theory, put a dent in the price tag. The JCT’s analysis does not include online sports betting, which is barred in Frank’s legislation. Moreover, the findings assume that states will not opt out of HR 2267. A February study by the U.S.-based firm PricewaterhouseCoopers revealed that up to $52 billion could be raised by taxing internet gambling companies over a 10-year period.

On the significance of a $4 billion per year revenue stream when programs like health care run over 200 times that total, Interactive Media Entertainment and Gaming Association (iMEGA) Chairman Joe Brennan explained, “It’s realistic to see it packaged with a number of revenue enhancers. As a standalone, in my opinion, it’s not enough money to be able to get people off the mark who have been against this in the near-term.”

Information released today by the SSIGI noted that Frank planned to hold a markup hearing on HR 2267, but the House Financial Services Committee has released no official information. For the balance of the week, Frank’s committee will be bogged down in discussion of systematic regulation, overdraft protection, and investor protection. The grizzly state of the U.S. economy has been the committee’s main focus since September of 2008.

Frank has also introduced HR 2266, the Reasonable Prudence in Regulation Act. The measure delays industry compliance with the regulations of the Unlawful Internet Gambling Enforcement Act (UIGEA) by one year. As it stands, the financial services industry in the United States must come into full compliance with the 2006 law by December 1st, which is just five weeks away. The Poker Players Alliance (PPA), the industry’s main lobbying force, has been working feverishly to delay the deadline through other means, including appealing directly to U.S. Treasury Secretary Timothy Geithner and Federal Reserve Chairman Ben Bernanke.

The JCT study assumes that wagering taxes will be levied and that HR 2267 will be amended so that internet gambling companies doing business in the United States must also be incorporated in the United States. Read the full internet gambling study.

Stay tuned to Poker News Daily for the latest news from Capitol Hill.

Should Poker Put the Skill-Game Issue Aside?

Anurag Dikshit’s Sale of Party Gaming Stock Receives Mixed Reaction

One of the major poker headlines this week was the news that Party Gaming Cofounder Anurag Dikshit would divest himself of nearly 114 million shares of the company’s stock, which is traded in London under the symbol “PRTY.” Now, the industry has had a chance to react.

The internet gambling think tank sported mixed reactions to the news, as Dikshit’s departure meant that a man who admitted to violating U.S. law in a New York courtroom one year ago would no longer hold any interest in the company. Interactive Media Entertainment and Gaming Association (iMEGA) Chairman Joe Brennan told Poker News Daily, “The thing to take away is that this is probably good overall for Party Gaming. When you have one of their founders pleading guilty, if and when things start to get normalized in the U.S. and Party Gaming comes into the market, they need to clear it off the books. The fact that he’s exiting the company is good for its future.”

When internet gambling will be legalized and regulated in the United States is anyone’s guess. Congressman Barney Frank (D-MA) introduced HR 2267 in May as one solution. The bill outlines a framework for the explicit legalization of the industry and, although the measure is up to 62 cosponsors, it has not yet been scheduled for markup in the House Financial Services Committee.

On how members of Congress and others outside of the industry would react to Dikshit’s exit, Brennan explained, “If Dikshit leaving Party Gaming can be a benefit to that company, I would say that it does the same broadly for the industry.” Financial analyst Nick Batram told Bloomberg that Dikshit’s departure meant that Party Gaming “may also find it easier to raise funds from institutional investors rather than the founders for large sports gambling acquisitions.” The Wire Act of 1961 has historically been interpreted to mean that online wagering on sports is not permitted in the U.S.

Dikshit will purportedly turn over the proceeds of his sale, which will likely total more than ?188 million, to his charitable foundation. On the TwoPlusTwo online poker forums, posters questioned Dikshit’s charitable motives: “If he donated to an established charity that could not be mistaken for a front, then that would be impressive,” one skeptic noted. Some have speculated that tax benefits are the real reason behind his actions. Brennan told Poker News Daily, “He wants to get out of the business and focus on his charitable endeavors.”

The sale of two-thirds of Dikshit’s stake sent shares of Party Gaming plummeting. Trading above 284 pence on October 19th, the stock dove to 240 pence in 24 hours, a dip of 15%. PRTY closed trading on Friday on the London Stock Exchange fetching 243 pence, 135 pence above its asking price one year ago.

