U.S. Takes on Online Gambling: Huge Fines to Microsoft, Yahoo, & Google

Something happened recently to the big 3 of the internet: Google, Microsoft (MSN), and Yahoo. It all ties together with online casino gaming. All three lost big money because of it.

These three giants of the world of computer technology paid fines for advertising online gaming entertainment industry companies without performing proper process. The Department of Justice (DoJ) in the United States claimed that these corporations paid $31.5 Million Dollars as fines for their violations of laws regarding the online advertisement of online gambling entertainment. The United States government has emphatically said that they do not condone the encouragement through advertisement of casino gambling of websites that can be easily accessed by under-aged people, especially students. The U.S. government has stated that this is an opportunity as venue for companies to learn about the “dangers of online gambling” and a way to send a message to other search engine marketers. That is why they believe they are forced to file a law suit against these three giants in computer technology – of course, all this stems from the Unlawful Internet Gaming Enforcement Act (UIGEA).

The Big Three versus the Big Government

To continue the story as it has developed, the attorneys for the United States federal government have said that these three companies have only paid the amount for arraignment. However, the three major computer companies involved did not admit nor deny the allegations of advertising these casino gambling businesses on their sites. It is important for them to protect their reputation because they are considered as the world’s premier authorities for internet information, with the most viewed sites on the web and the most used software on the planet. Because there is a possibility that each of these companies’ clients and customers will not continue their patronization of their products due to negative publicity, they have attempted to do their part on closing the case as quickly as possible. They have done this so the case will not continue and in order to not fall victim to additional negative publicity about them.

Microsoft was actually the company that paid the largest amount in fines – approximately $21 million United States Dollars (USD). The payment will go to different agencies of the government that the government feels needs monetary support to continue their projects – and to their legal funds to continue their online gambling prosecutions. Microsoft did not comment publicly on the case, the outcome, or the settlement. They have paid the amount in order to ensure that the lawsuit does not continue further and for them to protect their company against any future liability. Although there are people claiming that Microsoft Company accepted payments from many online gambling entertainment associations, they have stood on their legal position that they only provide quality service appropriate for the needs of each user of their software and MSN search engine. This issue is a great controversy faced by companies in this new internet age – the possible implications for reputations of major companies, especially those known as the world’s leading brand on computer software, are huge. Microsoft has been placed into a high pedestal which is not reached by many companies – this means that a company like theirs will be constant targets from both commercial attacks and government attacks. Google, Yahoo, and Apple are also constant targets of lawsuits – this has just been one of the first which has directly involved online casino gaming since the arrival of the Unlawful Internet Gaming Enforcement Act. It’s amazing to think how laws passed by governments are starting to affect the online world, which was previously thought to be untouchable. Even virtual worlds like Second Life are banning casinos – what else will be affected on the internet?

The Blow of Negative Publicity

Although Google and Yahoo! have paid a relatively small amount compared to Microsoft, they admit that this is a great blow to them because they are known world wide for their undoubted credibility and reputation as the world’s online giants. The fines handed down to these three companies for illegal online gambling activities is seen by most legal sources as a deterrent to other companies.  given for them is just right, says the Department of Justice for violating the rules and laws set about the online gambling entertainment.

This is a disturbing new trend of the government interferring in internet communities. For example, Massachusetts Governor Deval Patrick is making casino gaming illegal and wants people to go to the jail and pay thousands just because they play casino games online! We of course know of the many online casinos that have left the United States market as well due to these lawsuits – contact your favorite online casino by phone to make sure they still accept players from your part of the world.

What do you think will happen in this online battle? Will online casino gaming be finally free and open or will governments force internet based casinos to close down altogether?

Focus on the Family: Anti-Gambling Group Gets Slammed

From Bill Rini:

I recently posted a letter that Focus on the Family sent out to members. Unfortunately it was so full of complete crap that in an attempt to replay to each and every issue I was not very thorough in my responses. Here are their talking points. We should make my responses the official PPA talking points.
Internet gambling sites took approximately $6 billion out of the U.S. economy in 2005 and may have funded foreign terrorist groups or criminal organizations.

Organizations like Focus on the Family make outrageous, highly inflammatory, and completely unsubstantiated claims like this without any even the faintest bit of evidence.

