I;M just a Bill, I'm only a Bill... Sittin' up here on Capitol Hill

My college roommate was writing a paper for a history class and asked my opinion. He started the paper “Once upon a time…” Before reading any further I told him to consider rethinking his beginning, but maybe I was too hasty. A similar scenario is playing out in the halls of the U.S. Congress. In July, the House of Representatives voted to prohibit most forms of online gambling – including poker – in an effort to weed out, as one member of Congress called it, this “scourge on our society.” However, this misguided attempt to prohibit online poker playing is a huge folly – because you can’t turn back the clock on the internet.

Internet poker has taken hold and it is the natural evolution of this great American game. Today, nearly 23 million Americans play online. And, with the popularity of the World Series of Poker and other televised poker tournaments, the number of people turning to the online game will continue to grow. These facts make federal attempts to ban online poker all the more alarming. Congress’s belief that it can and should control the internet (and your behavior) is an affront to civil liberties and the principles upon which this country wass founded.

One has to wonder if those who supported the internet gambling ban (H.R. 4411, the Unlawful Internet Gambling Enforcement Act) believe that they have taken some positive moralistic position, while completely ignoring true policy arguments of this debate. The Poker Players Alliance is working with leaders in the U.S. Senate to ensure that they don’t ignore the policy implications of an online poker ban if they vote on the bill later this month.

As part of our efforts, we are educating members of Congress, the public, and the media on two major facts: 1) Poker is a skill game and should be evaluated as such, and not lumped into other games of chance or near chance, and 2) Prohibitions do not work. An enlightened approach to internet poker is regulation, not prohibition.

Poker is a skill game. In fact, there are few games where skill is so essential to the long-run performance of a competitor. This skill factor is the major reason for the explosion of the sport. Do you think a magazine about lotteries would be successful? Of course not. I often ask people to name the top roulette players in the world, or the top lottery players. Most Bluff readers can name the top 10 poker players; perhaps not in agreement, but with a general consensus. Poker’s widespread appeal does not denigrate the essential nature of the game – skill.

Currently, games of skill are not considered gambling games in most states. Additionally, the Wire Wager Act, 1961, a federal law which prohibits the use of “a wire communication” facility (i.e. the telephone) for sports betting, has also been used to challenge the legality of online casino gambling and online sportsbetting. However, the Wire Wager Act 1961 has not been utilized in any attempt to stop skill gaming, a category of gaming that generally includes games like chess, in which the outcome is determined by skill, not luck.

Some detractors have stated that poker is a game of chance, because the cards that are dealt to the players are random (due to the shuffle). But poker players know that this element of poker introduces variance to the game, not chance; because over time, the best players consistently come out on top. This empirical evidence alone is enough to support the “poker is skill” argument.

Armed with this information, the Poker Players Alliance has been fighting for an exemption or exclusion in the anti-internet gambling legislation, so that poker can be recognized as a skill game and left out of Congress’s net of prohibition.

Exceptions and carve-outs are already part of bill H.R. 4411. Currently, the strong horseracing lobby has managed to get an exemption for horseracing; and of course the state lotteries have been excluded from this legislation. A carve-out for poker would be one that is not only derived from the basis of fact (that poker is a skill game), but may also be introduced as a reflection of public opinion.

With 23 million Americans playing poker online, and over 100 million Americans having played poker in general, the opinion of the American public seems clear: Poker is as American as apple pie, and it is not unwanted by the majority of America’s citizens. The solution – include poker as a carve-out of HR4411.

“Once upon a time,” Congress passed a prohibition on alcohol. This created nothing but speakeasies, backyard stills, and the rise of the Mafia in the U.S. It was utterly ineffective, and legislation was required to repeal the prohibition; but even this could not restore the damage that was done. The game of poker is not typified by “fly-by-night-casino.com,” as some in Congress have suggested. Rather, the largest and most-played poker websites are regulated in certain jurisdictions and have high stan-dards of self-regulation. Some of these incorporated and regulated companies are even publicly traded on the London Stock Exchange, and many others are awaiting IPOs. Prohibition will only drive this industry underground, with newer, less traceable ways to fund a wager, and the creation of newer “rogue” sites that can elude detection from the Department of Justice. This is the wrong way to go.

History teaches us that regulation, not prohibition, is the responsible solution for our lawmakers to pursue. Instead of forcing players to find loopholes to legislation, good public policy dictates a system that rewards good behavior and punishes bad behavior. A system of licensing and regulation would require that internet poker sites maintain objective standards, safeguards for age verification, identity verification, financial solvency, fairness of game, and even measures to help problem gamblers. It would also provide the ability for U.S.-based poker brands to enter the market. It seems blatantly absurd for lawmakers to decry that $12B (the value of the iGaming market) is going overseas, when they penalize U.S. companies from competing for the business of poker players.

