Tuesday, May 03, 2011

House Judiciary Committee Discusses Online Poker With U.S. Attorney General Holder

U.S. Attorney General Eric Holder[Cliffs: In a hearing with U.S. Attorney General Eric Holder, three different members of the House Judiciary Committee brought up poker and/or online poker, a couple of whom pointedly suggested the DOJ should focus more on enforcing laws against significant crimes than bother with things like the UIGEA. Along the way, Holder mentioned in passing that he wasn’t qualified to say whether “poker is a game of chance or skill.”]

There was a hearing this morning in which U.S. Attorney General Eric Holder took questions before the House Judiciary Committee. Amid the wide range of topics discussed, online poker came up not once but three times during the hearing, no doubt thanks to the unsealing of the indictment/civil complaint against the founders of PokerStars, Full Tilt Poker, Absolute Poker/UB, and other individuals involved with payment processors by the DOJ on April 15.

What follows is a summary and partial transcription of what was said at the hearing with regard to online poker. And a smidge of commentary, too, though I’m mostly just interested here in sharing what was said.

Rep. Bob Goodlatte (R-VA) -- one of the chief architects and proponents of what eventually became the Unlawful Internet Gambling Enforcement Act of 2006 -- had the floor early on. Thought for a moment that something re: “Black Friday” might arise there, as he asked about cybercrime and domain seizures, though nothing did.

Rather, it was Rep. Bobby Scott (D-VA) who would be the first to bring up poker, asking a question of Holder about whether or not he believed poker was a game of skill or chance. Scott coupled that question with a number of others, noting that he was asking them “for the record” and didn't necessarily expect answers to all. Those other questions concerned things like combating identity theft, reentry (of the formerly incarcerated), and providing adequate support to federal prisons.

When responding, Holder literally waved his hand before him while noting he hadn't the time to address the various matters Scott had raised. Interestingly, Holder did offer a comment -- albeit jokingly -- in response to the poker-related question:

“I'd be more than glad to answer all of those questions except for the one about whether poker is a game of chance or skill,” said Holder with a grin. “That's beyond my capabilities.”

The next member of the committee to speak, Rep. Lungren (R-CA), then joked “According to ESPN, it’s a sport,” a line that elicited some chuckles.

Though delivered in a light-hearted, joking way, Holder’s refusal to comment on poker’s status as a “game based on chance” (to use the UIGEA’s language) seems somewhat noteworthy, given the way the UIGEA itself declines to specify whether or not poker (or any activity, for that matter) meets that criteria and thus is to be regarded as “unlawful internet gambling.” (Then again, like the UIGEA, Holder is keeping out of it, leaving it to the states to decide the question.)

In any case, a much more significant reference to poker (and online poker) arose later in the hearing, thanks to Rep. Steve Cohen (D-TN).

Cohen began his remarks asking Holder about his own poker playing, and whether or not he'd ever played with President Obama (whom we’ve all read was an avid player when he was in Congress). Holder said he had not. Cohen then alluded back to Holder’s having declined to comment on the skill/luck question before.

“Do you think Phil Ivey’s just lucky?” asked Cohen. “He’s the world’s greatest poker player. Do you think he’s just lucky… he and Annie Duke… or do you think some skill is involved?”

“I’m not sure I know who Phil Ivey is,” began Holder, “but I’m sure there was some degree of skill involved... I’m not a poker player myself.”

Holder’s answer here struck me as a little disingenuous, perhaps in a couple of ways. I suppose it’s possible he doesn’t know who Ivey is. I’d think he’d be somewhat familiar with Full Tilt Poker as a targeted site in the April 15 indictment/civil complaint, though I guess he wouldn’t have to know about Ivey. But Holder has stated before that he did in fact play poker, in particular having played in a regular game with current U.S. Deputy Attorney James Cole. Not sure why he’d say he wasn’t a player today.

“You’re not?” said Cohen, sounding a little surprised. “Well, okay. I didn’t realize that. But you might become one, because it is one of the most rapidly increasing, popular activities in America. It’s been going on for years. People used to play it at the tables, like in the kitchen…. Now they do it on the internet....”

Cohen went on to express amazement at the many things we now do over the internet (pay bills, etc.), comments which we’d soon see were part of a more general observation about how times change -- and that some laws should therefore change as well.

“Do you think we really ought to be spending a lot of time in trying to deal with internet poker, or do you think we should try to find a way to make it legal, to tax it, and to bring revenue in to help pay for things that [others] want to take out of your budget?” asked Cohen.

“We have to enforce the law as it exists, and there are laws on the books with regard to internet gambling that we have to enforce,” answered Holder. “We recently announced an action in the Southern District of New York. It is for, I guess, Congress to decide what the law’s going to be, and then we will enforce those laws.”

