Friday, January 25, 2008

Do We Want Online Poker Regulated? (2 of 2)

 In that Rounder’s Radio podcast I mentioned last post, Preston Oade listed a number of reasons why he believes Americans who play online poker should not be too eager to see bills like Barney Frank’s Internet Gambling Regulation and Enforcement Act (H.R. 2046) become law. I shared a few of those reasons yesterday -- go listen to the show if you want to hear the full argument.

As I said last time, I largely concur with Oade’s perspective on these bills. I also share his lack of enthusiasm for the Poker Players Alliance seemingly devoting almost all of its energies toward lobbying in favor of these bills. However, I don’t agree with everything Oade said about online poker during the show.

As he described his disfavor with the proposed IGREA and the other bills, Oade explained “I think what most online players want is the same thing I want. I want to be able to play online every day. And I don’t want it to be inconvenient. And I don’t want it to be expensive. And I don’t want to have weird things happening to me. And that’s what I want and that’s what I think most poker players want . . . . And right now that’s what we’ve got.”

All fine, until that last line.

Referring to the ease with which he has recently been able to fund his Full Tilt Poker account, Oade characterized online poker as currently satisfying all of those desires he had listed. (“If it ain't broke, don't fix it,” says Oade.) Sure, he can play every day, at least on some sites. It is convenient for him, I would imagine. And probably not too expensive, although that depends in part upon the method he tries to use to transfer funds to and from sites and the policies of the sites regarding withdrawal fees, etc.

But, come on. There have been a lot of “weird things” happening lately. And the fact that online poker’s efforts to self-regulate are not terribly reliable make it all the more likely they will continue to occur as we move forward.

The truth is, almost all online poker sites are currently regulated, although in a somewhat haphazard, patchwork way. And when we’re talking about sites that accept U.S.-players’ bets, we’re talking about what is essentially a voluntary system. Since there is no federal regulation of online gambling in the U.S., when I log on to an online poker site I’m counting on that site having some sort of voluntarily-accepted, non-U.S.-based oversight on its operations.

There are a couple of ways most online poker sites voluntarily regulate themselves. One is to be regulated by the governments of countries who do have an IGREA-like law regarding online gambling. There are some countries which in fact grant licenses to online poker sites -- Gibraltar, Malta, and the United Kingdom, to name a few. A poker site does not have to be physically located in the licensing country. For example, Bodog, headquartered in Antigua, is licensed by the U.K. In order to receive such a license, the site has to abide by a number of regulations, a lot of which resemble those broadly outlined in Frank’s proposed H.R. 2046.

The other way online poker sites can prove to customers they have some sort of oversight regulating their operations is to get a license from an independent group such as the Kahnawake Gaming Commission. Again, to get such a license, the site has to abide by that group’s stated regulations. For example, the Kahnawake Gaming Commission has a long list of items -- described as “Regulations Concerning Interactive Gaming” -- which a given online gambling outfit must adhere to in order to receive the KGC seal of approval.

While the Kahnawake Gaming Commission is not the only organization that grants licenses to online gambling sites, it is by far the most popular licensing organization. Today the KGC has listed over 450 such sites among their “permit holders.”

Of course, this kind of voluntarily-invited regulation is only meaningful if the licensing body is truly independent of the sites and trustworthy. The KGC’s response to the Absolute Poker cheating scandal indicates in obvious, bold strokes just how lacking in credibility such a system can be.

Life's a BluffThe KGC’s report of the Gaming Associates’ recently-completed audit of Absolute Poker visibly demonstrates the problems with trusting the KGC to regulate online sites. For one, the report is incomplete -- as I wrote about a couple of weeks ago, it clearly does not identify all of the regulations Absolute Poker failed to follow. (See Lou Krieger’s recent post for other ways the report falls short.). Secondly, the sanctions the KGC imposes are largely impotent. And, as Frank Frisina’s recent Life’s a Bluff cartoon illustrates, there are serious, unanswered questions about KGC’s independence from Absolute Poker. (See cartoon at left -- and when yr done here click the pic to visit “Life's a Bluff.”)