An article in the Financial Times summed up the reaction from most of the industry: “The truth, however, is that while the distancing of Mr Dikshit can’t be bad for Party Gaming, it is still frustratingly unclear what the odds are on a successful return to the U.S. market.” In five weeks, the financial services industry in the United States must fall into full compliance with the regulations of the Unlawful Internet Gambling Enforcement Act (UIGEA). The impact of the December 1st deadline remains to be seen, but the Poker Players Alliance (PPA) recently authored a letter to U.S. Treasury Secretary Timothy Geithner and Federal Reserve Chairman Ben Bernanke asking for the UIGEA’s regulations to be delayed by one year.

Party Gaming Cofounders Ruth Parasol and Russ DeLeon, a husband and wife team, have not yet announced their intentions to sell stock or formulate a plea agreement with the U.S. Government.

Merge Gaming Network Fires Back at PIC Club

In a statement released in recent days by the Merge Gaming Network, the family of online poker sites fired back at Players Investment Company, or PIC Club, a major online poker payment processor that uses its status as a trading organization to operate legally in the United States.

A terse e-mail, authored by Merge Gaming CEO Anthony Taylor, read, “It has been brought to my attention, via comments in a public forum, that there is some confusion regarding a relationship we have with a payments provider. To be clear, it was Merge Gaming, who served notice on our agreement with Pic Club.” An e-mail sent by PIC Club members to players on October 15th noted that the two sides “mutually agreed to end their business relationship.” October 18th, three days after the e-mail was sent to players, marked the final day of transactions between the two entities.

Speculation on the motivation for either side ending its agreement with the other has run rampant throughout the major online poker forums, leading to Taylor’s statement. He attempted to shed some light on the point of contention by remarking, “The reasoning behind this is a matter of private record. Merge Gaming attempted to resolve the issue brought on by PIC Club, one of its principals, and one of its members, and without resolution, felt it was in the best interest of our customers to end this relationship immediately.”

The Merge Gaming CEO crisply ended his e-mail by claiming, “It is regrettable that I have to respond to the statements of the past week, but our hand has been forced. We’ve cancelled our agreement to protect our players, our network partners, and our reputation going forward.”

According to PokerScout.com, which keeps tabs on online poker room traffic, the Merge Gaming Network is the 17th largest worldwide with a seven-day running average of 420 real money ring game players. During its peak hours, up to 700 cash game players can be found seated at its virtual felts. Its family of online poker sites includes ACED, Carbon Poker, IronDuke, Poker Nordica, Reefer Poker, and Spin32. PokerScout.com notes that the Merge Gaming Network’s headquarters is in Australia, while its servers are hosted on the Kahnawake reservation in Canada.

Chuck Kidd, the CEO of the trading company, authored the e-mail to PIC Club members ten days ago. In it, he lamented, “We regret the dissolution of this business relationship, however we believe it is in the best interest of PIC Club and our valued members.” Players who withdrew money from Merge Gaming Network sites through PIC Club would see their funds placed in a “pending status,” which meant they would only be released when funds were received from the Network. After cashouts had been processed, PIC Club officials planned to solicit relationships with individual Merge Gaming Network sites. Big Bet Poker and rooms on the IGS System were not affected by the agreement’s cessation.

Kidd recently sat down with Poker News Daily to discuss the origins and operations of PIC Club, but told us that he was unable to answer questions about the Merge Gaming Network squabble until at least Monday, October 27th. An interview will be held this week with Kidd to discuss the situation, which unfolded publicly on online forums, news sites, and other media last week.

PIC Club skirts the Unlawful Internet Gambling Enforcement Act (UIGEA) and other overarching laws in the United States by “buying shares of [a] pooled commodity” and selling it to an online poker site, according to Kidd. Player’s available shares accounts received dividends of 10.5% in 2008 and 14.25% in 2007.

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.

ESPN Inside Deal Welcomes Joe Cada

This week’s installment of the ESPN.com poker franchise “Inside Deal” featured 2009 World Series of Poker (WSOP) Main Event November Nine member Joe Cada. Laura Lane and Poker News Daily Guest Columnist Bernard Lee host the show.

The news segment of ESPN “Inside Deal” began with Lee praising World Poker Tour (WPT) Host Mike Sexton for his election to the Poker Hall of Fame: “I think it’s tremendously well-deserved. Mike has had a phenomenal career. A lot of people think of him from the WPT, but remember, he is a very well-accomplished player.” Sexton is the lone representative of the Poker Hall of Fame Class of 2009. Others who were up for consideration included Tom McEvoy, Dan Harrington, Daniel Negranu, Phil Ivey, Erik Seidel, Barry Greenstein, Scotty Nguyen, and Men “The Master” Nguyen.

