Gamblers Betting on Frank to Overturn Law
GAMBLING
New Bedford Standard Times
Matthew Huisman
Boston University Washington News Service
April 30, 2008
WASHINGTON – The odds may not be in his favor, but Rep. Barney Frank, D-Mass., has gained a valuable ally in his fight to overturn a 2006 law banning online gambling. Poker Players Alliance, a grassroots organization fighting for poker players’ rights, has put its chips on Rep. Frank’s proposal.
With more than one million members, the alliance in mid April began actively lobbying Congress. Members have flooded congressional offices with more than 17,000 letters in the past month, attended town hall meetings in districts and flown to Washington to meet with lawmakers, according to John Pappas, executive director of the alliance. There are 25,000 members in Massachusetts alone.
The alliance is betting on Rep. Frank’s new bill, which would negate the Unlawful Internet Gambling Enforcement Act of 2006, a law that prohibits the transfer of funds between online gambling sites and financial institutions. Exceptions to the rule include online lotteries, fantasy sports and horse racing.
Introduced in early April by Rep. Frank and Rep. Ron Paul, R-Texas, the bill would prevent the Federal Reserve Board and the Treasury Department from implementing regulations for the enforcement of the 2006 law. Since the act did not outline methods of enforcement, the responsibility falls on the Fed and Treasury.
Guidelines proposed in October of last year would require banks and financial institutions to identify and block transfers from unlawful Internet gambling sites, putting them in a law enforcement position.
According to Treasury spokeswoman Jennifer Zuccarelli, the two agencies hope to have a final rule in place by the end of the year, assuming Mr. Frank’s latest bill does not pass. The bill, which has 11 cosponsors, has been referred to the Financial Services Committee, of which Rep. Frank is chairman.
“The ban on Internet gambling infringes upon two freedoms that are important to many Americans: the ability to do with their money as they see fit and the freedom from government interference with the Internet,” Rep. Frank said in a statement.
Rep. Frank last year introduced legislation calling for federal regulation and licensing of Internet gambling and online betting. That bill, still in committee, would take financial institutions out of an enforcement role. Last year’s bill differs from his latest bill because the older legislation includes guidelines for regulation.
“They put a tremendous amount of pressure on the banks with no way to enforce it,” Rep. Frank said.
Because of the lack of technology to determine the nature of bank transactions, it is hard to determine if gambling is involved.
“It’s very difficult to separate out which transactions are retail and which are gambling,” said American Bankers Association spokesman Peter Garuccio. “You cannot tell based on a merchant’s name what the transaction is.”
Mr. Garuccio used the example of an online gambling site that might also sell T-shirts. For a bank to differentiate between a gambling transaction and one for a T-shirt by the same vendor would be nearly impossible, he said.
Last month, a House Financial Services subcommittee held a hearing on the proposed rules for enforcement of the 2006 act. Bank representatives and federal officials testified about the potential problems with the proposal.
“The statute as enacted and the regulations as proposed are both burdensome and unworkable and are unlikely to result in stopping illegal Internet gambling,” Wayne Abernathy, executive director of the American Bankers Association, testified at the hearing.
Mr. Abernathy said the burden placed on financial institutions by the 2006 act imposes “an unprecedented delegation of governmental responsibility with no prospect of practical success.”
Some supporters of Rep. Frank’s latest bill think it is too inclusive, which could hurt its chance of passing. Charles Nesson, a professor at Harvard Law School and founder of the Global Poker Strategic Thinking Society, said Mr. Frank should focus primarily on poker as opposed to all forms of online gambling.
“Strategically speaking, to take on the whole thing is more difficult than focusing on online poker,” Mr. Nesson said. “He’s got a libertarian principle he’s after.”
Mr. Nesson advocates poker use for educational and entertainment purposes because he maintains it is a game of skill rather than a game of chance.
“Adults who engage in a game of skill like poker should be allowed to do so,” the Poker Players Alliance’s Mr. Pappas said. “Just because it moved from the kitchen table to the computer table, doesn’t mean it should be illegal.”
Mr. Pappas said the alliance supports Rep. Frank’s bill but is primarily focused on the rights of poker players as opposed to all online gamblers.
In Massachusetts, the gambling debate has taken a different turn. Gov. Deval Patrick proposed legislation in October that would have provided for three casino gambling locations in the state. The bill, which the House voted down in late March, also included a clause to ban all forms of Internet gambling.
The proposal drew the attention of the Global Poker Strategic Thinking Society, which fought against the bill’s inclusion of poker in the online gambling ban. Mr. Nesson said he did not know why the clause was placed in a bill that so strongly advocated other forms of gambling. He said the state should approach poker as a learning tool.
A February 2007 telephone poll by the Center for Policy Analysis at the University of Massachusetts Dartmouth showed that four percent of Massachusetts residents participated in some form of online gambling during the previous year. That number is almost twice the national average, but not the largest in New England. Seven percent of New Hampshire residents gambled online, according to Clyde Barrow, director of the center.
Despite the popularity of poker, not everyone is buying into Rep. Frank’s proposal to allow Internet gambling. The National Coalition Against Legalized Gambling, a non-profit organization that opposes the bill, maintains that online gambling brings an addictive product into people’s homes. The coalition supports a ban on all forms of gambling, including online poker.
“In these economic times, the people that sponsor this want people to gamble more,” said Thomas Grey, spokesman for the coalition. “Wouldn’t it be better to work and save and invest your money at this point?”
The coalition and other organizations like Focus on the Family, a Christian organization that promotes conservative public policy, insist the Internet and the lack of adequate age-verification technology would give children easy access to online gambling.
“The strength of Internet gambling is that its secrecy and anonymity allow its accessibility,” said Chad Hills, the analyst for gambling research and policy at Focus on the Family. “Nobody has to know that you are even playing.”
Mr. Hills said his organization opposes all forms of online gambling and any attempt to regulate it because the Internet is impossible to control.
“You can’t stop it, so how do you regulate it?” Mr. Hills said. “How do we know playing poker isn’t going directly to fund a group of terrorists who are going to come in and bomb a large population?”
Mr. Pappas argues that improved age-verification technology coupled with government regulation would allow for a safer and less problematic solution as opposed to outright prohibition.
“The whole idea that we can achieve some sort of a prohibition is false,” Mr. Pappas said. “People have just found other ways to fund their accounts.”
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