Can this man legalize online gambling?

Let the games begin! Tomorrow morning at 10 a.m EDT, the U.S. House Congressional Services committee will debate the white hot issue of how best to regulate internet gambling. Watch it live and read the prepared testimony here:

http://www.house.gov/apps/list/hearing/financialsvcs_dem/hr_112409.shtml

Reading through the pre-hearing documents prepared by Harvard Professor Malcolm Sparrow, it looks like the anti-gambling proponents are going to have their hands full defending the status quo. Sparrow lays out the heart of the issue plainly and simply:

At a minimum, legalization and regulation of online gambling would give Americans much more protection than does the current prohibitionist regulatory framework. Although the kind of regulation that would accompany legalization would not be failsafe, it would be a significant improvement over the current regulatory and enforcement structure. We believe that safeguards could be implemented that would, on balance, substantially improve protections against the identified risks. These safeguards would also provide protection equal to or greater than that provided within the U.S.-based bricks-and-mortar gambling industry. We recognize that no set of technical or regulatory controls could ever eliminate these risks entirely. But even if the new fence had a few holes, it would be an improvement over having no fence at all.

The view that online gambling, in contrast to its bricks-and-mortar casino counterpart, is impossible to regulate reflects an old-fashioned perception of cyber jurisdictional authority. Many offshore commercial entities that operate online are subject to U.S. legal jurisdiction under existing long-arm statutes and authority. When coupled with governmental licensing authority, the ability to police online activities is even more powerful. Legalization with regulation would provide U.S. authorities with the power to grant or deny licenses and to impose significant sanctions on noncompliant licensees. Those licenses would be highly valuable to site operators. Compliance with any regulatory requirements and strict licensing conditions that Congress chooses to impose in return for the privilege of the license would therefore become a cost of doing business.

Watch this debate, email your Congressman, and continue to visit iBet.pro to keep up on the latest developments surrounding this fascinating clash between the world’s most powerful players.

An epic battle is brewing. The two opposing sides are readying themselves for the fray; recruiting foot soldiers, forging alliances, stockpiling ammunition. In recent weeks, powerful interests have thrown down the gauntlet, setting the stage for what promises to be one of the most riveting political and economic rumbles of all time. The issue at the heart of the conflict is the legalization of sports betting and the field of battle is the United States of America.

Some of the most interesting recent developments include:

• Bipartisan coalition unites to legalize online gambling – and tax it: Barney Frank picks up some Republican support for his bill to repeal the UIGEA. Ron Paul (R-Tex.) as usual shows himself to be a leading conservative voice for individual rights.
• NJ Gov. Corzine joins the fight to overturn the Federal ban on sports betting: The New Jersey Governor sees the Constitutional problems with permitting only four states to allow sports betting. A gubernatorial candidate from Massachusetts agrees.
• DoJ Tries to Block New Jersey Governor From Sports Betting Suit: The little lawsuit started by a state lawmaker in NJ has picked up steam, causing the Justice Department to desperately look for obscure legal reasons to prevent it from seeing a trial. Amazing in-depth coverage of this story at MajorWager.com
• GOP Senators come out against States rights on sports betting issue: Sen. Orrin G. Hatch (R-Utah) and Sen. Jon Kyl (R-Ariz.) are taking the lead in the fight against sports betting, challenging Delaware and New Jersey’s attempts to regulate and tax sports betting. Many of their questionable arguments are skillfully rebutted by Delaware politician Peter Schwartzkopf here.
• NFL seeks to stop sports betting in Delaware: The No Fun League joins in on the fun, seeking an injunction to prevent the Delaware sports betting program from going into effect. The other major sports leagues and the NCAA also throw their weight behind the effort.

This is merely the first round in what promises to be a heavy weight fight that goes the distance. In the end, let’s hope the Constitution and the liberty of he American people get the unanimous decision.

