Poker Articles

To say that the 2008 calendar year has been a busy one on the legislative front would be a huge understatement. The legislative wheels in the United States have been churning, with groups like the 1.2 million member strong Poker Players Alliance (PPA) leading the charge. The 2008 Congressional session has come to a close. Now, a new Congress will convene in January, and President-elect Barack Obama will take the oath of office on the 20th. Let’s take a look at a few of the highlights from 2008 and assess where the industry in the United States sits heading into the New Year.

After a hearing was held in the House Financial Services Committee, Congressmen Barney Frank (D-MA, pictured at left) and Ron Paul (R-TX) teamed up to introduce HR 5767, which would have clarified what is legal and illegal under the Unlawful Internet Gambling Enforcement Act (UIGEA). In June, the measure was defeated in Committee when an effort led by Congressman Spencer Bachus (R-AL) succeeded in halting the new bill from seeing the light of day. An amendment to the bill by Congressman Peter King (R-NY) was defeated by virtue of a 32-32 tie vote. The bill itself was shot down after an unfavorable oral vote.

The following month, the internet gambling pot was stirred again, as Congressman Jim McDermott (D-WA) introduced HR 6501, the Investing in our Human Resources Act, which would have prescribed up to $40 billion over a ten-year period to individuals currently or formerly in foster care as well as those working in declining job markets. The money for these programs would have been derived from taxing internet gambling companies. It was one of the first attempts to show the world the beneficial side of our fair industry. The revenue figure came after a study by PricewaterhouseCoopers was undertaken to examine the potential impact of taxing online casinos, poker rooms, and sports books.

In late July, it was revealed that Congresswoman Shelley Berkley’s (D-NV, pictured at right) Internet Gambling Study Bill just missed being marked up in Committee. The piece of legislation, HR 2140, would have examined the growth of the industry as well as the impact of the two year-old UIGEA. It fell by the wayside due to the House Judiciary Committee spending a considerable amount of time discussing the future of Karl Rove, a former adviser to U.S. President George W. Bush; Rove ultimately resigned.

Around the same time, Congressman Pete Sessions (R-TX), a colleague of Paul’s, jumped into the fray and introduced HR 6663, the Unlawful Internet Gambling Enforcement Clarification and Implementation Act. The bill ended the 2008 Congressional session with five co-sponsors and directed the enforcement of the UIGEA to focus on online sports betting. Interestingly, the PPA came out in direct opposition to the bill due in part to the following language that seemed to complicate online poker’s legal status: “To date, all Federal Internet gambling prosecutions have involved sports betting, creating a lack of authoritative court decisions on the applicability of other federal criminal statutes to internet poker and casino-style gambling.”

In September, the legislative environment took center stage as Frank made his second stand against the UIGEA. This time, the Payments System Protection Act took the form of HR 6870. Mid-month, Frank was successful, pushing the bill through the House Financial Services Committee by a 30-19 vote. The opposition didn’t go down without a fight, however. The bill was initially approved by an oral vote. However, Bachus then asked for a roll call vote, which took place after a recess that lasted several hours. HR 6870 called for a laundry list of legal and illegal activities under the UIGEA to be drawn up. Its purpose was to provide guidance for the fledgling financial industry in enforcing the 2006 law. In order to decipher what was acceptable, banks and other institutions would be forced to muddle through contradicting State and Federal laws.

For a few moments, it seemed as if online poker would be formally addressed just two years after the UIGEA flipped the industry upside down. However, the financial services industry would soon be faced with one of the largest economic downturns in U.S. history, rivaling that of the Great Depression of the 1920s. The slump crushed what momentum online poker had at the end of the 2008 calendar year, as lawmakers instead debated over multi-billion dollar bailouts of the financial services and auto industries.

Despite the larger “big picture” issues, the regulations of the UIGEA were approved in November as part of “midnight rule making” by the Bush Administration. The rules require compliance with the UIGEA by December 1st, 2009. What effect they will have on the industry is unknown. The new rules rely on due diligence between banks and merchants in order to deduce if a payment processor is engaged in illegal internet gambling. Whether Obama will try to overturn the last-minute rules also remains to be seen.

In the last few weeks, the industry has also reacted to the news that Party Gaming Co-Founder Anurag Dikshit admitted to violating the Wire Act of 1961. He remains a 27% owner of the company, which owns and operates PartyPoker. Dikshit agreed to pay U.S. authorities $300 million for soliciting U.S. customers prior to October of 2006 and now faces potential jail time. However, Party Gaming’s stock has mushroomed as a result, as potential legal struggles between the company and the United States Government may be alleviated in the process.

All legislation in Congress that was not passed during the 2008 calendar year is now moot. Instead, lawmakers making their way to Washington in 2009 may ultimately decide the fate of online poker. You can rest assured that we’ll keep you posted in the New Year right here on PocketFives.com. Check out the Poker Legislation forum to keep yourself up to date on the very latest from Capitol Hill.