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August-20-2008,
Another Bill Targets Online Sports Betting...By Hartley Henderson

On July 30, Congressman Pete Sessions (R-Tex) introduced a new bill aimed at "clarifying" the UIGEA. This bill was co-sponsored by Robert Berry, Bill Delahunt and Jesse Jackson Jr. and is another anti-UIGEA bill on the table to complement Congressmen Barney Frank's Internet Gambling Regulation and Enforcement Act and Robert Wexler's Skill Game Protection Act. It is clear from all these bills that the government realizes that the UIGEA is not a workable piece of legislation, and now even the Republicans are looking for a way to gracefully save face by legalizing some wagering, while not totally eliminating the piece of useless legislation they voted for.

Sessions' bill, like Frank's and Wexler's takes aim at sports betting while saving online poker. The bill, H.R. 6663 contends that anyone who offers sports betting to U.S. citizens or processes payments for sports betting to U.S. citizens is guilty of violating the UIGEA. The bill makes the argument that all federal convictions prior to the enactment of the UIGEA involved sports betting (the Wire Act, Travel Act and Gambling Paraphernalia Act), and hence the UIGEA itself was implicitly designed to prevent sports betting only. Naturally the DOJ will not agree with Sessions since it contends that all betting is equal and illegal under both the Wire Act and the UIGEA. Nevertheless, Sessions bill argues:

Sports betting, which is illegal in 49 of the 50 States, is viewed as particularly harmful because its potential adverse impact on the integrity of professional and amateur sports, and is the one form of gambling where there is settled Federal case law clarifying it as illegal on the Internet.

As well, H.R. 6663 looks to exonerate any offshore operators who left the U.S. market subsequent to the passing of the UIGEA, provided they were not offering sports wagering.

Naturally one would assume that organizations like the Poker Player's Alliance would be applauding the new bill, but in fact Alphonse D'Amato came out with a statement saying that the organization opposes it because it confuses the issue. The exact statement was as follows:

"The PPA remains concerned with the implication HR 6663 asserts that the UIGEA has made internet poker an unlawful activity that needs special protection. Previous federal case law (re: MasterCard 2002) has made it clear that existing federal criminal law (WIRE Act of 1961) applies only to Internet sports wagering and not to Internet poker. Further, the UIGEA itself states, 'No provision of this subchapter should be construed as altering, limiting or extending any federal or state law. Thus HR 6663 only confuses a clear judicial standing on this matter."

The PPA's statement is rather strange, as it appears to be arguing that the UIGEA makes poker legal and hence this bill would decriminalize a legal activity which just causes confusion. Of course there was no carve-out in the UIGEA for poker, but the PPA contends that the line of the UIGEA which states "'No provision of this subchapter should be construed as altering, limiting or extending any federal or state law," should be taken as an implicit carve-out for poker.

Pokersourceonline.com president Jay Lakin does not seem to agree with the PPA, and feels the UIGEA did, indeed, intend to include poker and is reluctantly in favor of HR 6663. "Personally I feel all gambling should be legal or illegal," said Jay "but officially, since my business, a poker affiliate, involves poker only I must welcome the legislation if it permits online poker to be played without hindrance." I pointed out to Jay that almost all sports betting sites also offer poker, but he seemed to wave that off stating that the amount of poker revenue at those sites is insignificant and that sports sites either use it as a loss leader or simply offer it to add revenue to the real purpose of the sites, which is sports betting. Jay also mentioned that studies have shown that more than 80% of poker players bet only on poker and have nothing to do with sports or other casino games, so poker sites who welcome the bill aren't being disloyal to their community with the stance they have taken. In the meantime, while the PPA opposes the bill itself, it applauds the idea of targeting online sports betting. Thus it is becoming more evident than ever that the poker community is only too happy to send online sports betting down the river if it accomplishes its goal of legalized online poker in the United States.

Martin Owens, a California attorney specializing in Internet and Interactive Gaming law also dislikes Sessions bill, but for a different reason: "HR 6663 shares the same defect as all other anti-gambling legislation: It has no complaint against those that it can reach, and cannot reach those of whom it complains. A Vegas handicapper of my acquaintance told me that the gross amount bet on the 2007 Super Bowl alone was over $5 billion, and of that amount only about $300 million was legally wagered in Vegas. The rest, along with any potential government revenue deriving there from, went straight to the dark side."

