Legal online poker – First step taken?

I know this is not an event directly related to poker, but it could be a more important one for the online poker industry down the road than all the 6-figure pots played at Full Tilt Poker’s nosebleed tables put together. On December 3rd, the House Financial Services Committee held its first ever hearing concerning Barney Frank’s HR 2266 and HR 2267, the Reasonable Prudence in Regulation Act and the Internet Gambling Regulation, Consumer protection and Enforcement Act respectively. Regarded by many as the first step the US Congress has taken towards the legalization of online poker and gambling, the hearing was described by John Pappas – PPA executive director – as a foundation of record rather than an actual step towards that goal. Joe Brennan Jr. of iMEGA also noted that there wasn’t any actual new ground broken in the matter, and that the number of congressmen present at the hearing was very low as well, but the fact alone that the hearing took place at all amid the debate about the health care and the general state of the economy, can be cataloged a small victory.

Despite the fact that the hearing was supposed to be focused on the two proposed pieces of legislation I mentioned above, it seemed more like a personal debate between Barney Frank and Spencer Bachus, the staunchest opponent of legal online poker and gambling. I suppose you know all about Frank’s viewpoint on the matter. He supports legalization so that regulation can be achieved, which would effectively protect the underage through the implementation of required measures and provide a new revenue stream for the federal budget as well. Bachus on the other hand, doesn’t believe that underage online poker and gambling is preventable at all, and he supports the UIGEA on account of its potential to protect the youth from online gambling’s potentially harmful side effects.

The two of them brought a series of witnesses to the stand, in order to support their arguments and/or to combat those of the other party. As far as the arguments war was concerned, I reckon it’s safe to say that Frank and the anti-UIGEA camp cruised to an overwhelming victory. Out of the seven witnesses brought forth, four spoke in favor of legalization and regulation. Michael Brodsky, the executive chairman of the horse racing site youbet.com was one of these witnesses. The other three were Samuel A Wallandingham, who represented the interest of bankers at the hearing (as you probably know, the brunt of the UIGEA’s implementation expenses falls on financial institutions), Malcolm K Sparrow, a Harvard University professor tasked with the study of the risks posed by online poker and gambling and Parry Aftab, the director of a non profit organization specialized in protecting children from potential internet-born harm.

Out of these four witnesses, Parry Aftab’s statement appeared to carry the biggest weight. He said that despite the fact he’d never have thought he’d ever support the legalization of online gambling and poker, he had grown to realize it was the only way underage gambling could ever be dealt with.
Keith S Whyte, the director of the National Council on problem gambling was one of Frank’s witnesses too. Though he represented a neutral point of view, he did make a few anti-UIGEA points too.

Jim Dowling, a previous anti-money laundering advisor to the white house, was one of Bachus’ witnesses. He stopped short of speaking out against Frank’s proposed legislation too, so that was a huge mark in the “W” column for the online poker industry too.

The only witness to speak up against HR 2266 and HR 2267 was Robert Martin, tribal chairman of the Morongo Band of mission Indians. The tribe has been trying to have online poker legalized in the state of California, so his statement wasn’t exactly watertight either.

When he said that Frank’s legislation would protect foreign interests against American ones, the chairman of the House Financial Services Committee was quick to corner him. Frank pointed it out that Morongo band was not in fact against the law itself, they just wanted to be the sole beneficiaries of it. They wanted to do it themselves, they just didn’t want anyone else to be allowed to do it. Martin had no answer to Frank’s reasoning, and that jotted down another mark in the win column for the supporters of Frank’s bills.

While it’s obvious who won the war of words there, the question remains: how much was really achieved through the hearing? The session lasted under two hours, and the fact that very few of the 70 members of the House Financial Services Committee attended may suggest that there still isn’t enough interest in the matter. About 22 of the members appeared at one point or another through the hearing, and there were never more than 12 of them there at any one time.

In closing, Frank said that the Committee would take the matter up once again next year. That was obviously a sign that he was ready to continue pushing his bills, and that he did indeed view the current hearing as a mere step in a longer process. Let’s hope that the issue does get taken up again next year and that it gets sorted sooner rather than later. After all, the doomsday clock is still ticking for the online poker and online gambling industries in the US.