Poker News

Gambling Law Expert Nelson Rose Comments on Online Poker Seizure

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

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

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

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

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

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

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

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

European Commission: US in Violation of WTO over Internet Gambling

As a result of a complaint filed by the Remote Gambling Association (RGA), the European Commission has found the United States to be in violation of its World Trade Organization (WTO) obligations due to its stance on internet gambling.

According to a statement posted on the European Commission’s website, “The report concludes that the U.S. measures constitute an obstacle to trade that is inconsistent with WTO rules. As a result, WTO proceedings would be justified.” However, the Commission may elect to forge an agreement with the Obama Administration rather than pursue WTO action. The RGA represents a bevy of European internet gambling companies, many of which are traded on major stock exchanges in London and Vienna. Its member roster includes Party Gaming, 888, Ladbrokes, Sportingbet, and Playtech, which owns and operates the popular iPoker Network.

The 2006 Unlawful Internet Gambling Enforcement Act (UIGEA) drove publicly traded internet gambling sites out of the U.S. market in deference to shareholder interests. However, U.S.-based sites that permit online wagering on horse racing were allowed to flourish. In addition, sites like PokerStars and Bodog, which are not publicly traded, continued to solicit customers from the North American nation. The Commission’s final report assessed, “There are serious adverse effects for the E.U. They include revenue and stock market value lost by affected companies as a result of their absence from the U.S. market and also the threat of serious sanctions hanging over them that affect their normal operation outside of the U.S.”

The European Commission’s investigation was launched in March of 2008. In the end, its report outlines many of the ambiguities and shortcomings of the UIGEA, including the lack of a definition of “unlawful internet gambling” and the propensity of credit card companies and other payment processing companies to “overblock.” The latter has taken center stage in North Dakota and New Hampshire, where legal online lottery purchases have been stunted by UIGEA regulations. Moreover, the report dives into the specifics of the Professional and Amateur Sports Protection Act (PASPA), which allows sports betting in several U.S. states, including Delaware and Nevada. In total, the European Commission report spends countless pages assessing convoluted U.S. gambling laws.

As a result of withdrawing from the U.S. market, the stock price of publicly traded internet gambling companies took a nosedive. Party Gaming, 888, and Sportingbet lost 75% of their value for a sum of ?5.7 billion between January of 2006 and October of 2006. In addition, bwin, which is traded in Vienna, lost €120 million as a result of exiting the U.S. market. In December of 2008, Party Gaming Co-Founder Anurag Dikshit admitted to violating the Wire Act of 1961 in a New York courtroom. On the same day as Dikshit’s agreement was struck, shares of Party Gaming shot up 27%. According to the Commission, the increase is evidence of how “uncertainty created by the [Department of Justice] investigations is affecting the business prospects of E.U. remote gambling and betting companies.”

Safe and Secure Internet Gambling Initiative spokesperson Michael Waxman told Poker News Daily, “We hope that members of Congress are paying attention to all of these very compelling arguments about why regulation is needed. We hope that, following Congressman Barney Frank’s leadership, members of Congress will start paying attention and move in support of regulation.” Frank’s Internet Gambling Regulation, Consumer Protection, and Enforcement Act (HR 2267) outlines a comprehensive regulatory environment for the internet gambling industry in the United States. It was introduced on May 6th and is up to 30 co-sponsors.

On the future of the European Commission’s activities, a recent Wall Street Journal article noted, “The E.U. said Wednesday it would hold off on filing a formal complaint in hopes of negotiating some sort of solution with the Obama Administration.”

Poker Players Alliance Giving Away a 2009 WSOP Main Event Seat

An e-mail sent to members of the Poker Players Alliance (PPA) late Friday night offered the prospects of playing in the 2009 World Series of Poker (WSOP) Main Event for renewing or upgrading to a premium membership. The seat is worth $10,000.

The offer is available until Midnight ET on June 15th and doles out one seat into the world’s most prestigious poker tournament. Last year, a total of 6,844 players entered the Main Event, which saw its final table delayed until November for the very first time in order to coincide with its airing on ESPN. In the end, it came down to a battle of Europe, as Danish poker pro Peter Eastgate bested Russian sensation Ivan Demidov, becoming the youngest WSOP Main Event Champion ever at age 22 and banking $9.1 million.

The offer is good for existing premium members who renew as well as members paying for the first time. The cost of the upgrade is $20, which can be done in a few quick steps online. First, existing members are asked to log in and new members are taken to the organization’s sign-up screen. Once logged in, players should select the “Membership” option, which whisks them to the subscription page. PPA members that do not have an automatically renewing membership will then see the date that their current one expires and a large orange button to “Purchase One Year of PPA Online Premium.” This will extend their renewal date by 365 days and does not eat into current time remaining.

Entrants must be over the age of 21 and a mail-in option to qualify is also available. The lucky winner will be selected at High Noon ET on June 16th. Travel expenses to and from Las Vegas and hotel accommodations are not included. However, the Rio and participating Harrah’s hotels offer discount rates for WSOP players throughout the seven week tournament series. The Main Event kicks off from the massive Amazon Room on July 3rd with the first of four starting days. The tournament plays down to its final table on July 15th, at which point it will be paused for over 100 days and resume in November.

Premium PPA members can take advantage of a variety of discounts on movies, restaurants, hotels, electronics, and travel as part of PPA Advantages. The discount shopping program touts potential savings of over $2,000 every year at over 600 merchants. The program includes instantaneous discounts; no point accumulation is required. Premium members also have access to the PPA’s Litigation Network, which has helped orchestrate successful court cases around the United States. The PPA is in the midst of fighting for the rights of one of its own members, Kevin Raley, who was charged with illegal gambling in Colorado. Finally, Premium PPA members score a card protector and window decal.

