Poker Exemption to UIGEA May Not Serve Interests Of Sports Gambling Industry...By Jay Graziani

[Rogthedodger]

An article here at MajorWager.com nearly 5 months ago (http://www.majorwager.com/frontline-306.html) asked: "Can Online Poker Save the Online Gambling Industry in America?" This article mentioned a burgeoning group known as the Poker Players Alliance (PPA), as well as the increasing public acceptance of poker compared to other forms of gambling like sports betting or casino games. Recent events suggest that Internet gamblers agree that the poker angle is their best bet for legal reform, as they seem content in letting the poker players dictate the pace of resistance to UIGEA.

The PPA came together in 2005 as a backlash to legal efforts to restrict the growth of poker, particularly online. The group claims to have already influenced the political process - the defeat of online gambling opponent Rep. Jim Leach this past November has, in some circles, been attributed to negative press generated by the PPA. On March 5th, the PPA announced that former United States Senator Alfonse D'Amato had joined as Chairman. Not surprisingly, the positive press generated by this move caused a surge in PPA membership (reportedly now over the 200,000 member mark).

While D'Amato has stated that Congress should create a regulatory body for online gambling, the PPA is not focusing its efforts towards legalization of online gambling in general. In fact, the organization's publicly stated goal is to obtain a legislative exemption for poker within the structure of UIGEA, primarily by using the "game of skill, not game of chance" argument.

I find it hard to believe the new push towards a poker exemption will have any effect whatsoever. The "skill versus chance" argument does absolutely zero to address the stated concerns of regulators -- primarily the money laundering, problem gambling, and underage access issues. The UIGEA is not an anti-poker law or even an anti-gambling law. It is a "money laundering" law directed at financial transactions. It is not passing judgment on poker or any other game, and thus the "skill versus luck" argument is irrelevant in arguing against the UIGEA.

While success seems unlikely, a poker exemption to the UIGEA could potentially have benefits to the sports gambling community. It would mean we are one step closer to legalization (or decriminalization) of online gambling in America, and it would potentially act as a show of support for further legislation, including sports betting reform. It would give legitimacy to online gambling operators and the industry as a whole. And if, further down the road, an exemption allowed offshore money transfers to "approved" online poker rooms, it would possibly allow for the occasional "diversion" of funds to sports books by clever gamblers, possibly relieving some of the pressure currently being felt in the offshore money transfer business.

But a legislative carve-out for poker could in fact significantly impede the sports wagering industry in the long term. Most importantly, a carve-out could manifest itself in a number of ways, many of which may not benefit the majority of online gamblers. Intrastate gambling legislation (referring to internet poker contained solely within one State) seems like a simple concession, or at least as a way to defer the state versus federal government battle to another day. Gambling policy has traditionally been left to individual state governments, though in today's climate of near-absolute federal power, that is no longer a given. Intrastate online poker has been attempted before -most recently in 2005 in North Dakota, in a bill that sponsor Rep. Jim Kasper (R) plans to bring up again in the 2007 legislative session. For states that allow brick-and-mortar poker, jumping to an online platform might not be that much of a stretch, and much of the necessary regulatory structure is already in place to some degree.

Even the best-case scenario for an exemption -- completely open access to offshore internet poker -- might not solve the sports gambling problem. The sports gambling industry has a lot of other hurdles to clear besides just the UIGEA, with the Wire Act of 1961 and the Professional and Amateur Sports Protection Act of 1993 chief among them. Even if an exemption somehow, eventually allowed for legal transfer to offshore operators (an issue that would have to be addressed depending on the WTO ruling, due out any day), the U.S. government would certainly include in any regulatory scheme a prohibition against sports betting in order for an operator to be "licensed". The financial windfall to an offshore operator legally entering the U.S. market, as well as the potential for federal investigation and criminal and civil suits under regulation, would entice any operator to stick firmly to the rules and prohibit U.S. players from making sports bets or other illegal wagers.

Furthermore, individual state laws would still trump a federal exemption for players in those states. There are nine states with specific laws prohibiting online gambling (Illinois, Indiana, Louisiana, Montana, Nevada, Oregon, South Dakota, Washington, and Wisconsin). Furthermore, gambling laws in each state also control the games that may be played, and many of these apply specifically to poker or sports wagering. Just a year ago we were reading about home poker games being busted and charity poker events being shut down. Online poker is more problematic in resolving disparate state laws. Any eventual regulation scheme would have to account for the fact that you may not be able to play the same games online as your neighbor across the state line. It would also likely lead to an increase in anti-gambling legislative initiatives, particularly in conservative states.