Attention then turned to the letter authored by the Poker Players Alliance (PPA) to U.S. Treasury Secretary Timothy Geithner petitioning for the delay of the regulations of the Unlawful Internet Gambling Enforcement Act (UIGEA) by one year to December 1st, 2010. Lee explained what would happen if the current deadline stood: “The impact would be devastating. We’re fearful that the banks will err on the side of caution and ultimately block payments that the online sites would give.”

Making headlines this week was the news that the GSN staple “High Stakes Poker” had dropped host A.J. Benza for Season 6, allegedly replacing him with a female correspondent. Lee explained, “I’m a little surprised. For five years, A.J. and Gabe Kaplan have seemed to have a good rapport, so I’m surprised they’re making this switch.” Poker News Daily broke the news that Vanessa Rousso, the presumed frontrunner for the job, would not be Benza’s replacement. Other possible fill-ins include former WPT hostess Shana Hiatt, Kara Scott, Absolute Poker pro Lacey Jones, and Shannon Elizabeth.

Cada, who could become the youngest Main Event winner ever if he takes down the feature tournament next month, then joined the show. He noted how his life has changed as a result of the increased exposure as a member of the November Nine: “I’ve been playing poker my whole life, so the only thing that’s changed for me is the media.” Cada is primarily a cash game player, only hitting up the tournament scene online on Sundays. He purchased a 2,400 square foot house at age 19 as a gift to himself and is a sponsored pro of PokerStars, the world’s largest online poker room.

Heading into the 2009 WSOP, Cada found himself on a $150,000 downswing. He sought the aid of two longtime cornerstones of the poker industry, Cliff “JohnnyBax” Josephy and Eric “sheets” Haber. Cada recalled, “I was lucky enough to have them back me and I’m very grateful for that. I knew I could win before I came in.” Josephy, a former Ultimate Bet pro, and Sheets will receive 50% of Cada’s earnings. The top prize in Las Vegas is $8.5 million.

ESPN.com Poker Editor Andrew Feldman joined the show to discuss a series of dream teams. News broke last week that Dream Team Poker would return with tournaments at the Bicycle Casino in Los Angeles coinciding with Monday Night Football. Feldman’s “Dream Team Young Guns” consisted of Tom “durrrr” Dwan, Bertrand “Elky” Grospellier, and 2008 WSOP Main Event Champion Peter Eastgate. “Dream Team Lady Luck” was comprised of Shannon Elizabeth, Annette “Annette_15” Obrestad, and Jones. Finally, Feldman unveiled “Dream Team Old Guard:” Negreanu, Phil Hellmuth, and Mike Matusow. Cada added that his ultimate Dream Team would be Ivey, Patrick Antonius, and Dwan.

Finally, Cada revealed that on Day 8 of the 2009 WSOP Main Event, his stack had dropped to 20% of the average before he clawed back. He knocked out between 10 and 15 players en route to the final table and, upon heading to Connecticut to film ESPN “Inside Deal,” dropped some dough at the Foxwoods blackjack tables.

“Inside Deal” is released every Tuesday on ESPN.com.

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.

Barney Frank, 18 Others Issue Letter to Geithner, Bernanke about UIGEA Rules

The fight to delay the implementation of the Unlawful Internet Gambling Enforcement Act (UIGEA) rules continues. Recently, 19 Congressmen, including Barney Frank (D-MA), issued a letter to Treasury Secretary Timothy Geithner and Federal Reserve Chairman Ben Bernanke.

The news comes on the heels of a letter sent by the Poker Players Alliance (PPA) in conjunction with the National Thoroughbred Racing Association and the American Greyhound Track Operators Association to the same two government individuals. In fact, the letter sent by the Congressmen alludes to the PPA’s petition directly, encouraging Geithner and Bernanke to use the Administrative Procedure Act to delay the implementation of the UIGEA rules by one year to December 1st, 2010. As it currently stands, the financial services industry must fall into line with the 2006 law six weeks from now.

Frank’s letter explains that the UIGEA rules were officially approved on January 19th, one day before current U.S. President Barack Obama took office. It implores, “We realize this is not a task you requested. We also believe this is an unreasonable burden on regulators and the financial services industry at a time of economic crisis, and it contradicts the stated intent of the Financial Services Committee.” Last year, Frank pushed HR 6870, which would seek to clarify what activities were permissible under the UIGEA, through the Financial Services Committee. However, any action on the bill was halted, as the crisis on Wall Street began shortly thereafter. Frank has been the Chairman of the Financial Services Committee since 2007.

