On Tuesday, the U.S. House Energy and Commerce Committee’s Subcommittee on Commerce, Manufacturing, and Trade held a hearing on online gambling entitled “Internet Gaming: Is There a Safe Bet?” The purpose of the hearing was to discuss the state of online gambling in the United States and the concerns (as well as solutions for those concerns) that people would have if it was legalized. Presiding over the hearing was Subcommittee Chairwoman Rep. Mary Bono Mack (R – Calif.). Rep. Mack opened with a statement about the history of internet gaming in the U.S. as well as brief summaries of the arguments for and against it. Following Mack’s statement, six invited witnesses were given the opportunity to speak; their testimony is the focus of this article.
The first witness was Parry Atfab, Chairwoman of the Board of Advisors of FairPlayUSA, “…a coalition of law enforcement officials, consumer protection experts, poker players, and other Americans that seeks to educate policymakers and the public on the broad public policy issues raised by the current ambiguous laws in the U.S.” Atfab came off as arguably the most educated panel member on the subject of online gambling while never at any time saying she was a gambler herself or a supporter of gambling. Looking at the issue practically, Atfab was of the opinion that current laws need to be strengthened to properly define “illegal” internet gambling and that online poker should be legalized and regulated so that Americans can be better protected than they are now.
Because online gambling is effectively illegal in United States, residents of the country must resort to “underground” offshore sites to play. But because the sites are not regulated in the U.S., American players have little to no protection should something go wrong. “The United States therefore finds itself in the unfortunate position of incurring all the social costs of online gambling while having no control over the gaming sites that serve U.S. residents,” said Atfab as she detailed what sorts of protections regulation should provide.
Atfab also stressed the role of technology when asked questions about how children, in particular, would be prevented from accessing online gambling sites. She said repeatedly that there are ways to effectively verify identities and whenever online poker is legalized, the best technology at that time should be evaluated for age restriction purposes.
Next was Ernest Stevens, Jr., Chairman of the National Indian Gaming Association (NIGA). Mr. Stevens appeared the least prepared to answer questions and often had trouble expressing his points clearly. Most of Stevens’ testimony seemed to center on the history of tribal gaming and its related benefits. He appeared to be anti-online gambling while at the same time resigned to the idea that it would likely be legalized at some point. As such, Stevens expressed his concern that Native American tribes must get a piece of the pie.
“When it comes to recognized U.S. governmental entities, Congress should not pick winners and losers if or when it decides to establish a new industry such as Internet gaming,” he said in his statement. “Any federal internet gaming legislation must also allow tribal governments to have an early entrance into Internet gaming, with a limited period of exclusivity. Carving out exemptions for certain states or gaming industries while violating existing Tribal-State compacts is unacceptable to Tribal governments and raises major concerns under the Fifth Amendment Due Process and Takings Clauses.”
He also feels that tribal internet gaming revenues should be exempt from taxation. Citing the Indian Gaming Regulatory Act (IGRA), he said that all tribal gaming revenue is required to be used for government and public purposes and thus could not be taxed by the federal or state governments.
The third witness to speak was Keith Whyte, Executive Director of the National Council on Problem Gambling. Contrary to what one might think, Whyte was actually neutral on online gambling. His concern was making sure that sufficient funding was allocated to treatment programs, should online gambling be legalized. He understood that it is not easy to predict how online gambling will affect the numbers of gambling addicts, saying, “It is not clear what the impact of legalization of internet gambling would be on problem gambling. The available research consistently finds internet gambling has the lowest participation rates of any form of gambling, regardless of the legality of internet gambling in the jurisdiction…However, it is also possible that problem gamblers may exacerbate their problems by going online…”
Up next was the man poker players wanted to hear, former Senator and current Chairman of the Poker Players Alliance, Alfonse D’Amato. D’Amato’s opening statement came off as a bit rambling, but throughout the hearing, his passion for poker was evident. He stated right up front that he was not there, and nor was the Committee, to argue the morality of gambling or the existence of online poker. People will play regardless of the state of the game’s legality. What D’Amato addressed was the need for strong, clear regulations. Regulations needed to ensure that player funds are safe, lest we have another Full Tilt Poker scenario. They needed to ensure that problem gamblers could be helped and that minors could be kept off the sites. He also said that states should still have the right to disallow their residents from playing.
“In sum,” D’Amato concluded, “Congress has a choice. They can preserve the status quo, where Americans play on foreign sites with consumer protections outsourced to foreign regulators, while creating jobs and tax revenue for foreign countries. Or they can replace it with a licensed regime for Internet poker with strict consumer protections, clear laws and effective enforcement against illegal Internet gambling. Such a regime would allow states to regain control over the gambling activities of their residents, and in so doing, create tens of thousands of U.S. jobs and billions in federal and state revenue.”
Fourth to speak was Kurt Eggert, Professor of Law at the Chapman University School of Law. His concern was consumer protection. Like the most of the previous witnesses, he was neither for or against online gambling. Eggert simply wanted to be sure that should it be legalized, players were protected, both from the gambling companies and from each other. He believed when it comes to casino games such as slots, all information related to chances of winning should be provided so that gamblers can properly shop around (he focused on “hold percentages” in slots). He was also strongly against poker “bots,” and to a lesser extent, data mining and hand analysis programs such as PokerTracker and Hold’em Manager (though he did not name them specifically). One possible solution he had for the latter problem, namely keeping “fish” from constantly being eaten by the “sharks,” was to implement a rating system for players, based on money won and lost and stakes played, so that players can see the relative skill level of their opponents before they even play.
Finally, there was Dan Romer, Associate Director of The Annenberg Public Policy Center at the University of Pennsylvania and the Director of its Adolescent Communication Institute. His primary concern was keeping youths away from online gambling. His suggestions were similar to others who had already spoken: he wanted age enforcement, possible daily wagering and time limits and self exclusion opportunities, prevention messages by the operators during game play, and making sure advertisements do not target addicts or children.
Overall, it was a very positive hearing for online poker players. While only one witness, Alfonse D’Amato, was truly a proponent of internet poker, most of the rest, in addition to being neutral, understood that properly regulated online gambling was far superior to a state of prohibition which forced players to “go underground” and receive no consumer protections whatsoever.