The organization is fresh off playing a part in Congressman Barney Frank’s (D-MA) introduction of HR 2266 and HR 2267. The former delays the regulations of the Unlawful Internet Gambling Enforcement Act (UIGEA) from going into effect until December 1st, 2010. The latter bill establishes a complete licensing and regulatory framework for the internet gambling industry in the United States. Both were introduced on May 6th and referred to the House Financial Services Committee, of which Frank is the Chair. No timeline has yet been announced for their possible discussion in Committee. Besides the PPA, other organizations supporting the bill include Harrah’s and YouBet.com.

Last April, the PPA eclipsed the one million member mark. It has constituents in all 50 states and Washington, D.C. In 2006, it stood at just 50,000 members and has experienced phenomenal growth in terms of numbers and status on Capitol Hill. Much of its growth came with the announcement that former three-term Republican Senator from New York, Alfonse D’Amato, would serve as its Chairman.

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

South Carolina Poker Bills Pass Senate Judiciary Committee

Live and online poker players in South Carolina have been jumping for joy at the news that Senate Bills 535 and 628 have cleared the state’s Senate Judiciary Committee. Both bills explicitly legalize social games of poker.

Senators McConnell, Mulvaney, Ford, Land, Knotts, and Davis introduced senate Bill 535. It outlines what forms of gambling are legal in the state, noting, “Gambling in a private home where no house player, house bank, or house odds exist and where the house receives no part of any of the money or other thing of value that is risked or wagered in the gambling in the private home is social gambling and is not unlawful.” Senate Bill 535 also outlines the process for a non-profit organization to obtain a gaming license, although 90% of the money raised in an event must go directly to the charity. The measure was approved in Committee by a 12-8 vote after being introduced back in March.

Senate Bill 628 and Senate Bill 535 were both amended to include what the Poker Players Alliance (PPA), the major lobbying force for the poker industry, calls a “predominance test.” The move follows a decision by Judge Larry Duffy in February that five poker players caught during a raid of a home game were guilty despite “overwhelming” evidence that poker is a game of skill. Judge Duffy noted that no clear direction existed from the South Carolina Legislature as to whether games predominantly determined by skill were considered gambling. The amendment, which was implemented with the help of the PPA, may clarify South Carolina’s position.

On Wednesday of last week, the Associated Press noted that the two bills had “virtually no chance of passing this year” because the legislative session had just five days remaining. PPA Executive Director John Pappas alluded to the time crunch at hand, noting in a press release distributed by the one million member strong organization, “We urge the South Carolina Senate to quickly bring these pieces of legislation to the floor for a vote before the end of the session.” Senate Bill 628 allows players to utilize a defense of social gambling against a charge of “unlawful gambling.” More importantly, it notes that games deemed predominated by skill are “not unlawful.”

The PPA has 10,000 members in South Carolina. In 2006, Bob Chimento, Jeremy Brestel, Scott Richards, Michael Williamson, and John T. Willis were arrested as part of an allegedly friendly home game in Mount Pleasant. Appearing at the trial of the five defendants was World Poker Tour (WPT) Host and Poker News Daily Guest Columnist Mike Sexton, who came armed with videos showing how hands were won via a player’s skill. Also appearing was University of Denver Statistics Professor Robert Hannum, who outlined the results of a study conducted by Cigital and PokerStars which found that, out of 103 million cash game hands on the popular online poker site, three-quarters did not go to showdown. Instead, a player’s skill in betting earned them a win in the hand.

PPA South Carolina State Director John Ridgeway commented, “The thousands of poker players in the state are now one step closer to being allowed to enjoy a game of poker online or with their friends around the kitchen table without the fear of being accused of a crime under outdated state laws.” The gambling law currently on the books is over 200 years old. The PPA notes that the effect of the two bills extends well beyond just poker. Games like Bunko and Bridge would also become explicitly legal.

The two bills’ approval by the South Carolina Senate Judiciary Committee comes the same week as Congressman Barney Frank (D-MA) introduced comprehensive legislation to legalize and regulate the internet gambling industry in the United States. A separate measure introduced by Frank calls for the regulations of the Unlawful Internet Gambling Enforcement Act (UIGEA) to be delayed for one year.

Focus on the Family Reacts to Barney Frank Internet Gambling Bills

Dr. James Dobson founded Focus on the Family in 1977, an organization that works to strengthen family bonds. Recently, it has come out against Congressman Barney Frank’s (D-MA) Internet Gambling Regulation Consumer Protection and Enforcement Act, HR 2267. The bill outlines a comprehensive framework to license regulate the internet gambling industry in the United States. Poker News Daily sat down with Focus on the Family’s gambling spokesperson Chad Hills to discuss the new measure.

Poker News Daily: Explain the general response of Focus on the Family to Frank’s comprehensive internet gambling legislation.

Hills: We see gambling as something that causes addiction and it’s an industry that seeks to exploit the weaknesses of people in order to gain money. What we see from our perspective is an estimated 15 million people who are either problem or pathological gamblers in the U.S.; that’s no small number to ignore. What concerns us is that addiction is followed by bankruptcy. When someone goes bankrupt and they hit the bottom of the barrel, they get desperate. They have nothing else to lose and so turn criminal to keep feeding the addiction or to pay off their debts.

From our perspective, internet gambling represents one of the most invasive and highly addictive forms of gambling. You have availability 24/7 and most gamblers online play on three to five sites at a time. Add those things together and then put that in the privacy and secrecy of your home and you have a perfect storm for gambling addiction. If you walk into a casino, people know the addicts and kick them out. There is public accountability. Online, it’s the click of a mouse.