First off, the FBI has never filed a single indictment involving the use of online gambling proceeds to fund terrorism. Anti-gambling proponents throw in the accusation as a way to make their cause seem pro-American and demonize anybody who supports the freedom of American citizens to decide how they spend their money despite the fact that not a single shred of evidence supports their claims.

The claim that $6 billion was taken out of the United States economy is also a highly unsubstantiated claim. The faulty assumption is that every dollar made in profit by an online gaming company is money that has forever left the United States economy. Online gaming companies have poured hundreds of millions in profits back into advertising and marketing efforts in the United States. Online gaming companies also pay millions of dollars a year to United States based affiliates who refer players to them.

Online poker, in conjunction with the massive popularity of televised poker, has resulted in millions of dollars in revenue to publishers who offer poker related books, magazines, poker chips, and other products and services. Thousands of jobs have been created in the US as an indirect result of the popularity of online poker.

While it is true that he general area of online gaming can be proven to benefit criminal organizations what isn’t being fully articulated is the fact that this is almost entirely confined to online sports betting. All this means is that bookies have been able to better lay off their bets. Since sports betting has been around as long as there have been sporting events to bet on it seems illogical to say that completely unrelated aspects of online gaming like poker have any relevance in this debate.

More than 2,500 foreign online virtual casinos were soliciting more than 230 million United States Internet users, without effective age verification, validation of payment sources and no financial accountability.

This is a typical catch-22 argument. In order to have an effective means of age verification, validation of payment sources and financial accountability one would need to be able to legally contract with United States companies and government entities that could facilitate all of the previously mentioned. If Congress were to simply define acceptable standards in all of the three areas then online gaming companies would be able to meet those criteria. Countries like England have implemented very stringent standards that online gaming operators need to adhere to in order to legally offer their products there. There is absolutely no reason why similar standards could not be required of companies offering services in the United States.

As long as the United States government takes a prohibitionary stance on the topic it guarantees that only those companies willing to violate United States laws are the only options available to United States residents. If anything the fact that companies like PartyGaming, SunPoker, CS Casino, and OmniCasino were willing to walk away from hundreds of millions of dollars in revenue after the passage of the UIGEA proves that gaming companies are willing to comply with any reasonable oversight and regulation the United States may wish to impose.

Another ridiculous argument often put forward is that there is no age verification technique that has 100% accuracy. Well, I used to buy alcohol when I was 18 using a fake ID. Does that mean that since offline verification techniques are not 100% accurate we should ban all activities that have an age restriction? Before you answer please keep in mind that you have to be 18 to vote, 21 to drink alcohol, and 65 to collect retirement benefits. Just because all of those systems can be scammed should we do away with them?

Internet gambling holds catastrophic potential for organized crime, funding terrorists and laundering money.

Again this is a completely illegitimate argument. The entire basis for this argument rests on the shoulders of the word “potential.” The US stock markets have a potential for organized crime, funding terrorists and laundering money. Services like Western Union have a potential for organized crime, funding terrorists and laundering money. Since there are more proven cases of organized crime involvement in labor unions than there are in online gaming should we also conclude that labor unions should be made illegal as well?

The other major flaw in this argument is a direct result of proponent’s attempts at turning this into an emotional plea rather than a logical decision. There is not a single case on the books of the Federal Bureau of Intelligence (FBI) or Department of Justice (DOJ) uncovering a connection between online gaming and terrorism. And even if there were, what would prevent both the funder and the fundee from moving to Canada, England or any of the other countries where online gaming is legal? Making it illegal to play online poker would serve absolutely no anti-terrorism purpose.

Betting on sports is illegal in the United States, with the exception of Nevada and Oregon (Montana and Delaware chose not to wager on sports). Online sports-betting sites were – and still are – making a mockery of U.S. legislation by violating federal Internet gambling laws daily.

This is a highly deceptive argument. It is perfectly legal for me to go to Hollywood Park in Los Angeles and place a sports wager on a horse racing event. In fact it’s perfectly legal for me to place horse race bets in many, many states. The only thing being made a mockery of is the United States Constitution which was intended to limit the powers of the federal government just so it couldn’t poke it’s nose into issues just like this.

The integrity of amateur and professional sports is compromised by the growing number of online sports-gambling sites (i.e. point shaving, player payoffs, corrupting coaches, etc).

The integrity of professional sports is being compromised by 21 year olds making $20 million a year. Sports betting is the least of the sporting world’s problems.

