The Civil Liberties Suck-Out
On the way out of offi ce, the Bush administration decided to leave a fi nal dubious mark – a black and blue shiner under the eye of civil liberty.
The Treasury Department fi nalized the longdelayed Unlawful Internet Gambling Enforcement Act on November 12 in a process known as a “midnight drop,” or an outgoing administration using its fi nal weeks to hastily push through controversial federal regulations. The UIGEA, which was passed by Congress in September 2006, prohibits fi nancial institutions such as banks and credit card companies from sending money to online sites for use in unlawful Internet gambling. The law, which does not apply to withdrawals from a poker site to a bank, goes into effect on Jan. 19, though banks have until December to put procedures in place before penalties will be enforced.
“With the world in economic collapse, is this what the Treasury Department should be passing through?” asks Al D’Amato, the former US Senator and chairman of the Poker Players Alliance. “It’s absolutely stupid, ill-conceived and shows a total lack of ethics. They should be ashamed, in these crucial times in the nation’s history, to allow this to take place.”
The law puts the onus on the fi nancial institutions to determine what types of online gambling are illegal and to identify and prevent transactions to such sites. Objections from banks and the PPA delayed fi nalization of the rule, which was supposed to be completed within 270 days of the bill’s passage.
“This is big brother, something banks don’t necessarily want to be involved in,” says John Pappas, executive director of the PPA. “They already have the post-9/11 ‘know your customer’ regulations. Extending that to include the personal spending habits of what could be $20 a week to play poker on the Internet is absurd. Banks don’t want to be the morality police for customers.”
The PPA hopes to have Congress overturn the UIGEA along with other midnight regulations in the next two months, before the impact of the law is felt. If the UIGEA holds up, banks will have to assume additional expenses at a time when many are failing under fi nancial problems. It is estimated fi nancial institutions will spend one million man hours to implement this rule.
Poker is not specifi cally mentioned in the UIGEA, though it is implied. The regulations apply to games “subject to chance,” though lotteries, horse racing, and fantasy football are given exemptions. The gray area of what constitutes unlawful Internet gambling is not addressed in the law. The Treasury Department will not provide a list of prohibited companies, instead depending on the individual banks to decide for themselves. There is no federal law that makes poker or the playing of online poker illegal. Gambling is a state issue, and only Utah and Hawaii have taken clear stances against it. The state of Washington passed statutes that make it illegal to play online poker. Gambling is clearly legal in 38 states. California, in a Court of Appeals case, has gone as far as declaring poker a game of skill. There’s an argument that nothing in the UIGEA should apply in these states, but it’s unlikely the fi nancial institutions will differentiate between locations. Instead, the fear is banks will block every related transaction.
“What the UIGEA says is there are illegal activities, and we’re not going to defi ne what they are but we’re going to tell the banks that – whatever those illegal acts are – they can’t process transactions for that,” says poker pro Annie Duke, who in 2007 spoke at a House Judiciary Committee hearing examining US policies on Internet gaming. “Think how weird a rule that is. If you violate the law, we’re going to punish you for it but we’re not going to tell you what the law is. This is going to cost the banks a lot of money because they’re going to need to have their general counsel go through and decide what’s illegal in each state. The problem is they’re probably just going to fi nd everything illegal and we’ll have over-blocking.”
The UIGEA does not criminalize playing online poker for the individual. Where people will be affected is in methods used to deposit money into their poker accounts. Those who could use credit cards or bank debit cards to make deposits no longer will be able to. MoneyGram, eChecks and eWallets also will be impacted.
The largest online poker sites, PokerStars and Full Tilt Poker, have indicated they will continue business as usual. These sites have been adjusting to the UIGEA since it was passed by Congress. It fi gures that they will continue to adjust, and that new deposit options will arise as others close. Whether people will go through extra hoops in order to make a deposit is another question. Many casual players in the US quit playing online back in 2006. Those who stuck around probably are less likely to be scared away by another setback.
An interesting subplot of the UIGEA has been the opposing interests of poker players and the National Football League. NFL lobbyists helped carve out the exemption for fantasy football and supported the UIGEA for its potential impact on sports betting. The NFL provides statistics, logos, and player information to fantasy leagues that pay substantial royalty fees but gets nothing from sports betting sites.
William Wichterman, a former lobbyist for the NFL against Internet gaming, worked in the White House Offi ce of Public Liaison to push through the restrictions. The Washington Post wrote on the possible confl ict of interest and questionable ethics of having someone who lobbied in favor of the bill involved in its fi nalization.
