This new bill from our good friends Reps. Paul and Frank, the one that simply makes the UIGEA go away, is the greatest piece of legislation yet on the subject. Sadly, very few poker players are jumping up and down about this. This new bill would save us from burdensome regulation and taxes and bring online poker back to the “good ole days”. Why aren’t more people screaming for this version to pass.

Consistently, when I see an article about the new bill (that fixes all the government intrusion of the old bill), they lump it together with bills that would tax the poker player out of business. We should all be pushing as hard as we can for this new bill and throw the rest in the trash.

The last thing any poker player with an understanding of economics would ever want is a bill that taxes and regulates online gaming. The power to regulate is the power to destroy. It always has been. If we are to save the industry, there is only one answer to the UIGEA –eradicate it completely. The last thing any of us want is a precedent out there that the U. S. government has the right to tax, oversee and regulate internet sites. They are trying to get a foothold on the entire Internet and we must stop it in all forms.

Any organization that supports any other bills (such as the ones that tax and regulate online gaming) is no friend to the online gambler. Instead, they are clearly in the pocket of big Nevada gaming outlets that wish to clear the field of competition and take over the entire industry for themselves. With billions of dollars at stake, one can hardly blame them for trying, but we certainly do not have to hand them the bullets to shoot us with.

We now have a brilliant and safe bill to support. One without controversy. One without nasty side effects. Please call your congressmen and ask them to support the newest bill by [Ron] Paul and [Barney] Frank:

http://thomas.loc.gov/cgi-bin/query/z?c110:H.R.5767:

While you are at it, demand that the poker player’s alliance support this and only this bill to protect us all from the ravages of government. Also, demand that they stop supporting the IGREA – the earlier attempt by Frank that was plagued with licensing requirements and draconian taxation methods. For those of you that wish to pay additional taxes to the Federal Government –feel free.

I am a researcher employed by a leading award winning UK based independent production company, that specialises in factual programmes. We are currently researching the online poker industry, for a forthcoming documentary that will look at the broader issue of the regulation of the online gambling industry.

I am interested in hearing from people who were or are involved in any disputes with their online poker provider. I would be particularly interested to hear from persons involved in the recent incidents at Absolute Poker and Ultimatebet. And I am keen to track down anybody with inside information relating to the recent Betfair heist (not least the player who goes under the name “Chillindude”).

All information received will be treated in the strictest confidence and anonymity will be afforded to anybody that wishes to appear in the programme, but does not wish their identity to be known.

In the first instance, please contact me at the address below, so that we can arrange a meeting.

Email: pbenckendorf (at) web.de

[...] the dark side of online poker – the fact that many players are colluding using devices such as MSN messenger; this is something that the average innocent, who decides to play online poker, is better not knowing about!

-

Is that true, folks? (It sounds like it is.) Let me know in the comment area, and I’ll update this post with fresh inputs.

If it is, then this is frightening.

I previously ranted against the lack of morality and ethics of the new, cocky BetFair Poker chief.

-

UPDATE: Rab Bibater goes deeper…

It is not a question of the Sporting Exchange “helping gangs”. Indeed, collusion between players is something that the company, and all other online poker companies, outlaw. The issue is actually an industry wide phenomena. Many of the players on the online poker sites know each other and they communicate on tools such as MSN. The existence of this channel may lead unscrupulous persons to collude during games to stiff innocent players.

My point vis a vis the “Betfair Heist” is (as I understand it), that it lifts the lid on the fact that players are in communication with each other during games. As I understand it, the first lot of players to uncover the fault in the software, used tools such as MSN to tell their mates, who then came on board and exploited the glitch. If the case were to go to court, it is this practice that would be brought out into the open.

A natural inference of the fact that this channel communication goes on, is that some will exploit the possibility to collude during games. This is not something that would be specific to Betfair, or something that they would wish to be happening.

Hummm… No good.