PND: Does Focus on the Family subscribe to the notion that regulation of an industry ultimately means better protection against underage and problem users?

Hills: We’ve been doing a lot of research on countries conducting legal internet gambling and can pull up three to eight different headlines almost every day where one of them is being hit up for corruption or being investigated. I haven’t seen a system yet that is childproof. I haven’t seen a system that can stop white collar crime from going on.

The Unlawful Internet Gambling Enforcement Act (UIGEA) has effectively dropped the number of internet gambling sites in the U.S. by about 50%. The prevalence of problem gambling is three to five times higher in internet gambling than in land-based gambling. You bring 2,000 casinos into someone’s home and you’re going to have huge addiction troubles. If we legalize this, we’re only going to open Pandora’s Box.

The Poker Players Alliance (PPA) says they have one million members. That’s nice, but for every member they have, there are 15 to 20 people estimated to have a pathological or problem gambling addiction. Each of them affects another 10 to 17 people negatively. One PPA member means that we have 15 to 20 addicted folks and another 250 people affected in total. There are a small number of people that want to play poker online. There is no choice in the matter.

PND: Respond to critics who say that the UIGEA is vague and consequently places unnecessary burdens on the financial services industry.

Hills: It’s not any more of a burden than it would be to verify that someone is of a certain age to purchase something else online. The banks will have to verify that an entity is a licensed gambling industry. Right now, none of those offshore foreign entities are licensed in the U.S. These groups could be funding terrorism. All you have to do is have a couple of techies, a warehouse, and some software and you have an online casino.

PND: What about legal forms of online gambling, like state lotteries, which have experienced a blockage of funding as a result of the UIGEA?

Hills: In terms of blocking legal entities, it’s going to be a process that the industry will have to go through. Once the UIGEA is truly implemented in December, things like online lotteries will have an effective verification certificate that they can show financial institutions. Barney Frank introducing HR 2266 (Reasonable Prudence in Regulation Act) is only going to delay the process.

PND: Talk about the background of Focus on the Family for those who are not familiar with it.

Hills: Focus on the Family is an organization that was founded by James Dobson. It is classified as a Christian ministry and we have a two-pronged approach: To strengthen and nurture families and defend them from dangerous policy. We try to preserve traditional family values and beliefs as they pertain to law, policy, and human conduct. We have different analysts who look at the incoming research, media headlines, and reports.

PPA Director John Pappas Appears on Bloomberg

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

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

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

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

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

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

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

Jim McDermott Introduces Internet Gambling Tax Act

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

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

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

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

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

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

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

iMEGA Sends Letters to Minnesota Internet Service Providers

In the wake of the order by the Minnesota Department of Public Safety to 11 internet service providers (ISPs) calling for the blockage of 200 internet gaming domain names, the Interactive Media Entertainment and Gaming Association (iMEGA) has struck back.

iMEGA sent a letter of its own to ISPs, which states, “iMEGA wants you to know that it believes that the Notice lacks any legitimate foundation in the law and requests that you not block access to the websites identified.” The Department of Public Safety charged that ISPs were in violation of the Wire Act of 1961, which has traditionally applied to online sports betting. Nevertheless, USA-friendly online poker sites such as Bodog, Full Tilt Poker, and Players Only were among the 200 affected. Also coming under fire were a number of online poker rooms that do not accept U.S. customers, such as Everest Poker, Titan Poker, and CD Poker. The former is even the on-felt sponsor of the 2009 World Series of Poker (WSOP) in Las Vegas, which begins later this month from the Rio.

iMEGA asserts that the Wire Act “simply does not apply to website operators and imposes no duty upon you to comply with the Minnesota Department of Public Safety’s request.” The question of whether multi-faceted companies such as Verizon and Comcast, which offer residential home telephone service, high-speed internet, and cable television, constitute “common carriers” as outlined by the Wire Act was also addressed. To answer it, iMEGA quoted a Congressional statement: “It is the policy of the United States… to preserve the vibrant and competitive free market that presently exists for the internet and other interactive computer services, unfettered by Federal or State regulation.”

iMEGA charges that the Minnesota Department of Public Safety is overstepping its bounds, noting that ISPs have been asked to “block access to certain websites by your Minnesota end-users even though these websites are not located within Minnesota.” The trade organization also warns that, prior to blocking a site, ISPs must provide written notice to their customers of any service changes. The letter questions whether the Department of Public Safety’s request entails a violation of the Commerce Clause of the United States Constitution or a “blatant” trampling of First Amendment rights.

For ISPs that are unfamiliar with the internet gambling industry in the United States, iMEGA’s letter points out, “The Notice shows evidence of selective enforcement insofar as the list of websites identified is not exhaustive. The website list is also inaccurate insofar as it lists some websites that are not accessible by Minnesota end-users and other websites that are defunct.” In addition, it questions why Time Warner Cable, which provides internet services to Minnesota residents, was not among the 11 companies that received notices.

John Fleischaker of Dinsmore and Shohl LLP’s Louisville office sign the letter. ISPs were expected to respond within two to three weeks of receiving the Minnesota Department of Public Safety’s notice. In addition to the aforementioned online poker sites, the casino arms of Ladbrokes and Party Gaming are also listed; publicly traded companies on the London Stock Exchange own both sites. Party Gaming yanked its online poker site, Party Poker, from the U.S. market shortly after the 2006 passage of the Unlawful Internet Gambling Enforcement Act (UIGEA). The company has even signed a non-prosecution agreement with the U.S. Government. One of its co-founders, Anurag Dikshit, admitted to violating Federal law and is in the midst of paying a $300 million fine.