It’s not just the temperature on the thermometer that is heating up as we enter into the summer months here in the U.S.; the war over the legality of sports betting has been growing hotter in recent weeks, setting the stage for explosive conflicts between powerful entrenched forces on both sides of the volatile issue.

Some of the incredible stories coming out in recent days:

• Federal prosecutors have seized $30 million of winnings from online poker players. Appealing directly to the banks used by the payment processing companies, the Feds have seized not the funds made by the poker sites, but the legitimate payouts won by U.S. based players. This should be a real wake up call for anyone who cares about their freedom and constitutional rights.
• The Governor of NJ has joined the fight to legalize sports betting in his state. What started as the David and Goliath story of a single state legislator against the U.S. Federal Government is quickly becoming an increasingly fair fight as various heavyweight lobbying groups and political players such as Governor Corzine enter the fray. Is it just a matter of time before other states take up the cause?
• The NCAA threatened to bar tournament games in the state of Montana due to its state-run fantasy sports league. Montana has responded with a rather weak attempt to appease the NCAA bullies.
• The WTO once again rules against the Unites States in a worldwide dispute over the online gambling ban in the United States. Unfortunately these rulings are consistently ignored by our government.
• The NFL is fighting tooth and nail to stop legalized sports betting in Delaware. The truth is that the NFL should be grateful for sports betting according to industry insiders. Meanwhile NFL owners just voted to allow NFL logos to appear on state lottery tickets.
• A guy got his hand chopped off for a gambling debt in NJ. Needless to say this kind of stuff doesn’t happen in the online gambling world where deposits are made up front.
• Finally, the state of Minnesota backs down on its ridiculous demand that the biggest Internet Service Providers block access for Minnesota citizens to certain gambling sites. This is the kind of thing they are doing in China my friends. Credit to iMEGA and the PPA for this small victory.

It’s an interesting time to be following the issue of online sports betting. The landscape could be very different by the start of the football season – though I wouldn’t bet on it.

“The expression by the professional leagues of shock at the notion that people would actually bet on games was one of the least persuasive emotional outbursts I have encountered, but we acknowledged the reality of it, no one will be betting on professional sports games.”

- Barney Frank, 5/7/09

By now you’ve heard the bad news: The long-awaited legislation introduced by Rep. Barney Frank to repeal the UIGEA does not include the removal of the online sports betting ban. After fierce lobbying by the National Football League, Frank concluded that he couldn’t realistically expect the bill to pass with sports betting legalization on the agenda. There is an excellent article with some great analysis on the issue by Hartley Henderson out today at Major Wager. The article touches on many of the reasons why this bill is just unacceptable, and Henderson sums up the problems with it quite nicely:

To those in the sports betting industry, however, the bill falls far short, and most would prefer no bill at all to this one. Not only does it throw sports betting under the bus, but it tries to legitimize the leagues’ stance that it is superior to other forms of gambling and hence deserves an exemption. It’s ironic as well that other countries view sports betting as more civil than other forms of gambling because it helps legitimize games and also because it doesn’t take advantage of the bettors like casinos and lotteries do. Good handicappers can win against the house in sports betting, but it is impossible for anyone to win in the long run on slot machines, roulette or lotteries because they are totally random and based on luck with the house edge built in. Australia has recognized this and told its citizens that they are permitted to bet sports online, but it doesn’t want them wasting money on gambling where they can’t win. In America (and Canada) the states would rather citizens only bet on games where they can’t possibly win, hence essentially making the legalized gambling a hidden tax. It’s truly unfortunate, but is also a sign of the times.

There is another good article covering the basics of the issue over at Covers.

Although this is a discouraging turn of events for advocates of legalized sports betting, there is potentially some light on the horizon. The announcement of Frank’s legislation may serve to bring more attention to the issue of online gambling in general. In addition, despite some opposition, the Delaware State Senate just passed their own legislation to legalize sports betting in that state, setting up a possible Constitutional “battle royale” between neighboring state New Jersey and the United States Federal Government. Sports betting advocates may have lost a battle with this latest setback, but the war is far from over.