It’s too bad Europe, Japan, and Canada caved. Here’s hoping little Antigua stays plucky.

A few observations:

First, and most obviously, the U.S. government is so hellbent on policing the online habits of its citizens, it’s willing to pay what will likely be tens of billions of dollars of money in trade reparations—taken from same said U.S. citizens in tax receipts—to maintain its dumb ban on consensual online wagering.

Second, the U.S. could have resolved all of this and preserved its precious gambling prohibition by simply making the prohibition uniform. But that wouldn’t do. Just as important as the ban on Internet gambling itself were the carve-outs for politically-protected special interest groups. Think state lotteries, or the horse racing industry, which has over the years given generously to the campaigns of people like Kentucky Sen. Mitch McConnell and Virginia Rep. Bob Goodlatte, who decry the immorality of online poker while also supporting carveouts for the ponies. So the tens of billions the U.S. government is paying to settle the trade dispute is not only to preserve the gambling ban, it’s to preserve the congressionally-granted monopoly on online wagering for interests with more political clout than poker players.

Finally, U.S. Trade Office flack Gretchen Hamel apparently told Reuters she “isn’t going to get into” the terms of the settlement. Pardon? Is the settlement not being paid with public funds? Aren’t the people who negotiated the settlement employees of the U.S. government? On what grounds does the U.S. Trade Office feel it’s entitled to withhold this information?

Previously: The European Commission dealt a blow to European online gaming companies Monday when it accepted a U.S. offer of openings in other sectors as compensation for closing the U.S. gambling market to foreign firms.

The past twelve months have seen a significant increase in the rate of investment by Betfair, as the company has sought to not only consolidate its position as the world’s leading betting exchange operator, but also, to broaden its product portfolio, so as to create a one-stop-shop solution for online gambling, under the Betfair umbrella.

Betfair’s Australian based betting exchange went live at the end of August 2006; and in recently filed accounts, Betfair’s Australian partner PBL (50%) said that the business continues to build critical mass in its first full year of operations, and that its share of after tax losses for the year was $2 million.

In October 2006, Betfair Poker left CryptoLogic Inc. to move to an in-house technology solution; whilst in July 2007 Betfair announced that it had executed a non-binding Letter of Intent with Harrah’s License Company LLC, an affiliate of Harrah’s Entertainment, Inc which designated Betfair.com as the “Presenting Sponsor” of the World Series of Poker (WSOP) Europe through 2011.

In October 2006, Betfair broadened its product portfolio with the launch of an online casino. This followed the previous launch of Baccarat (launched June 2006), Blackjack (launched November 2005), Jacks or Better, Roulette and Omaha Hi (launched April 2007); all with zero house edge.

At the end of November 2006 Betfair announced that it had acquired Portway Press Limited, the owner of Timeform for somewhere in the region of £15m.

Looking ahead, Betfair will launch its betting exchange service in Italy and will also enter into the area of financial spread betting.

A decline in revenue growth and profitability is anticipated; with profit before tax likely to be down somewhere in the region of 33%.

There are those that will argue that the company should have stayed focused on its core betting exchange business; and I for one must question whether the company’s investment in online poker is going to reap the forecast dividends.

[cross-posted from Betting Market]

Some background: on July 6, Betcha.com filed a declaratory relief action against the Commission — we’re asking a court to rule on the legal propriety of the Betcha product. The Commission knew this, but raided our office on July 9, anyway. During the raid, Rick Herrington, the Commission’s Chief Enforcement Officer, told my wife he didn’t know what they’d do with the confiscated items, but didn’t rule out selling them. He also told her that a court’s subsequent decision didn’t matter because he’d already determined that Betcha was breaking the law.

He wasn’t kidding.

On Saturday, I received notice (postmarked July 13) that the Commission was instituting forfeiture proceedings against the property they confiscated in the office raid — several computers, a multi-function printer/fax machine, blank compact discs, computer programming manuals and the like. The Commission is going to sell our stuff.