Today, Congressman Barney Frank (D-MA) introduced legislation outlining a comprehensive licensing and regulatory framework for the internet gambling industry that focuses on consumer protections. In addition, the Massachusetts lawmaker and Chairman of the House Financial Services Industry introduced legislation to delay the implementation of UIGEA regulations by one year to December 1st, 2010.

Barney Frank to Introduce Internet Gambling Legislation on Wednesday

According to a statement released by the office of Congressman Barney Frank (D-MA), legislation to exempt licensed internet gaming companies from the Unlawful Internet Gambling Enforcement Act (UIGEA) will be introduced on Wednesday.

The legislation is expected to establish a comprehensive licensing and regulatory framework for the internet gambling industry in the United States. In essence, it will likely be similar in scope to last session’s HR 2046, the Internet Gambling Regulation and Enforcement Act. The press statement sent out on Tuesday morning reads, “Tomorrow, Financial Services Committee Chairman Barney Frank (D-MA) will hold a press conference to unveil legislation that will enable Americans to bet online and put an end to an inappropriate interference with their personal freedom.” The bill would “create an exemption to the UIGEA for operators that are licensed and regulated. UIGEA, which was enacted in 2006, restricts the use of the payments system for Americans who seek the freedom to gamble online.”

The new legislation does not repeal the UIGEA. Also, according to the Safe and Secure Internet Gambling Initiative, it may not include a provision to tax the industry. During the last Congress, which concluded in December, Congressman Jim McDermott (D-WA) introduced HR 2607, which called for the taxation of 2% of all funds deposited onto regulated internet gambling sites by U.S. customers. The money would then be “deposited in the general fund of the Treasury and treated as revenue,” according to the legislation’s text. Similar companion legislation may be needed once again. A study released by PricewaterhouseCoopers revealed that similar legislation to McDermott’s combined with Frank’s HR 2046 could generate up to $52 billion in revenue over a 10 year period.

The press conference is scheduled for 10:00am ET on Wednesday morning in Room 2220 of the Rayburn House Office Building. The Safe and Secure Internet Gambling Initiative added, “The legislation is expected to include a number of significant consumer protections, including safeguards against compulsive and underage gambling, money laundering, fraud, and identity theft.” HR 2046 was officially introduced to the world on April 30th, 2007 and attracted 48 co-sponsors. However, it was not passed into law during the 110th Congress, leading to Wednesday’s re-introduction of what appears to be similar legislation.

The UIGEA was passed during the waning moments of the 2006 Congressional session and was attached to an unrelated security measure called the SAFE Port Act. Then-Senate Majority Leader Bill Frist (R-TN) was instrumental in its passage. The UIGEA deemed financial transactions between U.S. customers and illegal online gambling operations to be against the law, although no clarification was given as to what constituted “illegal gambling.” The UIGEA’s vagueness has led to a lawsuit by the Interactive Media Entertainment and Gaming Association (iMEGA) to declare it unconstitutional. The Third Circuit Court of Appeals will hear the case on July 6th following a decision by District Court Judge Mary L. Cooper last March, who granted iMEGA standing, but disagreed with many of the organization’s core arguments.

Last week, internet gambling came under fire in Minnesota, where the state’s Department of Public Safety issued written notice to 11 internet service providers (ISPs) calling for blocking access to 200 websites. The list of sites affected by the order includes USA-friendly rooms Bodog, Full Tilt Poker, and Players Only. It also features a bevy of sites that do not accept players from the United States, including World Series of Poker presenting sponsor Everest Poker, iPoker Network flagship site Titan Poker, and Party Gaming’s casino arm, Party Casino. Party Gaming, a publicly traded company on the London Stock Exchange, pulled out of the U.S. market after passage of the UIGEA in 2006. Its online poker room, Party Poker, is not among the 200 sites.

We’ll have a full breakdown of the bill when it is released on Wednesday right here on Poker News Daily.

Americans for Tax Reform Sides with Internet Gambling in Minnesota

The Americans for Tax Reform (ATR) has come out in support of the internet gaming industry in Minnesota. The state’s Department of Public Safety has served written notice to 11 major internet service providers (ISPs) calling for blocking access to 200 internet gambling websites.

Written notice was served on Monday. However, it was made public on Wednesday in a press release issued by the State. Siding with the internet gambling industry shortly thereafter was the ATR, which is based in Washington, D.C. and headed by Grover Norquist. The organization has been intricately involved in the battle for control of 141 internet gambling and online poker domain names in Kentucky and is one of the first to support the industry in Minnesota.

Norquist told Poker News Daily that the actions by the Department of Public Safety parallel a growing nationwide trend for control of the internet: “The State of New York wants to tax people who download movies. There is an effort throughout the states to tax internet sales on sites like eBay. One of the reasons that the internet is so helpful is that it allows competition. The best way to keep taxes low is to allow people to be able to access other jurisdictions.” If successful, 200 websites would be completely inaccessible by Minnesota residents. The affected ISPs, which have up to three weeks to respond, include AT&T, Charter, Comcast, and Qwest.

Poker players in Minnesota may be left with legal card rooms at racetracks and the state’s tribal casinos as the only options if the action to block 200 websites is successful. Norquist explained, “You can’t always pick up and move, but on the internet, you can buy things in other states and other countries. That’s one of the reasons why the internet is so helpful. It’s none of the government’s business what you do online. We just went through this in Kentucky.” In the Bluegrass State, the Kentucky Court of Appeals overturned the seizure of 141 internet gambling domain names, including those belonging to massive industry staples like PokerStars and Full Tilt Poker. The case now moves on to the Kentucky Supreme Court.

