…. swift passage in the next session of Congress of the Skill Game Protection Act. Introduced over a year ago by Florida Rep. Wexler, this bill clarifies that poker, bridge, mahjong and backgammon are games of skill and not “chance.” A related bill by Rep. Barney Frank will establish the mechanisms for federal regulation of U.S. Internet sites providing online wagering in these games.
Together, these bills will restore sanity to the insanity resulting from the Unlawful Internet Gambling Enforcement Act (UIGEA), passed when the Congress was still in the hands of a GOP that has been thoroughly repudiated by the voters. Now is the time to clean up one of the messes instigated by the religious conservatives who have such a sway on the GOP. (You may recall their last really big mess – Prohibition, which brought about the rise of national crime organizations by giving local crime organizations an opportunity to make really big money in alcohol, just like what is happening with drugs now.)
Let’s look at that bill title again: Unlawful Internet Gambling Enforcement Act. The title makes a lot of assumptions that are not fact based.
First, there’s “Unlawful Internet Gambling.“ Is there any federal law that clearly makes wagering on the Internet illegal? There is none, based on the failed efforts to prosecute online wagering.
Some federal prosecutors brought cases of Internet “gambling” to court using the Wire Act, a 1961 law developed to prohibit betting on sports events by organized crime. The language of the Wire Act makes clear that the targets are criminal organizations, not individuals. Nevertheless, the government engaged in fantastic contortions for ideological reasons, just as it did with the “slam dunk case” for WMDs in Iraq. With the same FUBAR results…. The attempt to prostitute a law aimed at organized crime has been struck down by many federal courts, including a federal district appeals court.
And, if poker is in fact a “sporting event” as claimed by federal prosecutors, then how is that game “gambling”? Or are sports events games of “chance” and not skill based? If there is in fact a federal law which clearly prohibits Internet gambling, then prosecutors would not be attempting to use a 1961 law which the courts have ruled is inappropriate. There is NO federal law against Internet gambling! And that is a slam dunk case….
Interestingly, and contrary to popular misconception, the UIGEA does not make online gambling illegal. It only states that no financial institution may participate in any transaction related to games of “chance.” Those games are not defined. So, that begs a huge question. But the government’s attempt to use the Wire Act means it has defined poker as a “sporting event” and so how can it now say that poker is a game of “chance” which is what the UIGEA is about? (We know how: government is a hypocrite, saying one thing one day in one situation and then saying the opposite the next day in another situation.)
Notice also that the UIGEA focuses on “financial institutions” and not individuals. I am not violating the UIGEA if I attempt a prohibited transaction; it is the financial institution that is subject to penalties under that law if it allows the transaction. So individuals do not need to fear the UIGEA.
Now let’s focus on “Enforcement.” There are two aspects to this.
The first aspect is technological. Although a financial institution can identify a “gambling” organization by its merchant coding if the transaction is by credit card and then stop such a transaction, the technology does not exist to read a check, cashier’s check , money order, or other “paper” transaction. So if you want to send a $500 check to an online “casino” a bank cannot prevent that “transaction” short of having someone read each check. What do you think will happen if the government suggests the banks do that? (Besides your monthly bank fees increasing?)
Add to that the second enforcement aspect previously noted: the UIGEA does not define what online games are games of “chance.” If the banks do not know what games they are prohibited from providing financial transactions for, how can they comply? So…..
Is it any wonder that the American Bankers Association (and Federal Reserve) has protested the last minute effort by the repudiated Bush administration to pass, in its waning days, enforcement regulations for UIGEA? Here is a law passed over two years ago and Treasury has never issued enforcement regulations!
Oh, that’s right…Treasury was too busy overseeing the meltdown of the economy to bother with those regulations. Now that Bush and Paulson have succeeded in turning our economy into one akin to a Third World country, they can now focus on the really important stuff like online poker.
The bankers rightly protest that they do not know what are the “games of chance” for which they cannot process financial transactions. E ven if those “games of chance” are identified, they can only stop credit and debit card transactions. Those who want to gamble online will just send checks, money orders etc. and the banks cannot stop those but they are nevertheless legally responsible, and are violating the law, for processing such transactions!
Bottom line: the UIGEA is FUBAR! Big time!
Passage of the Skill Game Protection Act, and its companion bills, will end this nonsense and have significant economic benefits. Economic benefits are something this country can use right now.
First, many offshore poker rooms will come to the U.S., creating investments and jobs as well as taxes for the federal government. I think that’s a good thing. Or would you rather see that money go outside the country? Because that is what’s happening now and UIGEA cannot stop that, only inconvenience those who want to play poker online.
Second, the World Trade Organization judgement against the U.S. will end. A claim filed in 2004 by Antigua and Barbuda (one country, not two) against the U.S. over online poker was upheld by the WTO. It ruled that the U.S. violated WTO rules by not allowing Antigua and Barbuda access to American online gamblers.
The U.S. had to “play fair” by either prohibiting U.S. online horse betting sites or allowing online poker. Online gambling is online gambling and favoring American-based online horse racing to the detriment of foreign-based poker is clearly a form of protectionism.
When the U.S. failed to comply with either option, the WTO issued sanctions last year. Antigua and Barbuda now have the right to ignore intellectual property treaties protecting the “piracy” of American copyrights, patents, etc in an amount equal to $21 million (per year, I believe) to offset revenue lost from American online poker players. This means that nation can now produce and sell, at any price, such items as Microsoft products, movie DVDs, music DCDs, without paying any royalties and the owners of the property have no recourse.
Think about online poker this way: imagine if the law said you can go to a mall to shop but you cannot shop online. That’s the situation with poker in most states, including Florida. I can drive to a poker room but the government doesn’t want me playing it online. That’s nonsense.
So in 2009, the issue for me is not Iraq; we’ll be out someday. It’s not the economy; it will improve in a few years. It’s not terrorism; over 41,000 Americans were killed on the highways by other Americans in 2007 so it’s the driver next to me I worry about, not bin Laden. The priority issue for me is online poker. And I’m all in for that!