Tuesday, July 10, 2007

Flack for the Internet

Barney Flack may not be a poker player, but the Massachusetts Democrat sure knows that a whole bunch of his voters are. In case you’ve been asleep or tied up in an online Hold ‘Em game without a newspaper for the past few weeks, Flack, Chairman of the House Financial Services Committee, became internet poker’s go-to guy by introducing a bill in Congress that could put the offshore card rooms back in business in the good old U.S. of A. Flack’s announcement came just months after the Unlawful Internet Gambling Enforcement Act of 2006 for all practical purposes shut down cyberspace gaming nationwide by making it a federal crime for financial institutions to move money from U.S. accounts into online casino coffers. Some internet gambling joints have already found ways to circumvent the law by creating money transfers that banks and credit card computers don’t recognize as illegal offshore casino transactions, but identifying and closing these loopholes is a pretty simple matter once the law identifies parties using them—and look for the feds to prove they mean business by putting someone’s fanny in jail. May as well face it; the feds have made buying chips enough of a pain so that internet poker is just about history in the U.S. until there’s a change in the law.
Flack’s new bill, the Internet Gambling Regulation and Enforcement Act of 2007, if passed through the House and Senate and signed into law, would restore U.S. financial institutions’ ability to deposit customers’ funds with offshore casinos if (oh, yeah, that nasty word) the casino is licensed to do business in the country where it’s located, and if the form of internet gambling going on is legal in the state where the U.S. player lives. There are some other conditions having to do with gambling addicts and minors, and authorized internet casinos have to submit to tax collectors and internet gaming regulators and whatnot, but basically our man Barney is puttin’ us back in action, baby. All you online pros out there, just tell the landlord to be patient for another month, and before he knows it you’re gonna catch up on the rent and even pay some in advance. And as for you players not living in the USA, the action will be fast and furious once again before you know it.
But hold it there, dealer. Don’t move that button just yet. The Poker Pigeon has slapped a bridle and bit on Barney’s gift horse and looked it right in the mouth. And you know what? Those teeth in there are long as hell.
U.S. participation in internet poker is a very big deal for online card rooms and non-U.S. players alike. Televised poker depends on advertisers such as Bodog, PartyPoker, Paradise Poker, etc., etc., and since most televised poker on ESPN and FSN originates in the U.S., without Yanks playing online the sponsors have no incentive to keep the advertising dollars rolling in. Ninety percent of the thousands of WSOP Main Event participants that have popped up in recent years win their seats in online satellites; in fact, without USA players taking seats in cyberspace, you can look for televised poker as we know it to pretty much go away, and for the WSOP to shrink down to just about what it used to be prior to table cams. So hey, before we all get caught up in the euphoria of being back in action once Barney Flack throws the switch, it’s a good idea to take a close look at Barney’s internet gambling bill and what it really means to us.
First of all, please know that playing poker over the internet is not, never has been, and never will be a violation of U.S. federal law, either for the players or the cyber-space card rooms involved. There is no federal law against any form of gambling, online or otherwise, because legalization of gambling falls under the heading of states’ rights as guaranteed by the U.S. Constitution. The only federal criminal statutes dealing with gambling originally were enacted as federal aids to state law enforcement; it’s a federal crime, for example, to use an interstate communications device (and the law has ex-panded the definition in recent years to include computers as well as telephones) to transmit gambling information, and this is the hammer the FBI has used in busting illegal bookies for decades. Early on in the battle against internet gambling U.S. Attorneys charged violations of the interstate communications device statute, but since the online casinos were located outside U.S. jurisdiction, federal prosecutors could indict to their hearts’ content but couldn’t extradite any of the offenders, so federal opposition to internet gambling was a toothless proposition. Not any longer. Congress has now hit online card rooms in the only spot where they’re vulnerable, in the pocketbook.
U.S. online poker players and offshore card rooms are counting heavily on the newly proposed legislation to restore cyberspace poker, but here’s the rub: even if the Flack-sponsored bill becomes law, online casinos still have to meet individual states’ requirements before they can get up and running. In the past, even though online casinos operated in clear violation of state law, the states left enforcement of international gaming to the feds and kept their noses out of it. But now here comes a law requiring internet casinos, in order to operate inside the U.S., to be in compliance with state statutes regarding gambling, and if you don’t think that federal enforcement of state regulation creates a boondoggle of conflict . . .
Take Nevada, the recognized Mecca of legalized gambling. All forms of gambling conducted over the internet, including poker, are legal in Nevada provided that the operators hold Nevada gaming permits and pay state taxes on profits reaped in Nevada. There are state-enforced bankroll requirements for permit holders; there is an initial minimum that buys you a sports-book-only permit, but if you add slots and table games there is an additional bankroll required for each machine or table that you put in play. If you play Blackjack and poker in your casino you need an extra two grand in the bank for each and every table; if Caesar’s Palace adds a hundred Blackjack tables, first they have to show the State of Nevada a couple of hundred grand. The same requirement currently exists for poker, though that figure could be increased or reduced at legislative whim.
So how do online casinos comply with Nevada regs? The answer is that they probably can’t. Since every time an online player decides on a little Blackjack he sits alone across from a single dealer, Nevada could argue that the online operator needs two grand additional for each and every player who sits in on a Blackjack game. The casino, on the other hand, could take the position that, hey, there ain’t no tables, not a single one, because all this stuff happens on a computer monitor. The same size-of-bankroll problem also exists in poker; as the game fills up, new tables magically appear to start more games and furnish more seats for the players. So is there a happy median, a meeting of the minds where Nevada and the online card rooms could agree on a bankroll requirement? Maybe, but the Poker Pigeon isn’t betting on it.
And let’s be real; offshore casino operators didn’t build all those villas and buy all those jets by cowtowing to U.S. regulators. Nope, they all got rich because of the lack of rules that apply to them, and are these same guys going to pay U.S. and Nevada taxes plus furnishing detailed financial statements to both entities just in order to keep taking U.S. action? Puh-lease. And Nevada’s just one state, folks. Imagine the mess when the thirty-six other legalized poker states stick their oars in the water. Rep. Flack’s committee has a meeting scheduled in June to decide how to proceed in bringing the bill before the House—you know, one of those lovely government goings-on where they hold a meeting to decide when to have another meeting. With the wrinkles existent in the current proposal, look for these meetings to still be going on ten years from now.
So is there a faster solution? Well, the Poker Pigeon’s legal staff has come up with one that I’ll lay out for you in my next little column. Meanwhile, spend your time keeping up with Barney Flack and his bill, which you’ll have plenty of time for doing while not playing poker over the internet, but never get the idea that a return to internet poker riches is only a House vote—or click—away.

The Poker Pigeon is a pseudonym for the anonymous pro level poker player who wrote Play Poker Like a Pigeon (And Take the Money Home), currently on bookstore shelves, and The Education of a Poker Pigeon, coming soon to a bookstore near you. He will welcome your comments at pigeon3450@yahoo.com.

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