The other thing that makes this argument such a farce is that people already bet on sports. There’s a thriving illegal sports betting industry that the US hasn’t been able to stop in over 100 years of trying. Players, coaches, and sports journalists regularly quote the Vegas line on games. Sports betting is so integrated into the fabric of the sporting world that to say that allowing online sports books (like BetUS) to do what people are already doing either displays a naive understanding of the situation or intentionally deceptive.

The American Psychological Association found high school and college-aged populations to be at an increased risk for Internet gambling addiction. [APA Advisory on Internet Gambling, March 17, 2002] See Advisory …

First off, high school aged children are not allowed to play on any mainstream online gaming site. Even with their limited ability to do age verification of US citizens onling gaming sites have set a hard line at 18 and if online gaming were to become legal and regulated in the US the legal age to participate in wagering could be set at 21.

Machines cannot verify your age, and children are at extreme risk for exploitation and addiction. Already, gambling addiction with adolescents and on college campuses is at epidemic proportions.

Machines can, with a high degree of certainty, verify who you are and various details about you (like age). Again, we go to the “save the children” emotional appeal because the logical, empirical case doesn’t stand on its own. Gambling has been a problem on college campuses before the internet. If the real concern is gambling addiction wouldn’t we be much better off if part of the gaming fees licensed online gaming sites paid was put towards providing help to addicted gamblers?

The National Gambling Impact Study Commission (NGISC) calculated that approximately 7.9 million adolescents have a problem or pathological gambling addiction. Imagine filling 113 NFL football stadiums to capacity; that’s how many under-aged teens and children have gambling problems. Read more of the NGISC Report …

According to Wikipedia:

According to the Illinois Institute for Addiction Recovery Recent evidence indicates that pathological gambling is an addiction similar to chemical addiction. It has been seen that some pathological gamblers have lower levels of norepinephrine than normal gamblers.

According to a study conducted by Alec Roy, M.D. formerly at the National Institute on Alcohol Abuse and Alcoholism, norepinephrine is secreted under stress, arousal, or thrill, so pathological gamblers gamble to make up for their underdosage.

Further to this, according to a report from the Harvard Medical School Division on Addictions there was an experiment constructed where test subjects were presented with situations where they could win, lose or break even in a casino-like environment. Subjects’ reactions were measured using a fMRI, a neuro-imaging device very similar to a MRI. And according to Hans Breiter, MD, co-director of the motivation and Emotion Neuroscience Centre at the Massachusetts General Hospital, “Monetary reward in a gambling-like experiment produces brain activation very similar to that observed in a cocaine addict receiving an infusion of cocaine.”

Deficiencies in serotonin might also contribute to compulsive behavior, including a gambling addiction.

So, if problem gambling is an illness or biological defect, as suggested by researchers, to some degree the argument that offering gambling creates problem gamblers doesn’t seem to hold water. These people have a defect that causes them to crave gambling as a way to compensate for a chemical deficiency. In other words, they’re problem gamblers before they’ve wagered their first dollar.

This is further evidenced by the Illinois Institute for Addiction Recovery’s discussion of different types of gaming as they relate to problem gaming.

Video poker and slot machines have been referred to as the “crack cocaine of gambling.” Because of their immediate and effective reinforcement schedules, problem gamblers who regularly play these machines appear to progress into pathological gambling much faster than problem gamblers who only gamble at horse races, or other games that do not have such an immediate rate of gratification.

Just as crack cocaine ­ referred to as the “great precipitator” ­ shortened the length of time between first use of cocaine and chronic addiction, so too have video poker and slot machines apparently reduced the length of time between first wager and pathological gambling. In the past, a gambler would experience 15 to 25 years of “sick” gambling at the horse track before he or she reached the desperation phase. Today, it is not uncommon for a gambler addicted to slot or video-poker machines to progress into the desperation phase in two or three years.

So, my read on this is that online gaming doesn’t create new problem gamblers. These people are already problem gamblers.

I guess my real point is that online gaming is not the cause of the problem. In fact, offline gaming isn’t the cause either. A certain percentage of people (estimated to be 2% – 3%) have this problem regardless of the availability of gambling. Obviously providing an avenue to gamble is going to give the illness an opportunity to manifest itself but as I said earlier, wouldn’t society be much better off if a percentage of tax and licensing revenues from online gaming were to fund treatment?