This is all quite troubling. First, unless you count Mr. Herrington’s “they’re committing a crime” assertion, neither I nor Betcha has been charged with one. No indictment, no judge, no jury, nothing other than Mr. Herrington’s “they’re guilty.” Second, the Commission knows there’s a civil action pending against them. Rather than wait for the court’s determination, however, they’re proceeding unwavered. (If that’s not contempt for the judicial process, I don’t know what is.) Finally, there’s no nexus here between the alleged illegal activity and the property in question. As to the computers, the Commission knows or should know that we purchased them months before we launched Betcha.com, so there’s no chance they were purchased with proceeds from our alleged illegal activity. Nor does the Commission seem to care whether the property was used in the commission of a crime. It’s very difficult to argue, for example, that blank compact discs were used in illegal activity. They are, after all, blank.

(If you’re wondering whether there’s anything we can do about this, the answer is “no.” Under Washington law, the Commission has immunity from liability for any actions they take in furtherance of enforcing the law. That’s not their fault: the Washington legislature created a system that all but invited a Gestapo. The current crew just took the invite.)

This isn’t particularly surprising given the way they’ve played fast and loose with the law. At a hearing on Tuesday, for example, Assistant Attorney General Jerry Ackerman argued in open court that the law entitled the Commission to a liberal interpretation of its laws vis-a-vis Betcha. (The AG’s office does the Commission’s prosecutorial bidding.) Not quite. Insofar as the Commission is entitled to the liberal construction of anything, it is memorialized in RCW 9.46.010, which states that “(a)ll factors incident to the activities authorized in this chapter shall be closely controlled, and the provisions of this chapter shall be liberally construed to achieve such end.” The Commission, however, has argued to the roof tops that Betcha is not authorized by law. How that liberal construction provision applies to Betcha, then, is beyond me.

The Commission’s contempt for the judicial process is rivaled only by its disregard for constitutional rights of Washington citizens. Last year, they busted a Bellingham man for running a web site that included articles about online poker — First Amendment be damned. The bust was based on a law that has been criticized on First Amendment grounds (1|2) and is now being challenged in court on other constitutional grounds. In an article written about that law, Commission Director Rick Day is alleged to have suggested that people who are unsure about putting gambling-related information on their Web site should write the Commission to ask permission.

Citizens asking the government for permission to speak: is that how it’s supposed to work?

None of this compares to the contempt in which they’ve held the rights of Betcha’s investors and employees. They’ve disregarded the well-established constitutional principle that citizens are entitled to read criminal statutes narrowly so that they can determine what conduct is and is not permissible in favor of a principle that amounts to “whatever we say goes.” They’ve shown up at the homes of Betcha employees. They’ve, to be kind, played fast and loose with both the facts and the law. And now they’re going to sell the property they seized from our offices — all purchased with our investors’ cash — without even charging us with a crime!

All of this should be of great concern to Washington residents as well as anyone who has even the slightest fondness for liberty. If the Commission is entitled to a “whatever we say goes” approach — and at least one Commission officer, a foot soldier named Lee Streitz, has told me they are — then we truly have a roving Gestapo on our hands. The Commission makes the law, they adjudicate it, and they mete out the punishment. Today Betcha’s in its crosshairs. Tomorrow it could be anyone in Washington who plays online poker.

All this has we wondering: why bother even having gambling laws in Washington? If the Commission is free to make up its own definitions of the law, and act as though the court system does not exist, then why not just scrap existing law in favor of a simply worded new one: “Whatever the Commission says goes.”

The world has seen such regimes before. The most notorious one ended in 1945.

NOTE: This entry was originally posted on the Nick Knacks blog on Betcha.com. The author can be contacted at nickj at betcha.com.