Norquist explained his ideal vision for the future of the internet: “We want to keep the internet deregulated and untaxed because it’s so important in terms of protecting individual liberties. It’s not helpful to have politicians pushing people around.” The ATR was founded in 1985 at the request of President Ronald Reagan. It has pioneered the Taxpayer Protection Pledge, which it describes as “a written promise by legislators and candidates for office that commits them to oppose any effort to increase income taxes on individuals and businesses.” In the current Congress, which convened in January, a total of 172 Representatives and 34 Senators have subscribed to it. Last year, the ATR created the Center for Fiscal Accountability. It also organizes an annual Cost of Government Day.

The ATR may now work hand in hand with industry organizations like the Interactive Media Entertainment and Gaming Association (iMEGA) and the Poker Players Alliance (PPA), which have already dispatched legal teams to Minnesota. In Kentucky, a broad coalition was formed to counter the Justice and Public Safety Cabinet. Rich Muny, the PPA’s State Director for Kentucky and member of the organization’s Board of Directors, told Poker News Daily, “Poker players throughout America should be very concerned, as should internet freedom lovers regardless of where they stand on gambling. Once we establish a process of government regulating the internet, where does it stop?”

Other organizations that stood by the internet gambling industry in Kentucky included the Center for Democracy and Technology, eBay, the Bluegrass Institute, and the American Civil Liberties Union. Stay tuned to Poker News Daily for the latest from Minnesota.

Minnesota Seeks to Block Internet Gambling Sites

Fresh off a similar incident that has been appealed to the Kentucky Supreme Court, the Minnesota Department of Public Safety has notified internet service providers (ISPs) that they must prevent access by the state’s residents to 200 internet gambling sites.

The total number of sites to be blocked currently stands at 200. However, at press time, the affected domain names are not yet known. According to the internet gaming press release, Written notice was given by the Minnesota Department of Public Safety’s Alcohol and Gambling Enforcement Division to AT&T, Charter, Comcast, Direct TV, Dish Network, Embarq, Sprint, Frontier Communications, Qwest, Verizon, and Wildblue Communications. John Willems, Director of the Division, commented in a press release distributed on Wednesday, “We are putting site operators and Minnesota online gamblers on notice and in advance. Disruption of these sites’ cash flow will negatively impact their business models. State residents with online escrow accounts should be aware that access to their accounts may be jeopardized and their funds in peril.”

The press release cites the Wire Act of 1961 and overtly charges, “Online gambling is illegal in all U.S. states.” The Interactive Media Entertainment and Gaming Association (iMEGA) has already dispatched a legal team specializing in First Amendment rights to Minnesota to combat the Department of Public Safety. Its Chairman, Joe Brennan, told Poker News Daily, “I'm somewhat troubled by the shaky legal premise on which Minnesota has based this order. They are asserting that there is some blanket Federal prohibition against gambling on the internet, when in fact none exists. In a similar fashion to Kentucky, you have the aggressor citing assertions that are not supported by the laws that are on the books.”

The letters to ISPs were delivered on Monday. The companies have “two to three” weeks to respond. Then, the Department of Public Safety has pledged to take the complaint to the Federal Communications Commission. In addition to the 200 sites whose access may be at risk in the immediate future, the Division expects further expansion: “Willems anticipates the program expanding to address thousands of sites, depending on compliance.” In Kentucky, a total of 141 domain names are in limbo as part of a forfeiture hearing that may be heard by the Kentucky Supreme Court. In Minnesota, no such seizure occurred. Instead, the Department of Public Safety is merely seeking that ISPs block access. Internet gambling is identified specifically.

In addition to their websites being inaccessible, the Department of Public Safety is also calling for the 200 companies’ phone numbers to be blocked. It explained, “For more than two decades, telecoms have shut down telephone numbers at the request of law enforcement agencies when believed to be involved in illegal activities, such as sports book-making telephone numbers.” iMEGA and the 1.2 million member strong Poker Players Alliance (PPA) are among those seeking to prevent the blockage from becoming a reality. In Kentucky, the American Civil Liberties Union (ACLU) and Bluegrass Institute rallied behind the internet gambling industry. In January, the Kentucky Court of Appeals in Louisville overturned a lower court ruling that upheld the seizure order by a two to one margin. The Commonwealth, led by Justice and Public Safety Cabinet J. Michael Brown, immediately appealed.

Matt Werden, the PPA’s State Director for Minnesota, commented in a press release on Wednesday, “This isn’t simply a heavy-handed tactic by the government; this is a clear misrepresentation of Federal law, as well as Minnesota law, used in an unprecedented way to try and censor the Internet. I don’t know what U.S. Code they’re reading, but it is not illegal to play this great American pastime online and we’re calling their bluff.”

Grover Norquist, President of the Americans for Tax Reform, added, “This is nanny-statism at its worst – the government barging into a private matter because people are supposedly too stupid to make decisions and take care of themselves. Individual liberty should not be supplanted by the whims of politicians looking to soak even more money from an over-taxed, over-regulated population while feigning concern over safety issues.” Brennan told Poker News Daily that early speculation revealed that pressure from Indian casinos may be behind the move, although this was not verified. PokerXFactor.com instructor and Minnesota resident Chris “Fox” Wallace speculated that fledgling legal card rooms at racetracks may be to blame.

Willems admitted to the Minneapolis Star Tribune that he did not know how many Minnesota residents gambled online nor provided an estimate. Instead, he stated that he has had gamblers claim they lost $200,000 and needed to borrow money. The Department of Public Safety’s press releases closes by asserting that the internet gambling industry may provide “funding for criminal and terrorist organizations.”