The letter notes, “At our hearing in April 2008, the testimony of regulators and the industry indicated that it would be particularly difficult to craft workable regulations to effectively enforce the statute without having a substantial adverse effect on the payments system.” Instead of creating a “laundry list” of activities that are allowed online, the UIGEA instead defers to a muddled web of federal, state, and local laws. As a result, credit card companies like Visa and MasterCard began “overblocking” in an attempt to comply with the measure, leading to legal online lottery purchases being denied in states like New Hampshire and North Dakota.

The letter is signed by 19 Congressmen, all of whom are members of the Financial Services Committee: Frank, Peter King (R-NY), Luis Gutierrez (D-IL), Ron Paul (R-TX), Melvin Watt (D-NC), Judy Biggert (R-IL), Gary Ackerman (D-NY), Leonard Lance (R-NJ), Michael Capuano (D-MA), William Lacy Clay (D-MO), Paul Hodes (D-NH), Ron Klein (D-FL), Ed Perlmutter (D-CO), Bill Foster (D-IL), André Carson (D-IN), Walt Minnick (D-ID), Steve Driehaus (D-OH), Jim Himes (D-CT), and Dan Maffei (D-NY). Four Republicans are among the signers, who also include two Subcommittee Chairmen.

Frank introduced HR 2266 in May. The measure, affectionately dubbed the Reasonable Prudence in Regulation Act, would delay financial services industry compliance with the rules and regulations of the UIGEA by one year until December 1st, 2010. The measure was introduced in May and has generated 51 cosponsors. However, while the letter explains that HR 2266 is “likely to move,” Frank’s committee has been bogged down with the struggling U.S. economy, which boasts near-double-digit unemployment. As of the time of writing, no discussion of the bill is scheduled.

Frank also introduced HR 2267 in May, the Internet Gambling Regulation, Consumer Protection, and Enforcement Act. The bill establishes a complete licensing and regulatory framework for the internet gambling industry in the United States. HR 2267 blocks wagers on sports under the Professional and Amateur Sports Protection Act (PASPA) and has attracted 62 cosponsors. As its name implies, HR 2267 places a considerable amount of emphasis on providing consumer protection in an effort to placate to those in Congress who are fearful of underage and problem gambling.

Barney Frank, 18 Others Issue Letter to Geithner, Bernanke about UIGEA Rules

The fight to delay the implementation of the Unlawful Internet Gambling Enforcement Act (UIGEA) rules continues. Recently, 19 Congressmen, including Barney Frank (D-MA), issued a letter to Treasury Secretary Timothy Geithner and Federal Reserve Chairman Ben Bernanke.

The news comes on the heels of a letter sent by the Poker Players Alliance (PPA) in conjunction with the National Thoroughbred Racing Association and the American Greyhound Track Operators Association to the same two government individuals. In fact, the letter sent by the Congressmen alludes to the PPA’s petition, encouraging Geithner and Bernanke to use the Administrative Procedure Act to delay the implementation of the UIGEA rules by one year to December 1st, 2010. As it currently stands, the financial services industry must fall into line with the 2006 law six weeks from now.

Frank’s letter explains that the UIGEA rules were officially approved on January 19th, one day before current U.S. President Barack Obama took office. It implores, “We realize this is not a task you requested. We also believe this is an unreasonable burden on regulators and the financial services industry at a time of economic crisis, and it contradicts the stated intent of the Financial Services Committee.” Last year, Frank pushed HR 6870, which sought to clarify what activities were permissible under the UIGEA, through the Financial Services Committee. However, any action on the bill was halted, as the crisis on Wall Street began shortly thereafter. Frank has been the Chairman of the Financial Services Committee since 2007.

The letter notes, “At our hearing in April 2008, the testimony of regulators and the industry indicated that it would be particularly difficult to craft workable regulations to effectively enforce the statute without having a substantial adverse effect on the payments system.” Instead of creating a “laundry list” of activities that are allowed online, the UIGEA instead defers to a muddled web of federal, state, and local laws. As a result, credit card companies like Visa and MasterCard began “overblocking” in an attempt to comply with the measure, leading to legal online lottery purchases being denied in states like New Hampshire and North Dakota.

The letter is signed by 19 Congressmen, all of whom are members of the Financial Services Committee: Frank, Peter King (R-NY), Luis Gutierrez (D-IL), Ron Paul (R-TX), Melvin Watt (D-NC), Judy Biggert (R-IL), Gary Ackerman (D-NY), Leonard Lance (R-NJ), Michael Capuano (D-MA), William Lacy Clay (D-MO), Paul Hodes (D-NH), Ron Klein (D-FL), Ed Perlmutter (D-CO), Bill Foster (D-IL), André Carson (D-IN), Walt Minnick (D-ID), Steve Driehaus (D-OH), Jim Himes (D-CT), and Dan Maffei (D-NY). Four Republicans are among the signers, who also include two Subcommittee Chairmen.