Happy March Madness everyone, I hope you’re all doing better with your picks than I am! Here is a quick update of the latest news from the sports betting world:

• New Jersey sues Federal Government, claims sports betting ban is unconstitutional – this is huge! If this suit is successful it could legalize sports betting for all U.S. citizens. We’ll continue to monitor this story very closely.
• New Vegas casino offers in game wagering – the new M Resort has immediately become the gold standard for sports betting in Vegas. “All the sports lines will originate here,” M Resorts Chairman Anthony Marnell III said during a recent interview. “It used to be the Stardust set the lines. Now, it’s us.”
• Delaware budget contains legalized sports betting – the budget proposal for Delaware contains provisions for a state sponsored sports betting “lottery”. It looks like the local media is supporting the bill and we may see this landmark legislation pass.
• NCAA kills March Madness wagering in Canadian casinos – another example of U.S. entities using their economic and political power to take away the sports betting freedoms of foreign citizens.
• President Obama smiles on online sports betting – Carter Randel writes, “Barack Obama showed he shares the people’s disregard for online gambling laws by appearing on ESPN to make his own bracket picks.” Randel continues, “The President has acknowledged enjoying playing poker, has shown visionary use of the Internet in his campaign, and now flirts with online sports gambling on natiuonal television.” This could point to a brighter future for online sports betting in the U.S. under the Obama administration. I’m hoping for the best.

This is really outrageous. William Wichterman is a former lobbyist for the National Football League – representing them as recently as March 2008. A few months ago he was appointed by the White House to the role of “Deputy Director of Public Liason”. Now, in the last days of the Bush administration, he is using his insider role to cram through flawed legislation designed to prevent Americans from gambling online. Fortunately, Democratic Congressman Steven Cohen is taking notice:

Last week, Rep. Steve Cohen (D-Tenn.) asked White House Counsel Fred Fielding to detail what role Deputy Director of Public Liaison William Wichterman played in the Treasury Department’s decision to send the proposed rule to the Office of Management and Budget for final review on October 20. In a November 7 letter to Mr. Fielding, Rep. Cohen said he had been told that Mr. Wichterman “has been a source of considerable political pressure to speed this regulation through.” The letter further stated, “The National Football League has been among the most vocal advocates for the proposed rule and the underlying law. I am sure you will agree that, at a minimum, the appearance of a conflict of interest is undeniable.”

This political influence peddling comes despite a commitment by the Bush Administration not to issue final regulations after November 1, 2008 except in “extraordinary circumstances.” Fortunately there are some signs that the incoming Obama administration will repeal this and other midnight hour legislative shenanigans once coming into office (props to Online Casino Advisory):

The Washington Post reported today that President-elect Obama’s team is preparing a list of regulations and policies being put in place in the waning days of the Bush administration. Any regulations that are being imposed for “overtly political” reasons stand to be swiftly withdrawn.

I’m hopeful that the new administration will take a new view towards online gambling. According to Online Casino News, there is reason to be optimistic:

According to inside sources, the President-Elect has very strong opinions on how the internet should be governed, if at all. Obama, when President, expects to ‘ensure the full and free exchange of ideas through an open Internet and diverse media outlets.’

Listing goals, the site says, ‘Protect the Openness of the Internet: A key reason the Internet has been such a success is because it is the most open network in history. It needs to stay that way. Barack Obama strongly supports the principle of network neutrality to preserve the benefits of open competition on the Internet.’

Be sure to check out the original article on Wichterman at Marketwatch. There is also a well-written opinion piece on the issue over at the Las Vegas Review Journal.

This news just in from our friends at The Safe and Secure Internet Gambling Initiative. It seems the legislation to force the Federal government to take back the burden to define what constitutes illegal gambling has passed a major hurdle. It’s interesting to note how the “sports leagues” came in at the last minute and were able to force changes to the bill exempting sports betting prohibitions from further regulation. Some key quotes related to this:

• “Congressman Frank felt it was inappropriate for the sports leagues to tell other people they can’t do what they want to do.”
• “Rep. Clay asked what was different between wagering on sports via the Internet and wagering on sports in a land-based casino in Las Vegas.”