All of which is to say, I have little assurance I won’t “have weird things happening to me” when I play on a site whose only license comes from the Kahnawake Gaming Commission. As it happens, all three of the sites I play on at present -- PokerStars, Full Tilt Poker, and Bodog -- are licensed by the KGC. PokerStars is additionally a member of the Interactive Gaming Council, a group that does function quite like a regulatory body. (Read more here.) As I mentioned, Bodog is additionally licenced by the U.K. (Read about that here.)

And as for Full Tilt . . .

My query to Full Tilt PokerErm. Should I be worried? Not saying I’m ready to leave Full Tilt, but it sure would be a hell of a lot more reassuring to know that if any “weird things” did happen to me, the site answered to someone besides the KGC.

(I’m not alone in having reservations about the KGC. The U.K. Gambling Commission left them off their “white list”, meaning none of them KGC-only licensed sites can advertise in the U.K.)

We’re between a rock and a hard place. We don’t want the feds to regulate online poker, but the present system of voluntarily-accepted regulation isn’t working very well, either. What, then, can be done?



Anonymous Anonymous said...

I agree with you, KGC’s report is a f. joke!!

1/25/2008 10:28 PM  
Blogger Ignatious said...

i don't even know what to say.

i'm beyond words over this.

1/26/2008 6:26 PM  
Blogger OhCaptain said...

I find the current system lacking in that it isn't very convenient to fund a poker site. The only reliable method I have takes 10 business days for the money to leave my account and make its way to the online host.


Regulation is an interesting subject. The more eyes in the system, the more open it becomes. But even that isn't fool proof.

I have no answers. I just miss the fishes.

1/27/2008 10:10 PM  
Blogger Unknown said...

It would've been interesting to me if Mr. Oade would've told all of the listeners which bank's credit card he uses, because I haven't heard of anyone funding a poker site through a credit card deposit in the last 3 years.

The elephant in the room that people keep squeezing past or barely mentioning when discussing regulation of online poker is taxation. Mr. Oade mentioned that what he's worried about is having a winning session online and the poker site being required to withhold tax on those winnings, causing him to have to file his return to get it back (if he has losses to offset, etc.). But I'm guessing the real reason nobody wants regulated taxation is that lots of people would have to start REPORTING income they otherwise haven't in the past. If the PPA has a million members, and 400,000 of those are winning players of differing levels, I'd bet that less than 20,000 of those report and thus are taxed on their total net winnings. If regs made that number jump to 400,000, every winner would suddenly be making between 10% and x% less, where x is the sum of the highest federal tax rate, self-employment tax, and state tax. Could easily be >50% in a state like California.

Sorry for the long response, just thought it's really the main point... not safety or trust.

1/28/2008 2:42 PM  
Blogger Short-Stacked Shamus said...

Yr right, Kelly. I think it is the case that a lot of players are in fact willing to give up safety/trust in order to avoid paying the taxman. (I.e., to risk being cheated in order to cheat.)

1/28/2008 5:00 PM  
Blogger OhCaptain said...

OPSB - Using credit to do most anything is a bad idea. I try and talk young people out of buying cars on credit all the time. Accumulating assets or services with future earnings is just bad money management.

That being said, linking directly to my checking account posses risks far greater to me.

Yes, a few bad apples are being dragged out to show how bad online poker is. But this nanny government mentality isn't helping. Compulsive gamblers will find ways around the law.

To me, there is a huge difference between gambling on horse and playing poker. I rarely gamble. I also rarely wager money on just one hand of poker. That's just ridiculous.

While you say these activities are not guranteed to produce a financial return, there are many of us in the poker community that actually do track our ROI. We play poker, are good at it, and make a profit in the process. No single hand in poker is determined, but solid, skilled play over the long run will be profitable. I've been playing with other people's money for years.

I just wish it wasn't such a huge pain in the backside to move the money around. Credit cards are just the modern means for us mortals to move money from one spot to another. I carry no balances on my credit cards and only use them for their convenience.

2/01/2008 9:59 AM  

Post a Comment

<< Home

Newer Posts
Older Posts

Copyright © 2006-2021 Hard-Boiled Poker.
All Rights Reserved.