A call placed to press release author Dennis Smith of the Minnesota Department of Public Safety was not returned as of press time. Stay tuned to Poker News Daily for the latest on this developing story.

Barney Frank Internet Gambling Bill Delayed Until Week of May 4th

According to an article released by Reuters on Tuesday, legislation to alter the landscape of the internet gambling industry in the United States will not be introduced by Congressman Barney Frank (D-MA) until next week.

Frank had originally stated that a bill favorable to the industry would be introduced in March. Then, an interview with The Hill revealed that it would not be seen until after Congress’ Easter recess. Now, legislation to overturn or clarify the Unlawful Internet Gambling Enforcement Act (UIGEA) will likely become a reality during the week of May 4th. A source close to Poker News Daily explained that pressure from “the guys writing checks” to release a bill may be taking precedence. In order to see time on the floor of the House of Representatives, past bills have undergone mark-ups and received amendments. Therefore, the bill Frank ultimately introduces may not be the final legislation enacted.

Frank told Reuters, "We'll be introducing it next week and I plan to move on it.” His previous attempt at creating a full licensing and regulatory framework for the industry came in the form of the Internet Gambling Regulation and Enforcement Act, which was introduced in 2007 and numbered HR 2046. The bill, along with a companion tax bill that was introduced by Congressman Jim McDermott (D-WA), would have generated up to $52 billion in revenue over a 10 year period for the U.S. Government, according to a study conducted by PricewaterhouseCoopers. On the reason for the two month delay, Reuters explained, “Frank said his Committee has been busy with other measures addressing the credit crisis and proposals to reform financial regulation.”

Frank made two attempts to clarify the UIGEA during the 110th Congress. Together with former Republican Presidential candidate Ron Paul (R-TX), Frank sponsored HR 5767, the first version of the Payments System Protection Act. However, amid pushback from Congressman Spencher Bachus (R-AL) as well as the failure of an amendment by Congressman Peter King (R-NY), HR 5767 failed to make it out of the House Financial Services Committee. In a June vote, King’s amendment was trumped by virtue of a 32-32 tie vote. An oral vote on HR 5767 saw the “Nays” outnumber the “Yays.”

In September, Frank introduced HR 6870, the second installment of the Payments System Protection Act. The bill passed out of Committee by a 30-19 vote, but then fell by the wayside as the global economy sputtered shortly thereafter. HR 6870 called for the U.S. Treasury and Federal Reserve to collaborate with the Attorney General’s office in order to determine what is legal and illegal under the UIGEA. The bill would have also suspended the UIGEA except for its directives related to online sports betting.

Despite being allowed to opt out of HR 6870, professional sports leagues such as the NFL came out against it. In March, the New York City-based NFL hired Jeff Miller to be its first full-time in-house lobbyist. His is charged with monitoring events on Capitol Hill and has pledged to support enforcement of the UIGEA. Miller told the Associated Press last month, “We want to maintain the integrity of the game, and gambling threatens that." The NFL completed its annual Draft over the weekend, with University of Georgia standout Matthew Stafford being chosen first overall by the Detroit Lions. Stafford received a six-year contract with over $40 million guaranteed.

Although a final copy of the proposed legislation has not been publicly released, Reuters claimed it “would overturn a law imposed during the Bush administration that has hurt U.S. trade ties with the European Union. Frank said the bill was being drafted this week.” Late last month, investigators from the European Commission found the United States to be in violation of its World Trade Organization (WTO) obligations due to the country’s stance on internet gambling. The Commission’s findings came as a result of a complaint filed by the Remote Gambling Association.

A call placed to Frank’s press secretary was not returned as of press time. Stay tuned to Poker News Daily for the latest news from Capitol Hill.

Poker Players Alliance to Spend $3 Million for Lobbying Efforts

In a recent article by the Associated Press, it was revealed that the Poker Players Alliance (PPA), the major lobbying force for the poker industry, plans to spend $3 million for lobbying efforts on Capitol Hill during the current Congressional session.

The online poker industry is on the cusp of seeing new internet gambling legislation introduced by Congressman Barney Frank (D-MA). It will need to sway a Congress that is engulfed with a struggling economy and ongoing war in Iraq to address the need for internet gambling or online poker legislation. The PPA’s method will be to lay out $3 million during the 111th Congress, which began in January and runs through the end of 2010. According to the Associated Press, The group gets its money from the “Interactive Gaming Council (IGC), a Vancouver, British Columbia-based trade association for online casinos, as well as from its poker player members.”

The PPA has over one million members worldwide, a number that it reached last year, and offers premium versions for a one-time fee of $20. Many of its constituents, however, are of the free variety. Benefits of upgrading to a premium membership include access to the PPA’s extensive Litigation Network, which puts poker players in need of legal counsel in touch with local pre-screened lawyers, as well as a discount program that touts potential savings of over $2,000 per year. Other benefits of the $20 membership include a PPA card protector and window decal, discounts on PPA merchandise, and the ability to donate to the organization’s Poker Political Action Committee (PAC).

The National Football League (NFL) has been among the advocates of continuing the enforcement of the Unlawful Internet Gambling Enforcement Act (UIGEA), which was passed into law during the final minutes of the 2006 Congressional session. Last month, it was revealed that the NFL had hired lobbyist Jeff Miller, who will serve as its first in-house counsel and keep the pulse of Capitol Hill. In an interview with the Associated Press, when asked whether he would continue to support upholding the UIGEA and Wire Act, Miller responded, "We want to maintain the integrity of the game, and gambling threatens that."