A bill that would relieve a significant burden on U.S. financial services companies forced to implement a ban on Internet gambling passed a critical hurdle in Congress yesterday. The Payments System Protection Act (H.R. 6870), approved yesterday by the House Committee on Financial Services, would direct the Department of the Treasury and Federal Reserve System, in consultation with the Attorney General, to appoint a special Administrative Law Judge to define the types of unlawful online gambling and conduct an economic impact study on the costs for compliance. The enactment of the bill would have the practical impact of delaying implementation of the Unlawful Internet Gambling Enforcement Act of 2006 (UIGEA) regulations through a process designed to ensure that the regulations do not impair the functioning of the U.S. payments system, or inappropriately prevent legal online transactions.

The Committee also approved an amendment to the bill that requires federal regulators to issue regulations to financial institutions within 60 days of enactment to block all Internet gambling wagers on sports, except for those involving horse racing, dog racing and jai-lai. Under the amendment, unlawful sports operators and sites would be specified by the U.S. Treasury on a list that would be consulted by financial institutions to implement the prohibition. The legislation and amendment were introduced by House Financial Services Committee Chairman Barney Frank (D-Mass.).

“This important vote acknowledges that the previous attempt to prohibit Internet gambling was overly burdensome and unworkable,” said Jeffrey Sandman, spokesperson for the Safe and Secure Internet Gambling Initiative. “We hope this vote indicates a willingness of Congress to develop a more sensible approach towards Internet gambling. Rather than prohibit an activity millions of Americans enjoy in the privacy of their homes, just as they can do in a casino, Congress should create a framework to regulate Internet gambling as a way to protect consumers and collect billions in much-needed federal revenue.”

Rep. Frank introduced the Payments System Protection Act in response to concerns raised by the financial services industry that the proposed rules to implement UIGEA forced banks and other payments services to determine for themselves what types of online activity are lawful and what are not, when the federal government itself was unable to specify the distinction between lawful and illegal online gambling activities. Rep. Frank stated that once the bill is passed “at least the banks will know what is and isn’t illegal.”

Rep. Frank listed representatives of the U.S. financial services industry, including the Chamber of Commerce, The Financial Services Roundtable and the Credit Union National Association, as all supporting the bill. Each had previously criticized the proposed regulations implementing UIGEA, describing them as unworkable and burdensome.

Sources present at the Committee mark-up of the bill stated that the language exempting sports prohibitions from the further rule-making and mandating sports-only regulations to go forward within sixty days from enactment appeared to have been developed in consultation with the sports leagues. Accordingly, the last-minute objection made by the leagues to the bill immediately before the committee vote came as a surprise.

According to Sandman, at the mark-up Rep. Frank expressed his disappointment with the sports leagues, stating that he was working to do “everything that they wanted.” Sandman said, “Congressman Frank felt it was inappropriate for the sports leagues to tell other people they can’t do what they want to do.”

During debate on the bill and amendment, Rep. William Lacy Clay (D-Mo.) stated his view that the position of the sports leagues was disingenuous. Rep. Clay asked what was different between wagering on sports via the Internet and wagering on sports in a land-based casino in Las Vegas.

Let your voice be heard! Sign up now and contact your representative at The Safe and Secure Internet Gambling Initiative.

Don’t get me wrong – I detest the credit card industry. I despise their “unfair and deceptive” business practices and I’m glad to see they are recently facing a major backlash from consumers and the Federal government. Recent news suggests that the lock they’ve had on the U.S. Congress may be loosening.