Exemptions to the UIGEA are already in place for the gambling industry's biggest lobbyists: horse racing, tribal gaming, and lotteries. Fantasy sports games are even exempted. If poker manages to gain an exception, sports gamblers will be standing virtually alone in opposition to the UIEGA. With all other special interests satisfied, the chance of passing substantial internet gambling reform based on casino games and sports wagering alone seems very slim - the popular support is just not present.

Sadly, sports bettors may be better off placing their bets against the poker players this time. We might be better served by staying on the sidelines until a better legislative solution comes along.

03-27-07
Jay Graziani
MajorWager.com
graziani@majorwager.com

http://www.majorwager.com/frontline-464.html

[Hartley]

Jay, my argument was that the more exemptions they throw in there, the more watered down the law becomes and gives fodder to the Barney Franks of the government who can argue that the bill is meaningless due to the number of things that are allowed.

Also, if they say poker is allowed because "it's a game of skill" then it allows the argument that sports handicapping involves skill also.

Mind you in a way I agree with you. The PPA would be happy to sell out all sportsbetting if it meant saving poker.

[BuzzRavanaugh]

Poker players are by far the slimiest, no good citizens on the planet. You surely didn't think they would do something for the greater good like try to lobby against the UIGEA, but instead they are going to try to carve out there own little piece of the market.

I wouldn't expect anything else from those guys.

You could see this from a mile away.

[drunkguy]

Originally Posted by Hartley

Jay, my argument was that the more exemptions they throw in there, the more watered down the law becomes and gives fodder to the Barney Franks of the government who can argue that the bill is meaningless due to the number of things that are allowed.

I agree that is a potential angle, although excessive exemptions does not necessarily invalidate legislation - look at the mess the tax code is. No one is looking to reform it, they just keep adding more and more exemptions as they come up.

Also, please don't see this as a rebuttal to your original article - if anything I wrote this more as an "extension" of that piece since the PPA involvement has become a lot clearer over the past few weeks. Your article was certainly quite relevant at the time, and actually still is.

Also, if they say poker is allowed because "it's a game of skill" then it allows the argument that sports handicapping involves skill also.

I think that is generally a misguided argument, for the reasons stated in my article. The "game of skill" argument is probably best applied at the state level, as that is a consideration of state gambling laws. UIGEA really makes no distinction, and pre-existing federal law on sports betting mostly invalidates that argument anyway. Maybe we can pull it out when someone tries to challenge the Wire Act or Sports Protection Act, as the skill argument has a lot more punch in regards to those pieces of legislation.

So, yea, I agree sports gambling can be argued on a "skill" basis, but I think that's an argument which really has no fundamental bearing on the current UIGEA debate.

[Minnow]

Also, please don't see this as a rebuttal to your original article - if anything I wrote this more as an "extension" of that piece since the PPA involvement has become a lot clearer over the past few weeks. Your article was certainly quite relevant at the time, and actually still is.

I was thinking along the same lines. I respect both of your opinions on this subject and see dg's latest contribution as more a continuation than a rebuttal.

This has been a pet subject of mine.. did poker blow it for sports gamblers? Could poker, due to the sheer numbers and publicity, bring enough attention to the inequities of the UIEGA and "save" offshore, or possibly bring about fairer amendments and possible state regulation?

I agree with Buzz. Poker players are strictly in it for themselves, at this point, and would gladly sell out anyone for self-serving exemptions.

[Uncle B]

interesting discussion....

[clevfan]

Targeted Attack on UIGEA to be launched in April

Reciting part of Henry Wadsworth Longefellow's poem the Midnight Ride of Paul Revere, Massachusetts Congressman Barney Frank stopped short of telling me when he would gear up for an attack on the Unlawful Internet Gambling Enforcement Act of 2006 (UIGEA). I figured it out remembering additional verse from Longfellow's memorable words: "on the 18th of April in Seventy-five." He let me know I was on track with the April 18th target date to get cracking in the halls of Congress, explaining that the legislators would all be back in Washington after a two-week recess.


Congressman Frank seeks relief, now


Congressman Barney Frank assured me he will get beyond mere rhetoric and move swiftly against the "stupid" provisions of the UIGEA, which attempts to end online betting by American-based players. He has previously called the recent legislation one of the stupidest laws ever passed. Now he is fully focused on its affront to any freedom-loving citizen. This latter point makes him see red. It bodes well for online and commercial gaming interests who need a powerful advocate in the thick of the political maelstrom.


A seasoned member of the House of Representatives, Congressman Frank ascended to the Chairmanship of the House Financial Services Committee when the Democrats won control of the Chamber last December. He is smart and has significant clout to go with his fearless style of getting out front on issues, no matter how controversial. "A bill will be filed later this month," he says.