The UIGEA does not clarify what is legal and illegal under it. Instead, the doctrine defers to existing federal, state, and tribal laws and charges the financial services industry with its enforcement. The Associated Press article notes that half of the $16 billion internet gambling industry is “fueled by bettors in the United States.” The entire industry underwent a makeover as a result of the 2006 law, which sent the largest online poker site at the time, PartyPoker, packing from the market. In addition, payment processors such as Neteller and Citadel Commerce fled. A subsidiary of a publicly traded company, PartyPoker is now the fourth largest site or network worldwide according to PokerScout.com. It has also rebounded to become the second largest that does not accept players from the United States.

NFL spokesperson Brian McCarthy told the Associated Press, “We understand that illegal gambling currently occurs, but there is little we can do about that. However, we can exercise our right to oppose Internet betting on our games. Gambling on our games – online or offline – threatens the integrity of our games and all the values they represent.” A recent study by U.S.-based PricewaterhouseCoopers noted that up to $52 billion could be raised by taxing and regulating the internet gambling industry over a ten year period. However, that figure relied heavily on professional sports leagues opening up betting on their games, a concept the NFL appears to be ardently opposed to.

Frank told the Associated Press in a previous interview that he plans to introduce internet gambling legislation before the end of April. Congress was on a recess for the Easter holiday last week. The Chairman of the powerful House Financial Services Committee had originally intended to submit a bill in March, but it was ultimately postponed due to the ongoing economic meltdown. What form the legislation will take is also not yet known.

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

iMEGA UIGEA Appeal to be Heard on July 6th

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Former PartyGaming CEO Hired By Harrah’s

On Sunday, the London Times sent shockwaves through the land based casino industry as well as the internet gaming world with a small article regarding the recent actions of one of the largest casino operations in the world and a former online gaming CEO.

It was announced in the Sunday Times Online that Harrah’s Entertainment – responsible for much of the casino action in not only Las Vegas but the United States as a whole and the owner of the World Series of Poker – and former PartyGaming PLC CEO Mitch Garber have entered into an agreement for Garber to join the organization. What isn’t known is what capacity Garber will have within Harrah’s or what effects it will have on the World Series itself.

Garber, who resigned as the CEO of PartyGaming in early 2008, is thought to be taking a leading role in a reorganization of Harrah’s online operations into a stand alone company that will also encompass the WSOP. After several recent developments in the online gaming world, it is believed that Harrah’s is envisioning that the legalization and regulation in the United States will happen soon and wants a qualified leader to be able to run the resulting operation. With Garber, Harrah’s has landed such a leader.

Garber led PartyGaming through much of its tumultuous last few years after the passage of the Unlawful Internet Gaming Enforcement Act (UIGEA) and the resulting move of PartyGaming to pull out of the American market. While with PartyGaming he focused on international expansion through product diversification and a series of mergers and acquisitions. These efforts helped PartyGaming to absorb the losses of the American market with little effect on PartyGaming’s bottom line.

There are different theories as to if, and/or when the legislative mood regarding online gaming in the United States will be changing. In a recent interview with The Hill, Massachusetts congressman Barney Frank, the chairman of the powerful House Financial Services Committee, stated that he plans to introduce internet gambling legislation after the Easter recess. The Hill noted that the week of April 20th is a likely time frame for the bill’s introduction and that it would create a complete licensing and regulatory framework for the internet gambling industry.

This line of thought is tempered by the current economic and political climate in the United States, though. With the ongoing financial crisis affecting not only the U. S. economy but the situations of most nations worldwide, many believe that the legalization and regulation of online poker and gaming is far down the list of priorities of the U. S. Congress and the Obama Administration. Although the taxation dollars from the online gaming industry - which garners an estimated $12 billion yearly - would be helpful to the American government, other more lucrative financial moves are expected to be implemented first.

Gary Loveman, CEO of Harrah's Entertainment, has said online poker's legalization is a strong possibility in the United States and recent activities regarding online poker operators have demonstrated that the winds may be changing. In December, former PartyGaming founder Anurag Dikshit pled guilty to violations of the 1961 Wire Act and paid a $300 million fine. Just last week, Garber’s former company PartyGaming also settled their grievances with the U. S. Department of Justice, agreeing to a non-prosecution arrangement and payment of a $105 million fine over the next three years.

With the hiring of Garber to run the online operations of a newly created branch of Harrah’s and – if online poker is a part of that operation – the WSOP, it does appear that Harrah’s is preparing for the day when online poker and gaming will be legal in the United States. Whenever that day may be.

iMEGA Will File Kentucky Supreme Court Brief by June 1st

On April 2nd, the Kentucky Clerk's Office approved the Commonwealth’s brief in a case that pits the state against owners of 141 internet gambling domain names. The approval means that the Interactive Media Entertainment and Gaming Association (iMEGA) must file its brief to the Kentucky Supreme Court by June 1st.

The timeline is setting up a summer showdown in the United States between the organization and the Kentucky Justice and Public Safety Cabinet. In January, the Kentucky Court of Appeals ruled by a two to one margin that the State lacked jurisdiction to seize and force the potential forfeiture of 141 internet gambling domain names, including those belonging to online poker sites such as PokerStars and Full Tilt Poker. The industry originally received word of the forfeiture back in September.

Although Commonwealth attorneys originally asked for more space to outline their discord or more time to pare the document down, the final brief weighed in at 50 pages, which is the maximum number allowed by law. The State’s brief opens, “Wagers are accepted in an unregulated underworld without effective age verification, identification, or financial accountability… Persons can instantly wager and lose retirement savings or college funds in secrecy.”

