Federal Laws Needed to Clarify DOJ Online Gambling Memo
The recent Justice Department memo on Internet gambling “opened the door for more complications” which must be addressed by federal legislation, Rep. Joe Barton, R-Texas, told us late Thursday. Though Barton said he was “glad” the Justice Department confirmed that the federal Wire Act does not prohibit online lotteries and non-sports related Internet gambling, he said the memo creates larger problems for regulators and consumers (WID Dec 28 p1). “If Congress doesn’t act soon we could end up with fractured rules and regulations that vary state to state, leaving more opportunity for fraud and fewer safeguards for players,” he said.
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Barton is the author of HR-2366, the Internet Gambling Act of 2011, which has failed to move since its reintroduction last year (WID Nov 21 p1). He said federal Internet poker laws like that proposed by HR-2366 are “needed now more than ever. It creates one federal standard that protects the integrity of the game and the financial interests of players -- while protecting American consumers from nefarious and predatory overseas gambling operations.”
The House Commerce Manufacturing Subcommittee plans to hold “at least another hearing on online poker before Chairman [Mary] Bono Mack, [R-Calif.,] makes a decision about whether to proceed with legislation,” a committee spokesman told us Friday. Last fall the subcommittee held two hearings to consider the legislation, but it hasn’t scheduled a markup. The spokesman said he expects “our next hearing to include law enforcement officials and regulators.” The bill has also been referred to the House Judiciary and Financial Services committees.
The Justice memo does nothing more than “muddy the waters,” said a spokesman for Bono Mack. “We've gotten various interpretations of it but we are still not completely certain what the Department of Justice is saying,” he told us Friday. “There was already a growing consensus that intrastate gambling is permissible. But there is uncertainty now whether this [memo] applies to intrastate or interstate gambling,” he said. “We will be reaching out soon to DOJ for clarification.”
Poker Players Alliance Executive Director John Pappas said the only thing now clear “is that that everything is unclear” following the Justice memo. “Now is the time for Congress to step in and make a declarative statement about what is lawful and unlawful relative to online gambling,” he said Friday. “States are going to become more active on this … and they will need some help from the federal government."
American Gaming Association President Frank Fahrenkopf agreed. Justice’s interpretation of the federal Wire Act “validates the urgent need for federal legislation” because “there are so many unanswered questions,” he said. “Federally mandated protections are vital no matter the interpretation of the Wire Act, and they must be enacted in order to avoid a patchwork quilt of state and tribal rules and regulations that would prove confusing for customers and difficult for law enforcement to manage.”
There is impetus to move quickly on the bill because 2012 is an election year, Fahrenkopf said. “If something is going to be done it has to be done in the first half of the year,” he said. “Come November no one will be in town, they'll all be campaigning.”
Online poker players said the Justice memo didn’t go far enough to protect players from the fraudulent and illegal activities in the current online gambling market. “Ultimately, this memo, in my humble opinion, only allows for lotteries to offer their services to their in-state customers over the Internet,” said Eric Prag, a lobbyist living in Washington. Internet gambling is legal in the nation’s capital and the D.C. Lottery is preparing to roll out online gambling hot spots in the District by mid-2012. In the meantime “the U.S. is not protecting the people who are playing” and regulators cannot effectively do their jobs unless there is oversight at a federal level, Prag said. He was one of the thousands of U.S. players who lost money following last year’s seizures of the top three online poker sites, PokerStars, Full Tilt Poker and Absolute Poker (WID April 18 p6).
Ally Hazen, another online poker player and webmaster for the U.S. International Trade Commission, said her friends lost thousands when Full Tilt Poker was seized by the Justice Department. “A few bad seeds ruined it for everyone and the federal government seems unwilling -- at least at the moment -- to give its citizens a safe environment in which to play,” she said. “Players need to know that, if they're acting within the bounds of the law and paying taxes on their revenue, that their money is safe. We have lemon laws in this country, we have the Better Business Bureau, and we have numerous consumer rights measures in place to protect citizens from corruption and theft. Consumers of online poker need and deserve that same protection.”