Doesn’t it seem illogical to say that 97% – 98% of the population can enjoy gambling in a responsible manner and help fund treatment programs for the other 2% – 3% but we would rather ban all forms of gambling and force the 2% – 3% into underground gambling while providing minimal funding for treatment?

Four out of five students under the age of 18 say that going online is a vital part of their schoolwork. One in five adults says their children spend too much time on the Internet. This age group is extremely vulnerable to online solicitation and subsequent gambling addictions. [USC Annenberg School, 2005] Read more …

I want to meet that fifth student because he’s probably failing out of school. The internet is a way of life. In the coming years it will impossible for anyone of any age not to interact with the internet in some way.

One in five adults can say a lot of things. Opinions change constantly. I’m sure one in five adults thought Rock n Roll was devil music at one time.

Of course, all of this tangential information is to attempt to make a connection between kids and online gaming. It’s one more try and tugging at the heartstrings rather than appealing to logic.

Availability and accessibility are key components in creating addiction to gambling. The Internet is available and accessible 24/7 with no accountability. Addicted gamblers can remain anonymous and feed their addiction in secret. Pathological gambling addiction doubles within 10 to 50 miles of a casino – one can only imagine the addiction rates for 2,500 or more casinos within the reach of a mouse click. Read more …

No they are not! Availability and accessibility facilitate problem gambling. The creation of problem gambling, the disease, is biological.

But again, the facts are being played with to arrive at illogical conclusions. If you tell me that pathological gambling addiction doubles within 10 to 50 miles of a casino I would say that to be an obvious outcome. Pathological gamblers are going to move closer to casinos than people who want nothing to do with gambling. Allowing online gambling isn’t going to create problem gamblers (despite the causality suggested by the talking point) it will simply provide an outlet for existing problem gamblers.

And they can’t feed their addiction anonymously. If online gambling was licensed and regulated an even more effective system to help problem gamblers could be developed than is available in offline casinos and racetracks. A licensing requirement could be that whenever a casino either identifies a problem gambler or a gambler identifies himself to the casino as being a problem gambler (self-reported) his name could go into an industry shared database which would deny him access to all online gaming sites. And because a licensed and regulated online gaming industry could require a social security number (for tax filing purposes) from all players, there would be no anonymity.

Video gambling is the most addictive form of gambling in history. Research finds that addiction can occur in about one year, compared with gambling addictions to traditional slots and card games occurring in three to four years. Read more …

As has been pointed out several times previously the problem gambling illness already exists. Notice how they say video gambling when the actual research said video poker and slots? Anyway, the real issue is identifying these problem gamblers and blocking access while pointing them towards treatment. Something that can ONLY be done in a licensed and regulated environment where the casino actually knows their customers.

Taxpayers and the federal government should not be burdened with monitoring thousands of separate, foreign gambling sites for corruption, illegal activities or jeopardizing homeland security.

Actually taxpayers and the federal government should not be burdened with enforcing prohibitionist laws designed to keep 2% – 3% of the population with gambling problems from harming themselves. And as has been stated several times previously, the taxes and licensing fees paid by online casinos would not only pay for monitoring gambling sites for corruption, illegal activities, and the absurd fear of jeopardizing homeland security but would be a net gain for taxpayers as the costs of those activities would pale in comparison. Also, by bringing these operations onto US soil it would create hundreds (if not thousands) of new jobs not only at the casinos but in advertising and other tangential areas.

Effective and strong regulations are necessary to ensure that the online gambling industry does not infiltrate millions of homes, destroy children, ruin families and mock U.S. laws prohibiting Internet gambling.

As their is no proof whatsoever that online gaming will do or has done any of the above it’s a final last ditch appeal to emotion rather than logic with no supporting evidence.

Politics: A Poker Playing Vice President

Is it possible we might have a poker playing Vice President on the WSOP tour?

Poker Pro Greg “Fossilman” Raymer, who won the 2004 World Series of Poker (WSOP), is making his case for a vice presidential run in 2008 for the Libertarian Party in the United States.

I can only assume he’s against the Unlawful Internet Gambling Enforcement Act (UIGEA). Well, he better be. Barney Frank would definitely tap him for his Internet Gambling Regulation and Enforcement Act (IGREA).

His decision will be coming Spring of 2008 which happens to be the Libertarian National Convention.

What’s the Libertarian Party all about?