Frank's motto is "be prepared"


For the moment he is doing his homework, part of his well-known modus operandi. He explained that he is consulting widely before moving forward with the drafting of legislation which will include but not be limited to a poker carve out from UIGEA. While the Congressman has previously noted, publicly, that he has no plans to work with Alfonse D'Amato on this matter, the former Senator and recently elected Chairman of the Poker Players Alliance has told me, directly, that he and Mr. Frank have at least, "touched base during the past week."


Perhaps the explanation for the less than enthusiastic embrace of the PPA's Chairman Lies in the Congressman's openly stated interest in getting some ideas and drafting advice from another former senator from New York, Tom Downey. Mr. Downey, a Democrat from Mr. D'Amato's neighboring Suffolk County served in Congress from 1974-1993. Since then he has become a highly respected Washington insider as the Chairman of the Downey McGrath Group, Inc.


Congressman Frank is also consulting on big picture issues - relevant to the shot across the brow of UIGEA - with Southern Nevada Congresswoman, Shelley Berkley. Mr. Frank will now lead the charge and is determined to put forth a bill that will stay focused in the Financial Services Committee, according to Ms. Berkley who sounded genuinely excited about the planned cooperation between their two offices.


Berkley has a well-channeled ego


Moments before I left for Europe, last Sunday, Ms. Berkley rang me. We spoke briefly about the changing dynamics in dealing with both the common ground and divergent interests of her poker guys and her casino constituents. She said she was at Mr. Frank's disposal to assist and to give him important feedback as he moves forward in the development of a bill. She expects to stand shoulder to shoulder with him (she'll use stilts) in attacking the outrageous provisions of the UIGEA. The present game plan is for the 'Frank bill' to go forward before Berkley takes a further look at a study bill that would examine online gaming issues for future purposes.


A poker carve out from UIGEA as a clean separate bill looks as if it is dead as a door nail, but a bigger and more forceful bill is on a well lit horizon; leave it to Congressman Frank to keep it narrow enough to stay tightly within the reins of his committee.


Alfonse D'Amato is poised to zig and zag


PPA Chairman Senator Al D'Amato tells me the political process is inevitably filled with twists and turns. He says he will be staying on top of the situation, and promises to further enlighten me on his advocacy in Washington and recommendations to the poker community so as to enhance the prospects of success. We may see a bill from Frank or Berkley or both, but for sure Alfonse D'Amato will be in the background, pitching the cause of online gaming interests. He has assured the PPA he is going to earn his keep.


Wendeen Eolis is CEO of EOLIS International Group a legal/business consultancy. A longtime confidante and advisor to Rudy Giuliani, she also served as first assistant to Governor George E. Pataki. She is consulted by law firms, companies, and governments around the world. In her spare time Wendeen became a poker ace; she was elected to the WPT's Inaugural Professional Poker Tour and has cashed in five WSOP events. She has written articles for various law journals as well as the poker industry. Visit eolis.com for info on her book, and availability as a speaker.

[Editor's Note: This story is part of material that may be incorporated in Ms. Eolis' forthcoming book, Power Poker Dame (to be published in 2008).]


See Also: Midnight Ride of Paul Revere

Wikipedia Profiles on: Barney Frank, Alfonse D'Amato, Tom Downey and Shelley Berkley.


Related Articles: No Folders in Legislative Game, Alfonse D'Amato to Chair the Poker Player Alliance (PPA), Can Congressman Barney Frank Free Poker From UIGEA?


Poker Player Home Page :: Articles :: Special Bulletin: Targeted Attack on UIGEA to be launched in April

[zewkey]

sorry, but i'm a little late to the party.

do sportsbettors have anything closely resembling the PPA? or, at least, a well known proponent that could voice an opinion on certain issues.

[Hartley]

Also, please don't see this as a rebuttal to your original article

I didn't take it that way at all Jay .

Clearly we are all on the same side here. Phil Ivey, Greg Raymer, Daniel Negreanu etc. are bigger than many sports stars and most of the big name poker players are also sports bettors. I don't think it would be a bad thing to get them on our side and if that means giving poker its exemption first so be it.

The fact that most sportsbooks now have poker rooms also speaks volumes. It's in the interest of party poker, poker stars, prima poker etc. to have the law repealed for both poker and sports.

Maybe if the PPA wins their exemption making them irrelevant, they'll become the SBPA (sports bettors player's alliance) kind of like the March of Dimes became an agency for the disabled after polio was eradicated