Rep. Steve Cohen (D-TN)“I agree with you, generally,” said Cohen. “I mean I understand that there were civil rights laws in the ’40s and ’50s that the government had to defend and that maybe 10, 12, 15 years later -- after Thurgood Marshall's arguments and the [Supreme] Court’s agreement -- that maybe they weren’t valid laws and the law changed because society changed and people's thinking changed. Same thing [could be said] with DOMA [the Defense of Marriage Act passed in 1996 defining marriage as between a man and a woman]. There are certain laws and things change and even though it’s the law Congress passed, there’s a change and a ‘cultural lag’ and people's perception of it changes.”

A little circuitous in the wording, but Cohen’s point is communicated well enough, I think. Laws written at one time aren’t always going to remain as needful or relevant later on.

“Some of the same people that gave us DOMA gave us the laws against internet poker... that ‘family values’ crowd,” continued Cohen. The representative made air quotes to indicate his distance, ideologically speaking, from the legislators to whom he was referring.

“They gave us those laws, but sometimes they might not be the right laws.... You could be processing... obscenity cases and some of the people you’ve otherwise got concerned with some of these laws concerning internet poker.” Again, the wording is a little hard to follow, but the point is that Cohen wondered if perhaps the U.S. Attorney General’s limited resources were being misused in the effort to enforce things like the UIGEA rather than pursue higher priorities.

“Don't you think that maybe in the priority range that internet poker would be down at the bottom… beneath obscenity, and hardcore pornography, and child rape, and things like that?” asked Cohen. I was a little disappointed that was where Cohen ended up, i.e., with a fairly loaded question the answer to which was obvious, rather than a more pointed one about the UIGEA in particular. Nonetheless, Holder did in his response revisit the Black Friday indictments.

“There are a whole variety of things that we have responsibility for,” said Holder. “The case that we brought, for instance, in the Southern District of New York involved pretty substantial amounts of money and big financial institutions, and I think those cases are appropriate. There might be some other cases in this area that aren’t really federal cases because they aren’t really large enough and the degree of harm is not serious enough. Even within a certain class of cases, certain ones are going to be worthy of our attention and some will not be.”

I could be wrong, but that latter statement seems to indicate a sentiment suggesting that the smaller, remaining U.S.-facing sites may well be okay to continue -- as long as they don’t become too big, that is.

Cohen had a follow-up: “Did the Southern District coordinate with the criminal division or you particularly about the policies of your office which have been kind of in flux underlying the decision to effectively criminalize poker [by] going after these folks?” Yes, answered Holder, there was some coordination with his office “in the formulation of the case, though the primary responsibility was in New York.”

Noting that he was running out of time -- and that he had brought the whole subject up because “freedom’s a big issue with me” -- Cohen then asked if “the Department [of Justice is] saying they were asking for sentences that are maybe on the lower range for those people that were indicted before the law changed?”

I’ll be honest, I’m not quite sure what Cohen is referring to exactly here, although it sounds like a reference to all of the sites’ having served U.S. customers prior to the enactment of the UIGEA.

“What I told our prosecutors is I've given them discretion, so that they ask for sentences that are appropriate looking at the facts of each individual case” said Holder. “The Department… is going to take a position with regard to whether or not the law should be made retroactive, before the sentencing commission. But while we are still in that process I’ve asked my prosecutors to make sure that we only ask for sentences that are appropriate and consistent with the facts.”

Thus concluded Cohen’s poker-related questions. Following a recess, a third member of the House committee brought up the idea of licensing and regulating online poker, more as a comment than a question. At the end of her five minutes, Linda Sánchez (D-CA) referred to how large online poker had become in the U.S. She then referred to how other countries had dealt with similar growth of the industry.

“There has been successful regulation of online poker playing in places like Europe and Australia,” said Sánchez. “I happen to be a strong supporter of legislation that would legalize online gambling in this country and tax it reasonably and efficiently and make sure that people were not being cheated out of their money. I’m sure that you can appreciate, again, that in challenging economic times with states experiencing deep budget shortfalls and the federal government trying to find a way to get its fiscal house in order, that is one of the areas where we could potentially increase revenue for Congress.”

When listening to this, my first thought was that the representative’s argument was perhaps better suited for legislators than for someone charged with enforcing laws. But then she added advice more practically directed to the Attorney General.

“So I’m hoping that's an area that you’ll look at again in terms of where you dedicate your precious resources,” said Sánchez. “I think time would probably be better spent dealing with bigger and more impactful, serious, violent crimes, for example, than trying to interrupt this industry which, as I said, has been efficiently regulated in other countries.”

Soon after the hearing adjourned, about four hours after it began.

Have to say I was surprised online poker received the attention it did today. Not sure what the focus on online poker at today’s hearing really means in terms of practical consequences going forward, but I think it’s probably safe to say it was a good thing, overall, that it came up at all.

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Blogger Nimh said...

"I could be wrong, but that latter statement seems to indicate a sentiment suggesting that the smaller, remaining U.S.-facing sites may well be okay to continue -- as long as they don’t become too big, that is."

This comment seems consistent with the statement that part of the reason the sites were targeted was because they created a "financial black hole," with huge amounts of money moving around that couldn't be traced. Small sites don't have this problem, obviously; Merge in particular seems to rely primarily on Western Union to get money on and off the site.

5/03/2011 4:58 PM  

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