First the raw facts. They have 200,000 registered voters and more than 600 people in public office. This is way more than any of the other “third parties” have – combined. They’ve been around since 1971 so they have experience on their favor over other more recent third parties. Of course, this still pales in comparison to the Democrat and Republican parties in the United States but it’s still better than some of the other parties that started up 2 days ago in someone’s basement.

How are they different from the Democrats and Republicans?

The Libertarian Party has some principles that they favor. They like having markets that are minimally regulated. Laissez-faire is the word for that – which comes from the French word “let do”, meaning the government shouldn’t be handing out privileges to certain organizations or markets – just let the chips fall where they may. They are very much in favor of strong civil liberties – which is essential for those of us that really want online casino regulation. They are also in favor of non-interventionism in foreign policy – meaning that they want freedom of trade and travel to all foreign countries.

They’ve never really made a serious run for the presidency of the United States – but at this point of the game they really just want to expose their ideas and get them out there so people can take notice of them. Maybe get some defectors from the “Big 2″.

“I had a conversation with one of the top guys in the Libertarian party who wanted to get a famous poker player involved,” said Greg Raymer. “I know they approached other guys like Andy Bloch, but I don’t think Andy is very libertarian and may be too liberal. I contacted the guy after hearing of the plan and I told him I might be interested. If I decide to run, I will do some campaigning in time for the national convention next spring and hope for the best.”For the most part, third party organizations like to get one of two groups of people on their side. Either they get an experienced politician to defect from the Republicans or Democrats – or they go after a celebrity from a part of society that feels disenfranchised with the current state of affairs in the country. This is where Raymer and the poker and casino communities come in. With the United States waging war against gambling, this is a ripe time for the Libertarian Party to get sympathizers.

“It sounds like this guy (Raymer) can get the party media coverage that otherwise wouldn’t exist,” said Professor Julian Zelizer, a political historian at Boston University. “The media always covers celebrities who are running for office and that’s the advantage. The danger is it looks too pragmatic. The negative part of that is it can diminish his candidacy and the image of the party. It can work, but it’s a delicate balance. I think a Libertarian candidate would do a better job of running the country than any of the Republicans or Democrats we’ve seen. It’s inherently better when a candidate believes in the philosophy of being able to do what you deem is right, as long as you don’t hurt anyone else in the process. A third-party offers room for him to enter into the political realm. These parties need someone with some type of appeal.”

The political views of a poker professional

Raymer thinks if you use cocaine, then, well you’re “extremely stupid”. But he won’t stop you. He feels that politics should be free from judging on morality and should leave it in the decision of conscious choosing adults. He favors protection from the government for underage gamblers but once you hit adulthood you’re on your own – you do what you want, when you want – the government won’t stop you. He is in favor of some other government initiatives like having a national defense and police force.

What comes as a little bit less of a surprise is that Raymer is definitely in favor of legalized gambling anywhere, everywhere, and for everyone.”Personal morals are great and it’s good for a person to have them. But when you apply your morality to me, we’re talking fascism,” said Raymer. He continues: “A poker player is more likely to be a Libertarian. It’s a game of self-sufficiency where self-discipline often produces success. It’s a natural fit.”

Raymer has worked as a board member for the Poker Player’s Alliance, so he’s not a total political rookie. He’s not done with poker though. Even though he won about $5 million dollars for his 2004 WSOP win, he wants to win at least one or two more before he leaves poker for good and tries his full-time hand at politics.

Advocacy Group Opposes Online Casino Gaming

From Bill’s Poker Blog:

Someone on 2+2 posted a link to the website for Focus on the Family who is actively campaigning against Barney Frank’s bill. Their passion and zeal should be frightening for all online poker players.

Internet Gambling Take Action
3-29-2007

by Chad Hills

In 2005, U.S. citizens illegally exported $6 billion dollars to unknown, unaccountable foreign online casinos. Congress passed legislation to stop Internet gambling in the U.S., but the Department of Treasury needs to hear your voice to keep this legislation strong. Representative Barney Frank, however, introduced dangerous legislation that would legalize Internet gambling and promote its expansion. The fight is on and we need your help to defend the family!

Look at how they use scare tactics to appeal to tug at one’s emotions. These offline sites were not unknown. They advertised on major television networks like NBC. And despite it being a common mistake, most online casinos are not unaccountable. I’m unaware of any casino that does not have a license to operate somewhere which means that they are accountable to the gaming commission of the entity that they have their license through. Most are licensed with the Kahnawake gaming commission in Canada but there are others such as the Alderney gambling commission which are very stringent.

