Monday, August 04, 2008

New “Clarification” Bill Provides Little Clarity for UIGEA

UIGEA Continues to Lack ClarityThere were a few items related to the Unlawful Internet Gambling Enforcement Act of 2006 that came up during the last couple of weeks, including the introduction of two more bills having something to do with the UIGEA and/or online gambling. That makes a total of seven different bills concerning internet gambling that have been proposed since April 2007. Meanwhile, the regulations for the UIGEA have yet to be finalized.

I thought I’d throw in my two cents regarding the most recently-proposed bill, the Unlawful Internet Gambling Enforcement Clarification and Implementation Act of 2008 (H.R. 6663), introduced late last week by Rep. Pete Sessions (R-TX).

First off, it should be noted that this one has a very misleading name. You’d think that after nearly two years of fussing over the UIGEA, including the feds coming back to Congress to say they can’t make heads or tails of their charge to finalize the regulations, a “clarification” bill like this would be especially welcome. Unfortunately, this bill doesn’t try to clarify what really needs clarifying as far as the UIGEA is concerned -- but I’ll get to that in a moment.

I’ve actually seen a few people around the intertubes reporting on H.R. 6663 as “yet another anti-UIGEA bill,” but anyone who actually reads the bill would realize instantly it is hardly that. In fact, I’d describe it as precisely the opposite -- a “pro-UIGEA” bill that seeks to reinforce the significance of its having been signed into law.

The bill’s “Congressional Findings and Purpose” state that “Prior to the passage of the Unlawful Internet Gambling Act of 2006... on October 13, 2006, Federal law was both vague and outdated regarding Internet gambling activities.” A lot of us -- particularly online poker players -- would argue that the law continued to be vague even after the UIGEA was signed, but the (unstated) implication here is that the UIGEA sets straight what is legal and what is not.

I’ve argued before here that from a legal perspective, the UIGEA does indeed make clear that not just sports betting, but other types of gambling -- including poker -- are intended to be covered when it defines a “bet or wager” as “the staking or risking by any person of something of value upon the outcome of a contest of others, a sporting event, or a game subject to chance.” Unless a bill like Rep. Robert Wexler’s so-called “Skill Game Protection Act” (H.R. 2610) miraculously made it into a law and provided an exception or “carve out” for poker from the UIGEA -- which ain’t gonna happen -- the matter of whether or not poker is gambling has been settled. Legally speaking, anyway.

Anyhow, the “Findings” go on to point out that “to date” all federal prosecutions of online gambling have concerned sports betting only (i.e., were covered by pre-UIGEA law). Then it is said that many foreign companies who offered online gambling to Americans that did not involve sports betting (e.g., poker) made the decision to refuse U.S. customers “upon receiving clarification of United States law regarding internet gaming through the enactment of the UIGEA.” The reference here would be to sites like PartyPoker that immediately withdrew from the U.S. market when President Bush signed the UIGEA.

The next section is the one purporting to provide “UIGEA Clarification and Implementation,” and essentially says that companies like PartyPoker that have complied voluntarily with the UIGEA since it was signed into law will not be subject to prosecution. Frankly, none of this even needs to be said. There is no point at all to “clarifying” that someone who broke a law before it was a law, yet voluntarily abided by the law after it was passed, will not be subject to prosecution.

The “Findings” conclude with a recommendation for the feds to focus their efforts on stopping online sports betting in the U.S. Also, a final section adds the disingenuous disclaimer that “No provision in this Act... shall be construed as clarifying or implying that Internet bets or wagers, other than sports bets or wagers, which were accepted subsequent to October 13, 2006, are in violation of Federal law.” As I’ve already suggested, this final disclaimer is a bit suspect, given that H.R. 6663 does, in fact, appear to reinforce the UIGEA’s definition of a “bet or wager” as extending beyond sports betting to cover other types of gambling (like poker).

H.R. 6663 concludes on an especially ironic note, then. It is called the “Unlawful Internet Gambling Clarification and Implementation Act,” yet it ends by explicitly denying that it clarifies anything regarding what exactly internet gambling is! All it clarifies, really, is that the law cannot be used to prosecute those who violated its terms prior to its passage. Utterly needless, in other words.

As the feds demonstrated in that April hearing before the Subcommittee on Domestic and International Monetary Policy, Trade, and Technology (a subcommittee of the House Financial Services committee), they want clarification all right when it comes to the UIGEA. But this is hardly the kind of clarification they are requesting.

What they need is clarification about which sites are to be designated as prohibited sites (i.e., specific guidelines regarding what kinds of activities are covered by the UIGEA), and clarification about how exactly to instruct financial institutions to implement the policies and procedures for blocking transactions outlined by the UIGEA.

None of that here, though. And frankly, that sort of clarification is never going to come in the form of yet another bill. If it ever comes at all.

The Poker Players Alliance has already made a statement that it does not support H.R. 6663, primarily because of the way the bill indirectly suggests the UIGEA does, indeed, designate online poker as a prohibited activity. I’m in complete agreement with the PPA here.

Of course, not many others will support H.R. 6663, either. Like most (or all) of the other online gambling bills presented to Congress, it will also die before ever coming to a vote. The only bill that I would suggest has any chance whatsoever of getting out of the House would be Rep. Shelley Berkley’s H.R. 2140, a bill to provide funding to the National Academy of Sciences to study online gambling. In fact, Berkley’s bill (which has 73 co-sponsors) was supposed to be considered last Wednesday, but got postponed as the House found itself preoccupied debating a resolution whether or not to find Karl Rove in contempt for not appearing to testify after he’d been subpoenaed.

And now it is vacation time. Congress is in recess until after Labor Day. And when they return, the November elections will surely eclipse any other considerations for a good while.

So when it comes to online gambling, you can safely forget about any sort of legal clarity for a good while.

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Anonymous BJ Nemeth said...

Excellent analysis.

8/05/2008 12:08 AM  
Anonymous gtycoon said...

I don't think anything is going to happen for the better with this issue until enough poker players raise some noise. Even then nothing may happen. Great post by the way.

8/07/2008 9:57 PM  

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