The belief that sports betting is somewhat seedy and doesn't deserve the same treatment as the gentile game of poker stems back to the days of yore. Instead of identifying sports betting with the likes of William Hill, Ladbrokes, Betfair or even Caesar's Palace which are very well respected companies, most politicians and the average American still seem to equate sports betting with Al Capone and Bugsy Seigel. Until recently even poker had that stigma attached to it, but the expansion of the World Series of Poker, which saw common Americans (Chris Moneymaker, Greg Raymond etc.) win millions from online qualifying, and the daily telecasts of poker tournaments seems to have swayed most Americans' view of the game. It's easy for a politician or the DOJ to convince the public that online sports betting is affiliated with the mafia if the sports betting operators aren't on TV every day, but it's hard to draw the conclusion that Phil Ivey, Jennifer Harman or even Gabe Kaplan are seedy when people see them on TV all the time and know they are not gangsters. It's ironic that in Europe and Australia the opposite is true. Overseas, gaming regulators seem to feel that sports betting is the most honest form of betting and leads to the least amount of addiction and hence should be treated with more respect than poker or casino games. In England betting shops like William Hill or Ladbrokes are strewn throughout the cities and people walk in them without hesitation or embarrassment. Most of the seedy gambling in England is still generally in the poker rooms. As well, in Europe sports leagues are working with the sports books to try and track any unusual betting patterns to ensure the integrity of games. It seems in England, countrymen who may have equated sports betting with the mob at one time now view it as just another honest business since it was legalized and regulated.

The negative view of sports betting in North America can also be linked back to the leagues themselves who say they don't want betting on their products. Suggestions that sportsbooks could help the leagues improve the honesty of games are always met with horror by the league officials. Those a bit more sceptical, of course, may suggest that the reason sports leagues are so adamant that sports betting never be legalized outside of Nevada is that the legalization and acceptance of sports betting would take away a useful scapegoat from the leagues when things go wrong. Almost always when something goes awry in a league, gambling on the sport is blamed. When Ted Donaghy was caught being on the take from local bookies, the league blamed the problem on gambling itself rather than on the real issue, which is the integrity and moral fiber of its officials. When concern arose that many colleges were graduating athletes that couldn't put two sentences together simply so they could play on a team or that the league those colleges were in had a playoff system which was useless in determining which team was actually the best, the league instituted a campaign encouraging the public not to bet on college games and insinuated that by stopping gambling on college athletics all concerns of the league would miraculously go away, somehow deflecting the real issue. When an athlete was found to be conducting dog fights and accepting bets on those fights the league conveniently equated the problem with the fact it involved gambling, even though the gambling aspect of the case was a non issue. The real issue is that the league has developed and promoted players which have a belief that violence and cruelty are not necessarily negative attributes since it helps develop competitiveness. And lastly, a league that is being dragged through the mud because many of its superstar players, record holders and almost certain future Hall of Famers are being shown to have achieved a high level of play mostly because they pumped their bodies full of steroids to gain a competitive advantage can shrug it off and claim it's all good because they have banned a star player from ever entering the Hall of Fame---all because he was a gambler who bet on his own team . In fact some leagues won't even set up teams in cities that allows sports betting, claiming that by doing so it is upholding the virtue of the sport, which of course is complete nonsense. As Owens commented to me: "Blaming gambling for one's troubles is the lowest common denominator of virtue in America. Meantime, just find me an office building in this country that doesn't have at least one betting pool for football or March Madness. The federal courthouse in Salt Lake City, maybe... and then again maybe not."

As for the likelihood that Sessions' bill will become a law, both Lakin and Owens feel it is unlikely, although for different reasons. Lakin believes that with a Democratic controlled Senate and Congress the bill has little shot of being passed as it was a Republican initiative. As well, he believes if Obama is elected as President all bills related to the UIGEA will be put on hold for some time. Owens believes the bill will never pass because the government doesn't want a bill that clarifies the UIGEA, or any gambling laws for that matter. "As far as HR 6663 is concerned, it will be voted down precisely because it attempts to clarify the situation. The people who use gambling as a political piñata don't want clarity. They want a vague, threatening law that they can interpret any way they want, anytime they feel like it. The witch hunt never stops you see. They just throw in fresh witches once in a while."

At the Next Generation in Gaming Conference in Montreal last month, one conclusion was drawn by almost all speakers - in the near future online gambling in the United States will be legal and regulated, but sports betting will always be on the outside looking in. Unfortunately, as long as sports leagues have their say and can convince politicians and the public of the ridiculous contention that legalizing online sports betting will increase mob activity, illegal betting by athletes and will hurt the integrity of the sports, as long as the horse racing industry can convince politicians and the public that online sports betting will greatly affect their product, and as long as the DOJ and judges continue to agree that the 1961 Wire Act applies to the Internet and is still relevant, sports betting will continue to be the whipping boy. Eventually the sports gambling bill that is accepted in Congress will be like those of Barney Frank, Robert Wexler and Pete Sessions, and it will legalize some gambling, but it will have carve outs to continue making sports betting illegal.

08-20-2008
Hartley Henderson
MajorWager.com
henderson@majorwager.com

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