The Gonzalez Getaway

Gonzalez is gone. Almost. Does it matter to Americans who play online poker? Hard to say. Let’s call this an interesting turn card.

Yesterday’s resignation of U.S. Attorney General Alberto Gonzalez was a bit of a surprise, though there had been a few rumblings over the weekend. The fact that Gonzalez resigned was hardly that much of a shocker. Even though the Congressional investigation into the sketchy firings of nine U.S. attorneys late last year has lost some of its momentum, the fallout (from that and a number of other missteps) had all but ensured Gonzales would be stepping down at some point. It was the timing that took some off guard.

His farewell speech offered no concrete explanations, though it is clear he’d become too sullied to continue his post effectively. His performance before Congress -- full of equivocation, misleading statements, and (in the eyes of many) downright lies -- plainly demonstrated how unsuitable Gonzalez was to serve at the United States’ chief law enforcement officer.

Of interest to Americans who play online poker is how Gonzalez’s abrupt departure might affect the uncertain fate of the Unlawful Internet Gambling Enforcement Act of 2006. We are in a kind of limbo at the moment as far as the UIGEA is concerned. Today we find ourselves about six weeks beyond the conclusion of the so-called “270-day period” during which federal regulators “in consultation with the Attorney General” were to assemble and deliver directives to banks, credit card companies, and other “designated payment systems” and “financial transaction providers” for blocking Americans’ transactions with online gambling sites.

As I’ve discussed here at length before, many observers have noted how such instructions -- if they are ever delivered -- may well turn out to be impossible to follow, thus making the law essentially unenforceable. Even so, according to the UIGEA, once those directives are delivered to the banks and credit card companies, those entities will then be considered in “compliance” with the law only if they “comply with the requirements of regulations prescribed.” And (one can reasonably infer) they will be considered not in compliance if they don’t comply with those regulations and therefore subject to the penalties outlined in the Act. Doesn’t really matter -- theoretically speaking -- if the banks can actually follow those instructions (e.g., can monitor the source of each and every check their clients attempt to cash at one of their branches). In any event, if those regulations are ever handed down, it is safe to say that many of us Americans who play online poker are in for more headaches.

Gonzalez will not officially step down as Attorney General until September 17th. From a political perspective -- and, after all, it was Gonzalez’s unmistakable partisanship that put him where he is today -- one wouldn’t expect the lame duck A.G. to be making any major moves here as he keeps the seat warm for his successor. Gonzalez has only rarely even acknowledged the UIGEA in public, and when he has it has only been after Jon Kyl (R-AZ), one of the authors of what eventually became the UIGEA, has brought it up in other contexts. For him suddenly to take a renewed interest in online gambling at this point would be quite unexpected.

Gonzalez spoke briefly about the regulations back in January 2007 in response to a query from Kyl. At that time Gonzalez said that it was his understanding that discussions about drafting the regulations had begun and that “hopefully” the process “can be completed in an expeditious manner.” (Video here.)

Kyl asked Gonzalez about the regs again in April, and received a similarly brief, non-specific response. Then about a month ago -- on July 24 -- Kyl brought up the UIGEA with Gonzalez yet again during a Senate Judiciary Committee hearing with Gonzales that primarily concerned combating terrorism and other national security issues. At that time, Gonzalez agreed with Kyl that as far as online gambling was concerned, “we [i.e., his office] believe it is a serious issue.” Gonzalez also said he thought internet gambling was “addictive” and that it was connected to organized crime. He then reiterated the process outlined in the UIGEA -- for the folks over in the Treasury Department to come up with the regs and for him to be consulted along the way -- and said that his office had already delivered its “input.” He concluded by saying “my understanding is that those regs are moving forward.”

Kyl went on to ask Gonzales to confirm that he was committed to enforcing “other laws” designed to prevent online gambling, particularly those that target sports betting. (Not a concern to online poker players, really.) You can view the July 24 exchange here.

It sounds as though the current Attorney General is essentially done with the UIGEA and it is now up to the Board of Governors of the Federal Reserve System to finish their work and send along the regulations to the banks, credit card companies, and others. So it probably doesn’t matter too much as far as the process goes that Gonzalez is a goner. Of course, the next Attorney General may have a different -- i.e., less detached -- attitude toward the UIGEA, which could perhaps speed things along. Tend to doubt that’s gonna happen, though.

More relevant will be a hearing scheduled for Sept. 4 where a New Jersey federal judge will be considering that lawsuit filed by the Interactive Media Entertainment & Gaming Association (iMEGA) against Gonzales over the legality of the UIGEA. (Story here.) Don’t know whether the Attorney General will be playing any role at all during that hearing, even though he is the one being sued. Could be a last chance, though, for Gonzalez (or, as he likes to say, “his office”) to opine on the UIGEA and the prospects for its implementation.

So we keep waiting for that river card. Could be good for our hand. Could be bad.