The State also notes that internet gambling may be cutting into its revenues for legalized forms, including horse racing. The city of Louisville is just three weeks away from playing host to the annual Kentucky Derby, which is held on the first Saturday in May. The spectacle takes place at Churchill Downs and brings in an extensive amount of revenue to the state’s economy. The Commonwealth’s brief claims that 2,500 “unregulated sites” solicit U.S. customers. They include 1,083 online casinos, 592 sports books, 532 online poker rooms, 224 Bingo sites, 49 skill game websites, 30 betting exchanges, 25 lotteries, and 17 backgammon sites. These figures are sourced from a Casino City study in 2006.

The brief also gives a lengthy history of arrests and admissions of guilt in the internet gambling industry. Commonwealth attorneys alluded to Party Gaming Co-Founder Anurag Dikshit’s $300 million settlement with the U.S. Government in December of 2008, decisions by ClearChannel and Infinity Broadcasting to cease running advertisements for online gambling sites in 2003, a $7.2 million settlement between Sporting News and the U.S. Department of Justice in 2006, and the arrests of the founders of Neteller.

The question of whether iMEGA and the Interactive Gaming Council (IGC) have standing to sue is also brought into light. The brief asserts, “IGC and iMEGA have refused to identify a single owner they seek to represent. iMEGA has even failed to identify any Domain Defendants its unidentified members claim to own. Appellant has no way to verify whether the associates have the authority to represent an actual entity claiming ownership interest in a domain.” Last March, Judge Mary L. Cooper granted iMEGA standing to sue to declare the Unlawful Internet Gambling Enforcement Act (UIGEA) unconstitutional. That case also currently sits in appeal.

In October, Judge Thomas Wingate did not overturn the seizure order by Kentucky Governor Steve Beshear. The decision prompted iMEGA and the IGC to file a petition for the state’s Court of Appeals to intervene. The organizations’ pleas were granted, setting up a December hearing in Louisville. In January, Judges Michelle Keller and Jeff Taylor agreed that the Commonwealth did not have proper jurisdiction to force the forfeiture of the 141 internet gambling domain names in question. Judge Michael Caperton submitted a dissenting opinion arguing that domain names are part of a much larger “gambling device,” a term that traditionally refers to physical objects like slot machines or roulette wheels found in an underground casino.

No date has been set for the Kentucky Supreme Court to hear the case. Stay tuned to Poker News Daily for the latest from the battle in the Bluegrass State.

Barney Frank to Introduce Internet Gambling Legislation after April 20th

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

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

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

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

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

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

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

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

Barney Frank to Introduce Internet Gambling Legislation after April 20th

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

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

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

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

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

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

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

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

New NFL Lobbyist Seeks to Protect UIGEA

Recently, the National Football League (NFL) enlisted the services of Jeff Miller, who will serve as its chief lobbyist on Capitol Hill. According to an article authored by the Associated Press, Miller seeks to preserve the ban on internet gambling in the United States.

In 2006, the Unlawful Internet Gambling Enforcement Act (UIGEA) was ushered through Congress at the last minute by former Senate Majority Leader Bill Frist (R-TN). Although the UIGEA did not define what was legal and illegal under its jurisdiction, its effect was driving some of the world's largest online poker sites out of the U.S. market. Now, only a handful of rooms, such as PokerStars, Full Tilt Poker, Ultimate Bet, and Carbon Poker, accept U.S. residents. In addition, the UIGEA also eradicated payment processors such as Neteller and Citadel Commerce from the market.

On January 19th, the regulations of the UIGEA finally came to fruition as “midnight rules” passed by the outgoing Bush Administration. Many in the internet gambling industry questioned the role of Special Assistant to George W. Bush William Wichterman, who had also served as an NFL lobbyist. Whether the urging of Wichterman resulted in the UIGEA's regulations being pushed through remains unknown. However, his involvement prompted a letter by Congressman Steve Cohen (D-TN).

The NFL's newest hire, Miller told the Associated Press, "I'm a lifelong NFL fan, grew up in Wisconsin, [and] rooted for the Packers at my father's knee every Sunday. I had had opportunities in the past to leave the Hill and do other things, such as work at a law firm and lobby firm. But when the NFL calls, you can't turn that down." When asked about the upholding the existing internet gambling legislation, which consists of both the UIGEA and Wire Act of 1961, Miller responded, "We want to maintain the integrity of the game, and gambling threatens that."

The Associated Press article added that Miller will be at the forefront of sports leagues' efforts to preserve the status quo with regards to internet gambling. Congressman Barney Frank (D-MA) has led the effort to overturn the UIGEA, or at least clarify it for the benefit of the financial services industry. HR 6870, the second version of the Payments System Protection Act, was passed out of the House Financial Services Committee, of which Frank is the Chair, by a 30-19 vote last September. However, due to the then-emerging economic crisis in the United States, it did not see time on the House floor.

According to the Associated Press, the NFL previously sought outside counsel. Miller's hiring bucks that trend. He explained, "The emphasis is to have a full-time person spending every waking moment thinking about how what Congress or the administration is doing is going to affect the NFL's business model." The NFL held its annual owners' meetings last week in California, instituting a number of rule changes as well as adjusting the draft order based on a team's finish in the playoffs. Fantasy sports received a specific exemption from the UIGEA, although the law forced industry websites to guarantee prize pools and not allow a manager to have all of his players come from the same team.

Joe Brennan, Chairman of the Interactive Media Entertainment and Gaming Association (iMEGA), told Poker News Daily why sports betting has received such a bad rap: “It's the only type of betting where the courts have been explicit. The Wire Act arose out of a couple of sports betting scandals back in the 1950s. It always comes back to trying to protect the integrity of the game.” iMEGA is suing to declare the Professional and Amateur Sports Protection Act (PASPA) unconstitutional. The case has been assigned to Chief Judge Garrett E. Brown, Jr. of the New Jersey District Court.