Monday, November 20, 2006

The Poker Players Alliance and executives for the American Gaming
Association (AGA) say they are hopeful that the recent political changes in
the U.S. Congress will help them overturn the Unlawful Internet Gambling
Enforcement Act of 2006 (UIGEA). You may recall how the UIGEA was appended
onto to the sure-to-be-passed Safe Port Bill when most Senators had already
cast their votes and left, in the final hours before the
Republican-controlled Congress adjourned for mid-term elections. The UIGEA,
while not making online poker illegal, did made it illegal for banks and
financial institutions to process transactions for online gambling sites
from U.S. customers when it was signed into law on October 13. Regulations
that banks need to comply with have yet to be defined. A Government board
has until July 2007 to define them. AGA President Frank Fahrenkopf said the
AGA previously opposed online gambling, saying, "Our policy changed back in
April when we took a position that we thought the best way to go was to have
an independent commission look at it." Many analysts around that timeframe
noted how online gambling actually lead to previously hesitant players
coming to the physical casinos, swelling the number of overall casino
visitors, which likely helped change AGA's perspective. So the AGA board of
directors will meet December 6, said Fahrenkopf, to consider whether "to
support legislation in the new Congress calling for an independent study of
Internet gambling to see if it can be properly regulated, controlled, taxed
and licensed here in the United States." Fahrenkopf pointed out, "My guess
is that they are going to say let's go ahead and do it." This past week
Terry Lanni, chief executive of MGM Mirage who is an AGA board member, said
the UIGEA is "ridiculous" because it was signed into law Oct. 13 as part of
a larger port security bill -- and because it exempted horse races and
lotteries, and online bets placed while on American Indian land. Nevada
Representatives Jon Porter and Shelly Berkley had previously introduced a
bill to create a Congressional Commission to study Internet Gaming this past
May. But the bill died. Noteworthy is that both Porter and Berkley were
re-elected last week.

In contrast to the prior Congressional Commission proposed, if the AGA votes
for a study it has already said it prefers an independent commission such as
the National Academy of Sciences to do the study, noted Fahrenkopf, so
results are free from the influence of lobbyists.

AGA's board includes CEOs from some the biggest live casinos in Las Vegas,
such as Boyd Gaming CEO William Boyd, Harrah's Entertainment CEO Gary
Loveman, MGM Mirage CEO Terri Lanni mentioned above, and Wynn Resorts CEO
Stephen Wynn, amongst others.

Many bloggers have remarked if these well known casinos launch their own
online gambling sites then a large majority of players will play at them
because of brand recognition and huge marketing budgets, causing yet another
re-alignment in the online gambling industry.

In an interview with Reuters news service, Fahrenkopf also remarked how the
stated goal of the UIGEA was to protect American citizens. Instead, he
noted, it caused many legitimate and responsible operators to pull out of
the U.S. opening the way for unregulated companies to fill the void, since
most US players were likely to continue gambling online.

He did not go as far as many others have to call the legislation Prohibition
II, as did Pulitzer Prize-winning writer George F. Will in Newsweek's Oct
23rd edition and U.K. culture secretary, Tessa Jowell.

President of the 120,000-member Poker Players Alliance (PPA), Michael
Bolcerek, said that results of the Congressional election have emboldened
the PPA.

"Our members and other poker players went to the polls. They influenced the
federal election," he said. "In the next 12 months we're confident that
we'll get a study commission bill. We think an exemption [for online poker]
is in order, as well."

Legal expert professor I. Nelson Rose, of the Whittier Law School, harshly
criticized the UIGEA, saying how it is confusing and contradictory with all
its exemptions, and noting how a portion of the bill even sanctions Internet
betting conducted within states and tribal lands.

"It's a public embarrassment...it's a mess," said Rose. "Eventually I think
they'll get Congress to change the law to do for Internet poker exactly what
they did for Internet horse racing. It's an exemption but (based on) states'
rights."