“I don’t think the NFL has anything against poker except that they want to see the UIGEA move forward and we don’t want to,” says Pappas. “We’ve had a number of conversations with representatives for the NFL in Washington and their opinion has always been that they don’t care about poker, just about sports betting. Nevertheless, the fact that they’re so stringent in pushing this has had a negative effect with the poker community. We don’t have a love relationship with them.”
The way the UIGEA was processed – pushed through by a controversial cast of characters at the end of an unpopular presidential administration – could create a backlash that helps poker in the new year. “I think their rush to implement the UIGEA will eventually backfi re because it will galvanize support to actually overturn it instead of delay it,’’ says poker pro Andy Bloch.
It’s not uncommon for incoming presidents to overturn the midnight regulations of the previous administration. Bush undid many last-minute Clinton laws eight years ago. However, the calculating Bush administration took preventive measures to make sure incoming president Barack Obama would not be able to do the same to the UIGEA by having it fi nalized November 12. Presidents can only undo regulations completed less than sixty days before they take offi ce, and Obama will be sworn in January 20.
That strategy doesn’t account for the Congressional Review Act of 1996, which allows for Congress to overturn any regulation fi nalized within sixty days of congressional adjournment. When Congress begins this month, it will have another sixty days to review and reverse the midnight regulations – even those that have already taken effect – without the possibility of being fi libustered by the Senate. This is poker’s best chance for a quick and painless resolution to the UIGEA. D’Amato is optimistic, saying, “The fi nal analysis is this is not going to matter because this legislation will be reversed. I absolutely believe this attempt to prevent people from using the Internet to play poker will be reversed and that we will win in the next year of Congress.”
It’s highly likely the Democrat-controlled Congress will try to overturn some of Bush’s midnight regulations. The most important part for poker players is to make sure the UIGEA is included in the attempt. The PPA recommends that people interested in fi ghting for the right to play online poker call their member of Congress and send an e-mail to the Obama transition team. More information on how to do so is on their website, www.pokerplayersalliance. org.
Although Obama won’t be able to overturn the UIGEA himself, there is hope that he will be a much more favorable president for poker and perhaps use his large infl uence to help legalize and regulate the game.
All indications are that Obama is a poker fanatic who will be holding games in the White House. As a state senator in Illinois in 1997, Obama helped form a weekly low-stakes poker game with other state legislators and lobbyists. The Associated Press did an article on Obama’s poker past at the beginning of his presidential campaign, describing him as a cautious player with a good poker face. The games helped Obama get to know his fellow state senators and become known as one of the guys. When an Associated Press reporter asked Obama if he had any hidden talents, he named poker.
Daniel Negreanu, in November’s issue of BLUFF, spoke about meeting Obama last summer during a fundraiser. Obama recognized the poker pro and called him over and to say he had played poker the previous night, pulling $60 out of his pocket to show his winnings.
Stories such as these led to the PPA throwing its support behind the Democratic nominee. However, despite his obvious affection for poker, Obama has yet to speak up on behalf of the game’s legal struggles. “He hasn’t come out on this issue at all, which made it diffi cult for us to support him 100 percent as an organization,” says Pappas. “One of the arguments we make is that poker is a game of skill, and it’s helpful that I don’t think we need to sell Obama on that idea. Some Congressmen laugh at that. I don’t think we’ll have that uphill climb with Obama.”
Even D’Amato, a lifelong Republican who is dismayed by his party’s stance on poker, is optimistic about Obama despite not voting for him. “He certainly can’t be worse than the present administration and their bunch of zealots,” says D’Amato. “I thought this was the party of Ronald Reagan, the party of less government, not government intrusion. It seems someone mixed up the priorities.”
Duke hopes that, even if Obama isn’t a friend of poker, he’s a friend of civil liberties. Many of online poker’s supporters in Congress, such as Barney Frank (D-Mass), couldn’t tell a fl op from a blind but are against the government infringing on people’s right to participate in an activity in their own home that causes no harm to others.
The Democrat-controlled Congress will take its cue from Obama. It may seem like he’ll have more important issues on which to focus his effort. That’s certainly true to a point, but Obama’s interests and poker’s interests could coincide if he has the foresight. If he included Internet gaming revenue in his budget, it would put pressure on Congress to fi gure out a way to legalize and regulate online poker. In a time of fi nancial crisis, the PPA estimates that legalizing online poker would make the US government $3 billion a year.
“Here’s a way to raise money and restore individual rights,” says D’Amato. “Obama can raise revenue for some of the health programs and educational programs he talked about enacting without going to traditional sources.”
Soon-to-be President Obama has the podium. Civil liberties can be protected, fi nancial institutions unburdened and the Treasury Department’s coffers enhanced if only he would apply to poker his three famous words – “Yes we can.”