Why do lotteries exist? They are allowed because they provide valuable tax revenues for state governments. The PPA had a noted economist analyze the potential revenue for the federal government from the taxation of internet poker. The analysis found that more than $3.3 billion in revenue could be generated annually for the federal government, and another $1 billion for state coffers. Granted, that number is not as nearly as much the contribution of lotteries, but you are not gambling against the government, and the rake in poker is only about 4% rather than the 40% of most lotteries. That being said, $4 billion is a substantial revenue that could be put to work immediately, providing better schools or increasing our protection at our airports.

In addition to the tax dollars that are lost by not regulating online poker, the U.S. economy is also missing out on keeping domestic revenue in the country as well as attracting substantial foreign investment to the NASDAQ or NYSE. Poker companies like Party Poker (listed as PartyGaming) are listed on the London Stock Exchange (LSE) or the Alternative Investment Market (AIM). Billions of dollars of these stocks are traded each year. While the majority of the players on the sites of the large publicly traded companies are Americans, it is foreign brokers and traders that are earning this revenue. Furthermore, many investors in these stocks are Americans, who are choosing to invest in foreign, rather than domestic stock exchanges.

Prohibition is not the only option Congress is considering for online poker or online gambling generally. Congressman Jon Porter (RNev.) and Congresswoman Shelley Berkley (DNev.) have introduced bi-partisan legislation in the House of Representatives, calling for a Congressional Study Commission to evaluate the potential for regulating internet gaming.

Being from Nevada, both Congress members recognize the value of gaming to their economies, and realize that online gaming is the future for their constituent state casinos (e.g., Las Vegas). This approach also affords Congress the time required to gain a better understanding of the detriment (if any) that online gaming will bring, and allow them to assess that detriment against the benefits of online gaming, and incorporate policy that will minimize the potential harm that regulating online gaming may bring. The PPA strongly supports this reasoned approach, and we continue to press this issue in our dealings with Congress.

The regulation of online gaming is not a new concept. Online gaming has been successfully regulated and taxed for many years. First, Caribbean nations embraced online gaming for the revenue potential and jobs it brought their countries, as well as the high-tech internet infrastructure that online gaming companies brought with them. Australia licenses and regulates online gaming operators, as do many countries in Europe, including the British territories of the Isle of Man and Alderney. In fact, these nations have had so much success regulating internet gaming; and providing it, without harm, to their citizens, that the United Kingdom is enacting new gaming legislation to license online gaming from its shores. There are law firms and legislators worldwide already skilled in drafting licensing legislation and tax structures that could allow any of the 50 states to license online gaming, given a concerted effort, within 18-24 months.

Traditionally, gaming has been a states’ rights issue. The federal government generally only gets involved when there is an interstate provision of gambling. In fact, 48 states have some form of state-licensed or state-sponsored gaming (only Utah and Hawaii don’t). So, if an individual state wanted to provide online gaming within its borders (provided that people in other states were banned from playing), that state could theoretically do so without federal permission.

North Dakota is one state looking at doing just that. They have been looking at licensing online poker for over a year, and have had many of the industry’s top executives in to discuss this possibility. In fact, they determined that if they were to license online poker from North Dakota, the revenue generated would be so substantial that it could eliminate property taxes for all the residents of the state.

How can you help? The PPA asks that poker players become politically aware and active. Our website has state-of-the-art software under the “defending the game” section that allows you to directly contact your elected representatives through an email or physical letter. We encourage you to write to your senators today.

Letters, however, are just the start. Joining us as a member of the PPA is just as valuable as your individual actions: You are then counted as part of our unified voice for poker. The PPA is driving the political agenda for thousands of American poker players. And our grassroots efforts must be complimented by sophisticated lobbying. These endeavors cost money. We are a non-profit organization, so your contribution goes directly to fund our activities in DC and throughout the states. We are competing with hundreds of other nonpoker related interest groups to get our voice heard. Politics is about action, and action requires resources; and your funds help to put forth the Poker Players Alliance’s “best hand” on Capitol Hill.

A lifetime membership to the PPA is $20 ($15 for Bluff online and magazine readers) and it is easy to join. Simply go to our website, www.pokerplayersalliance.org, and click on JOIN TODAY. Be sure to enter BLUFF into the Promo Code section to receive your discount. The PPA will send you our T-shirt and membership kit; but even more importantly, you will be counted as part of our growing membership, and effect real change on Capitol Hill.