NEWS FLASH: Barney Frank Bill Threatens Families, National Security

Representative Barney Frank, Chairman of the House Financial Services Committee, sponsored a bill (H.R. 2046) that would legalize Internet gambling in the United States. His bill, if passed, will undo nearly a decade of Congressional efforts to protect children and families from gambling predators on the Internet. It also threatens homeland security in the midst of terrorist threats.

It will undo a cowardly backdoor insertion of legislation that the majority of Americans didn’t want. And the UIGEA, as has been pointed out in many other venues, does absolutely nothing to protect minor from gambling. There isn’t one single item in the law that does anything to protect families and children from gambling. And, obviously the statement about gambling being a threat to homeland security is so hollow that they don’t even attempt justifying it. Instead they just float it out there letting it tug at the emotional strings of those too stupid to think for themselves.

Before the Unlawful Internet Gambling Enforcement Act of 2006 was signed into law, children were being assaulted by Internet pop-ups and advertisements for more than 2,000 instant, online casinos. More than $6 billion left the U.S. economy and poured into questionable off-shore gambling operations. Barney Frank’s bill must be defeated for the sake of children, families and homeland security.

These numbers are simply absurd. Games like poker are zero sum. One player makes money, another player loses money. The $6 billion they claim that left the US economy also came back into the US economy. Besides, what business is it of anyone’s where I spend my money?

The pop-up ads thing is laughable. I’m far more likely to get a pop-up from GM or Nissan reading the Yahoo News or Forbes than I am to see a pop-up ad for gambling sites.

Lastly, notice the emotional appeal again. Save the families. Save the children. Homeland security.

This coming Friday, June 8, at 10 am, the House Financial Services Committee will hold a hearing on Rep. Barney Frank’s legislation, H.R. 2046, the “Internet Gambling Regulation and Enforcement Act of 2007.” H.R 2046 has 19 Co-Sponsors.

H.R. 2046 sets up a scheme for legalizing, licensing and regulating Internet gambling operations. Rep. Barney Frank’s bill excuses Internet gambling operators from prosecution or enforcement action under any Federal or State law, if they simply obtain a license and follow the bill’s requirements. Thus, H.R. 2046 effectively overrides all other gambling regulations or limitations under Federal or State law.

Yes, if these people simply follow the law it exempts from from prosecution! How dare they! They should be prosecuted even if they follow the law!

Are you tired of being assaulted by thousands of online gambling pop-up ads? Are you worried about your children, a spouse or an extended family member becoming “hooked” on highly addictive Internet gambling? Barney Frank seems more concerned about a handful of poker players and the special interests of foreign casino operators.

Oppose Barney Frank’s bill (H.R. 2046) and support strong regulations for the Unlawful Internet Gambling Enforcement Act of 2006. Take action now!

Why don’t you just not visit those sites or put a blocking program on your computer to keep your children from visiting gaming sites? No, instead it’s better to take away someone else’s right to play online poker rather than exercise any sort of self-restraint.

Take Action – Barney Frank Bill

Oppose Barney Frank’s legislation (H.R. 2046), because it jeopardizes the safety of our families and our nation.

The House of Representatives, specifically those who serve on the Financial Services Committee, need to hear an outcry from families and pro-family groups by this Thursday (6-7-07).

*
Fax, call or e-mail your Representative. Urge your Representative to oppose HR 2046. If your state has a Representative on the House Financial Services Committee, contact them as well (see Committee members). This Committee will hold a hearing on Barney Frank’s bill this Friday (6-8-07).

Other Things You Can Do:

* Submit testimony (your experience, your thoughts) about Internet gambling for the Congressional record (by 6-8-07).
* Send out e-mails to friends to call their Representatives.
* Mention this issue in your church, to radio programs or other pro-family organizations
* Write to the local newspaper editor with your concerns.

Background on the Unlawful Internet Gambling Enforcement Act

The Unlawful Internet Gambling Enforcement Act (UIGEA) was attached to the SAFE Port Act (H.R. 4954) and passed in 2006. This legislation delegated authority to the U.S. Department of the Treasury to determine the details and regulations pertaining to the Internet gambling portion of this legislation (Title VIII).