That said, the enemy of my enemy is my friend, and in the battle against the online gambling ban, the credit card companies just might be the best friend U.S. sports bettors have. Rep. Barney Frank yesterday introduced legislation to force the Federal government to clarify the ambiguous law that requires the U.S. payment processing companies to make a legal determination for each payment they process as to whether or not it constitutes an illegal gambling transaction. They stand to face serious consequences if later Congress disagrees with their evaluation. Here is a press release from The Safe and Secure Internet Gambling Initiative about the Payments System Protecton Act of 2008:

House Committee on Financial Services Chairman Barney Frank (D-Mass.) today introduced the Payments System Protection Act of 2008, which would direct the Department of the Treasury and Federal Reserve System, in consultation with the Attorney General, to create a formal process to define what types of online gambling are unlawful to make it possible for the U.S. financial services industry to comply with the current ban on Internet gambling, as required by the Internet Gambling Enforcement Act of 2006, or UIGEA. In response to concerns raised by the financial services industry about the burden and ambiguity in the proposed rules to implement UIGEA, the bill would require federal regulators to appoint a special Administrative Law Judge to define unlawful Internet gambling activities and conduct an economic impact study on the costs for compliance.

The credit card companies, through their various trade associations, have come out swinging in support of this important legislation. Representatives of the U.S. financial services industry, including the Chamber of Commerce, The Financial Services Roundtable, Credit Union National Association, and National Association of Federal Credit Unions, have pledged their full support of the Payments System Protection Act in several letters to Rep. Barney Frank and members of the Financial Services Committee. “I wish to be clear that we do not support the notion that financial services companies should be ‘deputized’ to police gambling activity in any form or function,” wrote Mr. Steve Barlett, president and CEO of The Financial Services Roundtable on June 23, 2008.

If you support the efforts of these lawmakers to restore your freedom as an American citizen to bet on sports online, it’s time to take some action. The Safe and Secure Gambling Initiative provides an easy way for citizens to express their support for regulated internet gambling to their elected representatives.

From their website:

The Safe and Secure Internet Gambling Initiative promotes the freedom of individuals to gamble online with the proper safeguards to protect consumers and ensure the integrity of financial transactions.

Additionally, the Initiative is a resource for information about legislation to regulate Internet Gambling and provides individuals, organizations and companies the opportunity to support the legislation and engage their elected officials.

It’s fast easy and informative, and I strongly recommend everyone reading this blog take a moment to sign up and let your voice be heard.

The Delaware House of Representatives has approved a bill to legalize sports gambling. The bill moves onto the Senate now where it’s fate is uncertain. The Governor has sworn to veto the bill, but the bill’s sponsors have cleverly included a provision that makes the law not go into effect until the day after she leaves office – giving her a way to save face while not thwarting the legislature’s will. Read more about this hot issue here.

Meanwhile in New Jersey, Democratic Senator Raymond Lesniak is threatening to sue the federal government in order to pave the way for his state to legalize sports betting. It seems that there is a Federal law in place that bans sports betting in every state of the union except for Delaware, Montana, Nevada and Oregon. CNN offers a nice summary:

New Jersey is looking to bring professional sports betting to Atlantic City casinos and horse racing tracks, but a 1993 federal law limited legalized sports betting to the four states, though only Nevada enables it.

“Congress did more than make us second class citizens,” Lesniak said. “It violated the Constitution of the United States of America.”

He said federal law cannot favor some states over others.

“Other states are likely to support our efforts if we take the lead,” Lesniak said during a Senate hearing.

…

Sen. Jeff Van Drew, D-Cape May, said a conservative-leaning U.S. Supreme Court could favor states’ rights.

“It is very difficult to understand how sports book could technically be legal in four states but not in 46 others,” Van Drew said.

I wholeheartedly agree with these lawmakers and applaud their efforts to bring sports betting out of the shadows. It’s not in our country’s interests to make criminals of millions of law-abiding citizens simply because they prefer to bet on sporting events rather than take part in the state-run lottery. If you live in Delaware or New Jersey, please take the time to contact your local representatives and express your support for the legalization of sports betting in your states. You will almost certainly receive a thoughtful reply and could well have an impact on the outcome of this important debate.