Zombie Bill Dies, UIGEA Monster Lives

A running joke over the last week-and-a-half among some observers has been that the “online poker bill” proposed by Senator Harry Reid (D-NV) -- prematurely pronounced dead several times -- somehow possesses “zombie”-like qualities in its refusal once and for all to meet its end.

In truth, though, it is the Unlawful Internet Gambling Enforcement Act of 2006 that is the real monster here. And unlike Reid’s bill, which apparently has finally been cast aside as far as the current Congress is concerned, the UIGEA really won’t die, despite our most earnest wishes for it to do so.

Last night Andrew Feldman posted an article over on the ESPN Poker page announcing that “multiple sources” had confirmed there would be no more attempts made to attach Sen. Harry Reid’s “Prohibition of Internet Gaming, Internet Poker Regulation and UIGEA Enforcement Act” to any of the legislation being considered during this current “lame-duck” session of Congress.

One of Feldman’s sources for the news was Poker Players Alliance Executive Director John Pappas, who expressed disappointment that the bill would not be presently pushed through, referring to the bill’s opponents as having “their heads fully in the sand” when it came to the need for and significant benefits to be had from licensing and regulating online poker in the U.S.

Looking ahead, then, to the 112th Congress which will begin its work on January 3, 2011, prospects for this particular bill appear quite dim. So does the likelihood of any other legislation designed to promote online gambling in the U.S. (such as the failed Barney Frank-sponsored bills of the past few years). Nor should one expect from the upcoming Congress any serious legislative attempts to curb or repeal the UIGEA, either.

That’s because when the new Congress takes the Hill, Republicans will enjoy a majority in the House of Representatives, which in turn means that Rep. Spencer Bachus (R-AL) will be taking over as the chairman of the powerful House Financial Services Committee, assuming the seat previously occupied by Rep. Frank (D-MA). This is the committee from which one should expect bills like Frank’s previous ones to come -- that is, bills designed either to stop the UIGEA or to introduce licensing and regulatory schemes for online gambling in the U.S. which would render the UIGEA insignificant.

Bachus, most certainly part of the group of politicians Pappas was referencing with his “heads fully in the sand” remark, staunchly opposes all forms of gambling, online or elsewhere. I think it is safe to assume he will therefore make it difficult if not impossible for his committee to consider with any seriousness any bills that might be viewed as promoting gambling, poker included.

When I first wrote here about the “Reid bill” last Monday (12/6/10), I concluded that I was neither all that excited about its particular vision for online poker in the U.S., nor did I think much about its chances to become law.

Over the last 10 days I began to understand and appreciate some of the arguments being made by those who supported the Reid bill. But really, the greatest argument for the Reid bill always seemed to me to have had little to do with what it was actually proposing, but rather the fact that if it were to become law we online poker players would no longer have to worry as much about the UIGEA.

That is to say, I understand the idea that we’ll basically take anything other than what we’ve got, this horrendous (probably unconstitutional) law, a law which is starting to have greater effect since its full implementation on June 1, 2010, and which will mostly likely continue to do so going forward.

As Andrew “Foucault” Brokos wrote on his Thinking Poker blog last week, the Reid bill was “far from ideal for the professional player, but there [was] no reason to think that we [were] in a position to hold out for something better.” This is true -- in fact, in terms of political bargaining power for such a bill, I never thought Reid had much from which to draw right now, despite being the Senate Majority Leader, let alone what’ll be the case next year.

Considering the prospects of the Reid bill failing to pass, Brokos predicted “things will get very bad in the not-too-distant future.” I’ve no reason to think he’s wrong there, either. The UIGEA, that law that blocks U.S. banks and financial transaction providers from allowing transactions with online gambling sites (even if they are non-U.S.), remains free to continue with its destructive ways.

And now we are in a situation where there is no legislative response imminent. So what can we U.S. players hope for?

Seems to me all that’s left to look forward to at the moment would be a successful challenge to the UIGEA in the courts -- that is, the overturning of the law as indeed unconstitutional, something that obviously would be long, long time coming, if it were ever to happen at all.

Such has been tried. The Interactive Media Entertainment and Gaming Association (iMEGA) took a shot, taking the angle that the UIGEA not only should be made “void for vagueness,” but violated things like individuals’ privacy rights and the First Amendment. They received an unfavorable ruling in the U.S. 3rd Circuit Court, though, and lost their appeal, too.

One so-called “silver lining” in that appeals ruling was the court saying that states had priority over the federal government when it came to the business of regulating gambling, including online. So I suppose court battles vs. the UIGEA could be waged on the state level (i.e., rulings that said the federal law couldn’t apply in a particular state because of its stand on online gambling). I’m not entirely sure about that, though.

In any event, I can’t just now envision other ways to prevent the UIGEA from affecting us as we Americans try to make deposits and continue playing on PokerStars, Full Tilt Poker, and other U.S.-facing online poker sites. Not for the next couple of years, anyway.

In other words, it doesn’t look like we are going to sneak the UIGEA out the backdoor via any law-makin’ legerdemain anytime soon. Somebody’s gonna have to fight this sucker heads-up.

The Door is Closing: Hoping for UIGEA Delay

Yesterday on the Two Plus Two forums, a question was asked about “how pivotal are the next 24 hours” when it comes to the possibility that compliance with the finalized regulations for the Unlawful Internet Gambling Enforcement Act of 2006 -- scheduled to begin next Tuesday, December 1 -- will be delayed.

