Wednesday, July 21, 2010

Oh, Right... the UIGEA

Oh, Right... the UIGEAA few weeks before the WSOP began, I pulled together those “Bloggers Roundtable” columns over at Betfair Poker where I asked a dozen well-known poker bloggers to talk about the upcoming Series and also reflect on covering past WSOPs. Kind of fun to go back and see what they said now that we’ve reached the end of seven-and-a-half week WSOP marathon.

The first question I asked the bloggers was to tell me what stories they were most interested in following over the summer. At the time we were a few weeks away from June 1, the day when it would finally become mandatory for banks and financial institutions to comply with the finalized regulations of the Unlawful Internet Gambling Enforcement Act of 2006. A couple of the bloggers (F-Train and Dr. Pauly) did say they were interested in seeing what, if any, effect the UIGEA finally being enforced might have on the WSOP, including possibly hurting attendance.

The UIGEA, you recall, was that law hastily passed way back at the end of September 2006, tacked on to the end of something called the Safe Port Act and rushed through both houses just as the 109th U.S. Congress was closing up shop to ready for the 2006 elections.

The bill was signed into law two weeks later by then President George W. Bush. Within days many sites -- including Party Poker, at the time a top site for U.S. players -- instantly became inaccessible to Americans. And not too long after that other depositing methods like Neteller were taken away from Americans as well, although there have always been other ways for Americans to get money onto the sites (even if they take a little bit of work to figure them out).

It then took three-and-a-half years for the regulations to be drafted and finalized, and then, on June 1, for compliance to be made mandatory. Those finalized regs prohibit banks from allowing their customers to deposit from their accounts into online gambling sites, even if they are located offshore (as they all are). The way the finalized regulations are written, U.S. citizens should be able to withdraw funds from online gambling sites back into their accounts, but no one is 100% sure about how banks are (or are not) following the UIGEA’s directives.

That’s because there remains a lot of fuzziness regarding the actual enforcement of the UIGEA, which representatives of the American Banking Association repeatedly characterized before Congress as an undue burden on banks. (I mentioned just one example of such testimony in a post from a couple of years ago titled “The Good, the Bad, and the UIGEA.”) One fairly significant problem for banks is that the UIGEA never does define “unlawful internet gambling,” thus making it difficult for banks to determine what exactly they are being asked to prohibit. As the ABA indicated early on, one way of dealing with that burden would be for banks to “overblock” all deposits that are suspected to be gambling deposits.

As far as the WSOP was concerned, the June 1 deadline did not appear to have much of an effect on attendance at all. Indeed, the numbers were up overall in terms of total registrations as well as the field for the Main Event. And while I found myself fairly well buried to the neck in each of the events I ended up covering, I didn’t really hear a lot of fretting about the UIGEA from players or the media during my time in the Rio this summer.

Now that the WSOP is over, our attention once again has become occupied by the UIGEA and other legal issues connected with online poker. This afternoon the entire House Financial Services Committee will meet to discuss the Internet Gambling Regulation, Consumer Protection, and Enforcement Act (H.R. 2267), a bill introduced over a year ago by the committee’s chairman Rep. Barney Frank (D-NH) which is designed to create a licensing and regulating mechanism for online gambling sites in the U.S.

Five witnesses are scheduled to testify this afternoon. Not all support Frank’s bill.

First scheduled is Ed Williams, President and Chief Executive Officer of the Discovery Federal Credit Union. He will represent the Credit Union National Association’s view that the UIGEA creates too much of a burden for credit unions and banks, saying they really need a list of illegal sites before they hope to enforce the UIGEA as directed. The CUNA supports Frank’s bill, but again wants to ensure “safe harbors” for the credit unions and other financial institutions with regard to their having to police against customers’ transactions with unlicensed, unregulated gambling sites.

Next will come Tom Malkasian, Vice Chairman and Director of Strategic Planning of the Commerce Casino in Los Angeles. Malkasian will speak in opposition to H.R. 2267. He has a few specific objections to Frank’s bill, but it is clear he views the creation of some sort of licensing/regulating scheme for online gambling to be potentially detrimental to the live gambling industry.

Then the Honorable Lynn Malerba, Tribal Chairwoman of the Mohegan Tribe of Connecticut will speak. She supports H.R. 2267, but believes it could be enhanced by including an unambiguous provision making it clear that tribal governments/gaming facilities are authorized to operate internet gaming sites.

Law Enforcement and Anti-Terrorism Consultant Michael K. Fagan comes next, and as you might guess he, too, is less than enthusiastic about H.R. 2267. Although he claims to be “agnostic” about gambling -- kind of an odd word choice, there -- Fagan believes any sort of legislation that would facilitate gambling would open up a host of potential problems for the U.S.

Finally Annie Duke will testify -- really the only one of the five witnesses who will speak unreservedly in favor of Frank’s bill. Duke’s testimony includes points about individual liberty and poker’s place in American history. She also attempts to characterize H.R. 2267 not as “a bill that expands Internet gambling in America," but one that "simply provides the appropriate government safeguards to an industry that currently exists and continues to grow.” By the way, Grange95 offers some insightful commentary about Duke’s current status as a spokesperson for online poker.

It looks like there may be a Q-and-A after the five witnesses speak, which could prove interesting. Frank’s bill currently has 69 co-sponsors, but I’m not too enthusiastic about it attracting many more following today’s hearing.

Nor am I really all that excited about H.R. 2267 generally speaking. Before the UIGEA was finalized and compliance made mandatory, I liked the way these hearings about other bills provided occasions to demonstrate how flawed the UIGEA was, hoping that perhaps that a consequence could be that the law would never be fully enforced.

But now that time has passed. And while the UIGEA remains somewhat impotent, that could change -- very quickly, I’d say.

So I’ll be watching this afternoon. Doesn’t seem like it’ll be as interesting as a WSOP final table, but it will be curious to see what sort of hands get played and in which direction the chips appear to go.

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2 Comments:

Blogger BWoP said...

Shamus,

The one thing that I noticed this summer is that an awful lot of players seemed to be scrambling to convert online $$ into real $$. One friend had a couple of checks bounce just before his trip to LV.

7/21/2010 4:00 PM  
Blogger Yorkshire Pud said...

Whilst the UIGEA is a royal pain in the ass, I can only imagine how poker will be damaged if the US government decide to regulate the industry in the way the French have done recently

7/22/2010 3:55 PM  

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