Needless to say, the foreign online gambling industry hired a number of lobbyists to influence this legislation and ultimately weaken the UIGEA. Foreign Internet casino operators lost an estimated $6 billion when Congress passed this legislation in 2006. They are intent on lobbying to reclaim their lost business by advocating porous Internet legislation and regulation.

The U.S. Department of Treasury is expected to release their regulations very soon, so voice your concerns today (see talking points listed below). Read the letter written by professional and amateur sports organizations that encourages strong regulations against Internet gambling.

Take Action – Unlawful Internet Gambling

Send a message to President Bush:

Comments: 202-456-1111
Switchboard: 202-456-1414
FAX: 202-456-2461 (most effective)
E-mail: comments@whitehouse.gov

Emphasize these points:

* The Department of the Treasury is tasked with drafting strong and thorough regulations. Word from legislators working closely with this bill is that the regulations are too weak, and the law will may be undermined by the rules and regulations. A handful of federal agents could create and maintain a list of unlawful Internet gambling operations to existing Pro-family organizations and citizens must contact the White House and urge President Bush to direct the Treasury to create strong regulations to uphold this legislation.

* A second concern is Rep. Barney Frank’s (D-MA) bill, HR 2046. His bill would effectively repeal the Unlawful Internet Gambling Enforcement Act of 2006, reversing nearly a decade of Congressional efforts to keep families safe from the predatory online gambling industry. Citizens need to voice their opposition to the dangerous bill that would open the gates wide for all Internet casinos.

Citizens should also be aware that Rep. Shelley Berkley (D-NV) sponsored a bill that seeks to “study” the option of Internet gambling in the United States and ultimately justify its legalization. Oppose HR 2140, because more than 230 million Americans access the Internet, including children. We do not want thousands of virtual casinos tempting adults and children to gamble, nor can we verify whether these sites are funding criminals or terrorists. We don’t have to study Internet gambling to know that risks are too great.

This is one of my favorites. “We don’t have to study Internet gambling to know that the risks are too great.” These family-first types are proud of their own ignorance. Facts might muddy the debate.

You can also contact Secretary Paulson, of the Department of Treasury. Express your concern for the Unlawful Internet Gambling Enforcement Act regulations to remain strong.

The Honorable Henry M. Paulson

Secretary of the Department of the Treasury

1500 Pennsylvania Avenue NW

Washington, D.C. 20220

Phone – 202-622-1100

Phone – Department of the Treasury Main Switchboard – 202-622-1100

Fax – 202-622-6415

Web site: http://www.ustreas.gov/

Talking Points:

(Choose three or four)

* Internet gambling sites took approximately $6 billion out of the U.S. economy in 2005 and may have funded foreign terrorist groups or criminal organizations.

There is absolutely to evidence to support this statement. None!

* More than 2,500 foreign online virtual casinos were soliciting more than 230 million U.S. Internet users, without effective age verification, validation of payment sources and no financial accountability.

All online casinos have age verification. Just try getting a withdrawal from Mansion. They require that you send a passport, proof of residence, etc.

* Internet gambling holds catastrophic potential for organized crime, funding terrorists and laundering money. Read more …

Unless, of course, it was legal, regulated, and open to inspection by state and federal agencies. Duh!

* Betting on sports is illegal in the United States, with the exception of Nevada and Oregon (Montana and Delaware chose not to wager on sports). Online sports-betting sites were – and still are – making a mockery of U.S. legislation by violating federal Internet gambling laws daily.
* The integrity of amateur and professional sports is compromised by the growing number of online sports-gambling sites (i.e. point shaving, player payoffs, corrupting coaches, etc). Read more …

The integrity of professional sports is being compromised by 21 year olds making $20 million a year. Sports betting is the least of the sports world’s problems.

* The American Psychological Association found high school and college-aged populations to be at an increased risk for Internet gambling addiction. [APA Advisory on Internet Gambling, March 17, 2002] See Advisory …

Then control your kids! Don’t take away my rights because you’re an incompetent parent.

* Machines cannot verify your age, and children are at extreme risk for exploitation and addiction. Already, gambling addiction with adolescents and on college campuses is at epidemic proportions.

What?! Considering the epidemic problem of identity theft, people don’t seem to be able to verify age/identity that well either.