Frank introduced HR 2266 in May. The measure, affectionately dubbed the Reasonable Prudence in Regulation Act, would delay financial services industry compliance with the rules and regulations of the UIGEA by one year until December 1st, 2010. The measure was introduced in May and has generated 51 cosponsors. However, while the letter explains that HR 2266 is “likely to move,” Frank’s committee has been bogged down with the struggling U.S. economy, which boasts near-double-digit unemployment. As of the time of writing, no discussion of the bill has been scheduled.

Frank also introduced HR 2267 in May, the Internet Gambling Regulation, Consumer Protection, and Enforcement Act. The bill establishes a complete licensing and regulatory framework for the internet gambling industry in the United States. HR 2267 blocks wagers on sports under the Professional and Amateur Sports Protection Act (PASPA) and has attracted 62 cosponsors. As its name implies, HR 2267 places a considerable amount of emphasis on providing consumer protection in an effort to placate to those in Congress who are fearful of underage and problem gambling.

Poker Players Alliance Issues Letter to Timothy Geithner, Ben Bernanke

With the December 1st deadline rapidly approaching for industry compliance with the Unlawful Internet Gambling Enforcement Act (UIGEA), the Poker Players Alliance (PPA) has coauthored a letter to prominent members of the Treasury and Federal Reserve.

The PPA letter is dated in September and addressed to Secretary of the Treasury Timothy Geithner and Federal Reserve Chairman Ben Bernanke. Its purpose is straightforward: encourage the postponement of the UIGEA’s regulations by one year. The letter explains, “An extension of the compliance date is necessary because a significant number of institutions subject to the Final Rule will not have in place the necessary policies and procedures mandated by the Final Rule on December 1, 2009, the current compliance date.”

In May, Congressman Barney Frank (D-MA) introduced HR 2266, the Reasonable Prudence in Regulation Act. The measure pushes back mandatory UIGEA compliance by one year to December 1st, 2010 and has generated 51 cosponsors. However, with Frank’s committee bogged down in financial reform and near double-digit unemployment, HR 2266 has not yet seen the light of day. Rich Muny, PPA State Director for Kentucky, told Poker News Daily, “The hope is that we would pass legislation or would work with the Treasury to get them to accept something like an administrative law judge to determine what is legal and illegal under the UIGEA. The judge, for example, could include the fact that the Wire Act doesn’t apply to online poker.”

The PPA authored its letter in conjunction with the National Thoroughbred Racing Association and American Greyhound Track Operators Association. The letter concludes by explaining what the three groups have in common: “Given a choice between subjecting themselves to liability under the Act for processing transactions involving unlawful internet gambling and subjecting themselves to no liability for overblocking, regulated institutions have indicated to our members that they intend to overblock.” In New Hampshire and North Dakota, overblocking by credit card companies like Visa and MasterCard of legal online lottery transactions occurred as financial institutions rushed to comply with the UIGEA.

The letter comes as the PPA scrambles to delay the UIGEA regulations by any means necessary and takes advantage of the Administrative Procedure Act, which governs the way regulations are implemented. Muny explained, “There are two laws that give the Treasury the right to make sure that regulations it implements are understandable. The UIGEA rules were a last-minute decision by the Bush Administration, so they could make a feasible case that they were created in haste.” The regulations of the UIGEA were passed as “midnight rules” by the Bush Administration and took effect on January 19th, one day before U.S. President Barack Obama took office.

The two horse racing outfits express concern in the letter over legal transactions being prohibited. It notes, “The UIGEA regulations could result in confusion among members of the financial services community, leading to a devastating impact on electronic wagering as authorized by the [Interstate Horseracing Act], which produces some $100 million in prize money for horsemen and millions of dollars of state and local tax revenue.”

Whether the UIGEA’s regulations will have any impact on the internet gambling and online poker industries in the United States after December 1st is not yet known. Noted online gambling expert Nelson Rose told Poker News Daily in a July interview, “Basically, the whole program focuses on due diligence on new accounts. If you’re crazy enough to set up a bank account with an American bank, they’ll ask if you’re involved in illegal internet gambling.” He added that payment processors have already devised ways to skirt the 2006 law.

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

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.