Aaron Todd:

WINNERS
1. States
That’s right, the biggest winners aren’t Internet gambling companies, nor is it the Internet gambler. It’s states, and states’ rights. Gambling has traditionally been regulated by states in the U.S., and this bill gives states the power to decide whether or not they will allow people within their borders to make wagers on the Web. More importantly for the states, it will establish a system that will provide revenue through taxes on licensees and winners.
2. Sports leagues
The NFL and Major League Baseball have been among the loudest in calling for a ban on Internet gambling. The leagues lobbied hard for the UIGEA while working to ensure that the bill included exceptions for fantasy sports leagues. The IGREA allows leagues to decide whether licensed sportsbooks can offer odds on their games. If the league decides against allowing bets on its contests (and it is very likely that all the major sports leagues and the NCAA would do so), then licensed sportsbooks must abide by that decision or they will lose their license.
3. Internet poker rooms
While the PPA originally sought an exemption for poker, the IGREA sets up a regulatory framework that will provide a permanent solution. Most of the popular Internet poker rooms have already gone through a lengthy regulation process to earn licenses in European nations and would likely already have most of the answers U.S. regulators would be looking for.
4. Yahoo!
The Internet giant launched a U.K.-facing Internet poker room last week. While it currently bars U.S. play, a regulated market would give Yahoo! access to a large number of customers, many of whom have yet to play online poker because they are worried they might be breaking the law. Yahoo!’s combination of trust and an enormous database of Internet users could have an enormous impact on the Internet gambling landscape if the U.S. began a licensing process.
5. Banks, credit cards and PayPal
Banks lobbied against the UIGEA, and for good reason. They do not want to be forced to monitor every transaction made by their customers to block Internet gambling purchases. PayPal, which paid $10 million to settle allegations that it knowingly did business with offshore Internet gambling sites, would be able to allow customers to use its service to gamble online.
6. U.S. players
American Internet gamblers would be able to conduct instant transactions directly with Internet casinos. Not only will they be able to avoid long lag times that are common with online e-wallet’s like ePassporte, they will also be able to avoid fees that can become prohibitive for players who conduct numerous transactions. American players will also be able ensure that they are doing business with a reputable company when the sites are licensed by the American government.

LOSERS
1. Internet sportsbooks and sports bettors
There couldn’t be a bigger loser in the IGREA than Internet sportsbooks. The clause that allows sports leagues to opt out would surely be used by the NFL and the NCAA, the two most gambled on leagues in the U.S.
2. NETeller, ePassporte and other Internet gambling payment processors
With the regulatory framework set forth by the IGREA, there would be no need for these payment processors to exist. Players would be able to fund their accounts using credit cards, bank accounts or PayPal.
3. Sen. John Kyl (R-Ariz.) and Rep. Bob Goodlatte (R-Va.)
These Congressmen were instrumental in getting the UIGEA through. But so was former Iowa Congressman Jim Leach, who did not get re-elected last year. According to the PPA, Leach’s staunch support of the UIGEA helped cost him the election. Kyl and Goodlatte didn’t face much opposition in their election bids last year, but an increased awareness of their involvement may increase political action by Internet gamblers.

Previous: Internet Gambling Regulation and Enforcement Act 2007

Is there is room in the PPA’s tent for prediction market interests? Probably not, but it is worth looking into, especially since they are characterizing their request as a “skill game exemption”.

If not, while I don’t begrudge the PPA their relative progress, I would not be inclined to support their efforts to attain an exemption for the game. According to PPA President Michael Bocherek, “While we are working toward the short-term goal of a poker exemption, the PPA will also be laying the foundation for the eventual U.S. regulation of online poker. This is the only proven public policy for online gaming.”

Perhaps they ought to keep to their long-term goals, as in the short-term, poker is a game of chance.

You could say that these opinions are divisive, but I would counter that it’s up to the PPA to determine how specific their interests are. The more they act like a privilege-seeking special interest, the more my general libertarian support for all forms of legal gaming is trumped.

[Cross-posted from Risk Markets and Politics]