* The National Gambling Impact Study Commission (NGISC) calculated that approximately 7.9 million adolescents have a problem or pathological gambling addiction. Imagine filling 113 NFL football stadiums to capacity; that’s how many under-aged teens and children have gambling problems. Read more of the NGISC Report …

Those people shouldn’t be gambling. How about you work on the problem – keeping problem gamberls from gambling – rather than violating the rights of the other 230 million people without a problem. Imagine filling 3250 NFL football stadiums to capacity; that’s how many people’s rights you’re willing to trample.

* Four out of five students under the age of 18 say that going online is a vital part of their schoolwork. One in five adults says their children spend too much time on the Internet. This age group is extremely vulnerable to online solicitation and subsequent gambling addictions. [USC Annenberg School, 2005] Read more …

This argument is so weak it’s laughable.

* Availability and accessibility are key components in creating addiction to gambling. The Internet is available and accessible 24/7 with no accountability. Addicted gamblers can remain anonymous and feed their addiction in secret. Pathological gambling addiction doubles within 10 to 50 miles of a casino – one can only imagine the addiction rates for 2,500 or more casinos within the reach of a mouse click. Read more …

Yeah, because people with gambling problems wouldn’t move closer to the casino. This argument tries to make it sound like once a casino goes in that it spreads a problem gambling virus into the surrounding community.

* Video gambling is the most addictive form of gambling in history. Research finds that addiction can occur in about one year, compared with gambling addictions to traditional slots and card games occurring in three to four years. Read more …

Are they really arguing that the speed at which it dawns on you that you have a gambling problem should be the criteria for whether or not something should be legal?

* Taxpayers and the federal government should not be burdened with monitoring thousands of separate, foreign gambling sites for corruption, illegal activities or jeopardizing homeland security.

Believe me, with the increased taxes coming in, I don’t think the government is going to look at this as a burden.

* Effective and strong regulations are necessary to ensure that the online gambling industry does not infiltrate millions of homes, destroy children, ruin families and mock U.S. laws prohibiting Internet gambling.

I guess being a good, responsible parent is out of the question.

Thoughts on Neteller, PartyGaming, and 888 Holdings Announcements

From Bill Rini:

Some folks have been asking me to give my take on the most recent announcements to come out of the online gaming world. Okay, so here we go.
Neteller: It’s been announced that Neteller has struck a deal to give people their money back. Woohoo! As Drizz recently commented, I’m the blogging sourpuss so while I think this is a very positive development the bad taste left in my mouth from Neteller’s attitude and lack of communication during this period doesn’t exactly make me feel any better about them as an organization.

Anyway, I think it’s a good development. Some of that money will come back into the poker economy and that’s always a good development. But to keep it in perspective, it was only $55 million. That’s not an insignificant amount of money but it won’t likely create anything more than a small blip in overall liquidity.

It’s still difficult for players to get money onto online gaming sites and many people have simply left the market. In my personal opinion, the dropoff we’ve seen since the Neteller seizure isn’t a result of the $55 million being sucked out of the poker economy (though it is a contributing factor) as much it’s a reflection of how difficult it is to get money onto poker sites.

I know, I’m the bad guy for saying this stuff but I think it’s good news but not great news.

PartyGaming and 888 Holdings: Both Party and 888 announced that they’re speaking with the USAO. Nobody’s 100% sure what it’s all about quite yet as both companies have made very generic statements but I think the view presented by some analysts that they are seeking to strike a deal with the USAO which says that the law was unclear prior to Oct 13th and they’ve been in full compliance with the law since Oct 13th is the most likely scenario. If that’s the case it’s like a baptism for both companies. They’ll come out of this squeaky clean.

Obviously, I side with this view because I’m biased by my past predictions on this. When people asked why these companies were exiting the US market I speculated that at least part of it had to do with being able to re-enter the US market at some point in the future. At a minimum, it clears up a lot of investor uncertainty and if the laws are changed to allow online poker in the US, Party and 888 could either apply directly for a gaming license or be acquired by someone who would have no problem getting one (Harrah’s, MGM, etc).

So from a meta-level, I view this as being extremely positive for online poker. It’s far better news than Barney Frank’s bill which currently has only 19 of Frank’s 69 committee colleagues signed up as co-sponsors. The reason being that if 888 and Party come to some sort of agreement with the USAO someone like MGM could buy 888. Once MGM owns an online poker site operating overseas they’d have a lot of motivation to lobby Congress hard for an exemption or law allowing them to offer services to US customers. Considering the depth of the gaming industry’s pockets this seems to be a far more of a slam dunk than anything else that’s out there right now.