According to Rich “The Engineer” Muny, a member of the Board of Directors of the Poker Players Alliance, “If [the] Treasury decides to delay implementation of the bill, it could be announced tomorrow, or it could go to Monday just as easily.” Indeed, as Muny implies, since the Thanksgiving holiday is upon us, if we don’t hear anything today, then Monday is really the last chance.

It is very difficult for the average shamus to detect the odds of a delay with any precision here. I’ve been reading the forums and other sites, and occasionally see expressions of optimism about the feds stepping in here and extend the deadline. But it is hard to tell from where such optimism comes.

On November 20 (last Friday), an article titled “High Stakes for Online Gamblers” popped up over on the Newsweek blog regarding the impending deadline and the recent request for a delay. The article, by Jeremy Herb, makes reference to an unnamed “Federal Reserve official” saying that a decision regarding delaying compliance had yet to be made.

That’s with just a week-and-a-half to go. Talk about a sweat.

Herb’s article additionally provides a decent overview of the situation, including some background on how the UIGEA came to be and the problems that still exist for banks and other financial institutions with regard to implementation. Herb references that October 1 letter from House Rep. Barney Frank (D-MA) and Rep. Peter King (R-NY) -- also signed by 17 other members of Congress -- asking the Department of Treasury and Federal Reserve “to extend the date of compliance for the final regulations implementing the Unlawful Internet Gambling Enforcement Act (UIGEA) by one year.” The feds do have the power to enact such a delay thanks to something called the Administrative Procedure Act.

He also notes that other November 3 letter, also sent to Timothy Geithner (Secretary of the Treasury) and Ben Bernanke (Chairman of the Federal Reserve) by Senator Jon Kyl (R-AZ) and Rep. Spencer Bachus (R-AL) in which they “strongly oppose” the request made by Frank et al. for an extension, arguing that “there is no justification for delaying the compliance deadline of the UIGEA regulations.”

Among other points made by Kyl and Bachus, they cite the fact that banks have already had nearly a year to ready themselves for compliance, and so should not need any further time in that regard. Also, the pair notes how the “Final Rule was adopted after a lengthy and open rulemaking process,” and that any “‘problems’ [they use the scare quotes] raised by certain interest groups are speculative.”

You remember Kyl as one of the first authors of the bill that eventually became the UIGEA, and Bachus as the clown who in House hearings rode a moral high horse while misrepresenting studies about gambling and Full Tilt Poker pro biographies. (If yr curious, here is a post in which I shared some details from Bachus’ mostly deranged contributions to the discussion of online gambling.)

The most infuriating moment in their letter comes at the end when they characterize the delay request as “a blatant attempt to circumvent the democratic process.” O RLY?

Let us think back to how the bill came to be passed by the House and Senate back on September 30, 2006 after being sneakily appended to the Security and Accountability For Every Port Act of 2006. There was zero discussion of the UIGEA part of the bill when the House and Senate hastily voted in favor of the SAFE Port Act in their final session of the 2006 Congress. Then President George W. Bush signed it into law two weeks later. Indeed, thanks in large part to then Senate Majority Leader Bill Frist (R-TN) and Sen. Kyl, their efforts represented as “blatant” an example of legislators working “to circumvent the democratic process” as it gets.

The fact is, both Geithner (top) and Bernanke (bottom) -- the ones to whom the petition to delay compliance has been directed -- have a lot else on their minds at the moment. Geithner’s status as Treasury Secretary is presently more than a little tenuous. Just last week he was explicitly asked to resign by House Rep. Kevin Brady (R-TX). Said Brady to Geithner, “the public has lost all confidence in your ability to do your job. Conservatives agree... liberals agree... it is time for a fresh start.”

Bernanke is also facing a lot of opposition from Congress at the moment. President Obama has already nominated Bernanke for a second four-year term as Federal Reserve Chairman, but Congress has to approve the nomination, and it is expected that their approval -- if it comes -- will not be without a lot of strife. The first hearing on that matter is scheduled for next Thursday, December 3.

So the guys who have to step in here and do something for us... well, one wonders how high a priority the UIGEA really is to them at the moment.

It’s frustrating as hell. We took a big hit early on in this one, and have been playing with a short stack from the get-go. Now the blinds have finally caught up with us. We have to catch a hand to survive.

Here’s hoping we do get the word today of a delay, and thus have something else to be thankful for tomorrow.

(EDIT [added 11/25/09, 10:30 a.m.]: This just in -- the House Financial Services Committee, chaired by Rep. Barney Frank, will be meeting on Thursday, December 3 at 10:00 a.m. to discuss his two bills, the Reasonable Prudence in Regulation Act [H.R. 2266] and the Internet Gambling Regulation, Consumer Protection, and Enforcement Act [H.R. 2267]. Of course the former bill -- which seeks to delay implementation of the UIGEA regs one year -- would apparently be somewhat moot should the regs go into effect on 12/1. Again, hard to read this announcement as an indicator of anything specific with regard to a possible delay. Stay tuned!)

(EDIT [added 11/25/09, 3:25 p.m.): The Engineer is reporting there may be a six-month delay in the implementation of the finalized regs. Read here. Good news, if this turns out to be the case!)