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Subcommittee Hearing Recap

Earlier today the Subcommittee on Commerce, Manufacturing, and Trade held its hearing into the potential legalisation of online poker. Among the witnesses that testified were Alphonse D’Amato, former senator and now chairman of the Poker Players Alliance (PPA), and Parry Aftab, a lawyer specializing in Internet privacy and security law, who is a board member of FairPlayUSA.

Of the six panel members that testified, five expressed support for the legislation of online gaming. The lone detractor was Ernest Stevens, chairman of the National Indian Gambling Association, who feared tribal governments would not see a big enough share of the profits under current proposals.

Unlike previous hearings that have predominantly focused on the morality of gambling, today’s hearing centred around consumer protection. Every witness before the committee expressed the belief that regulation would only further help to protect players.

“It’s not a matter of whether gambling is immoral or not, but [whether] we can put safeguards in effect that aren’t in effect now. What’s happening now isn’t working,” said Aftab.

Joe Barton, who introduced his HR2366 bill to legalise online poker in June, highlighted that nothing will stop millions of Americans from playing online poker, regardless of the government’s attempts to discourage them. This sentiment was echoed by D’Amato, who likened the situation to Prohibition early in the 20th century.

“The status quo is badly broken and benefits no one,” D’Amato said. “Internet poker has not gone away and it’s hard to envision a scenario where it will.”

D’Amato emphasised that by not regulating the industry, Congress is leaving millions of Americans exposed to unscrupulous offshore operators. He was also the only witness to challenge the idea that poker is illegal in the United States.

He noted that the Wire Act, which banned interstate financial transactions related to gambling, was intended to prevent sports betting, and it remains unclear whether online poker is illegal.

“I think the court, the 5th circuit, indicated that the Wire Act has not been violated as it relates to playing poker. The wire act was intended for sports gambling. I think there’s a legal distinction, now some are still battling it out, it hasn’t gone up to the supreme court, but it’s the highest ruling to date.”

Opposition to online gambling has emerged from the organizers of state lotteries, who claim that legalisation would drain dollars from the state. D’Amato argued that online poker sites serve a different market and would have minimal impact on lotteries if legalised.

“We believe that people who buy lottery tickets are generally not the same people and we don’t believe they really compete,” D’Amato explained.

The financial benefits of legislation were also highlighted. Americans send $6 billion to offshore gambling sites each year. Several members noted that regulating and taxing the industry would provide a steady stream of revenues for state and federal governments. Over 10 years, online gambling could generate $42 billion in tax revenues, according to the Congressional Committee on Taxation.

Mary Bono Mac, who noted that some form of gambling is legal in every state except Hawaii and Utah, closed the hearing by saying that the committee will “thoroughly” investigate the potential legislation of online gaming. A follow up hearing is yet to be scheduled.

Click here to view the panel’s testimony and to watch the full 2 ½ hour hearing.

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