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Monday, Aug. 2, 2010 | 2 a.m.
Sun Archives
- Online gambling is illegal, but betting sites’ logos often in Nevada casinos (7-13-2010)
- Online poker law in effect, but players still manage to bet (7-11-2010)
- Question evolving from legalization debate: How to tax online casinos? (5-24-2010)
- Lawmakers push to regulate, tax online gaming (5-19-2010)
- With aggressive push, Internet gambling again in play (2-9-2010)
- Why casinos in Nevada won’t go online (for now) (8-20-2009)
- Will Web poker bust spark fight or flight? (6-15-2009)
- Poker players swarm site seeking input on big issues (5-19-2009)
- Web betting is wedge for Big Gaming (11-25-2008)
- Bush administration moves on Internet gaming band (11-12-2008)
- Gaming’s new frontier (11-23-2007)
- Online gaming in the shadows (7-17-2007)
The race for Internet gambling riches may have turned in favor of Nevada-based casino operators that own some of the best-known brands in the business.
Bricks-and-mortar casinos in Nevada and other states have stood by while online wagering has blossomed into a multibillion-dollar business. They were unwilling to risk operating Web casinos considered illegal under federal law.
Now, they stand to be big winners under legislation that aims to punish foreign gambling websites that have profited significantly by accepting bets from Americans.
“Clearly it’s in the best interest of Nevada casinos to limit those who can get licenses to those not currently in the (online) industry because they have had a large head start,” Las Vegas gaming attorney Tony Cabot said.
On Wednesday, the House Financial Services Committee passed a bill to legalize and regulate online betting — but not before tacking on amendments designed to prevent online operators now violating U.S. gambling laws from becoming licensed under the new regime. The bill will be forwarded to the House.
“Al Capone couldn’t get a liquor license if he’d stayed around to the end of Prohibition,” said Rep. Brad Sherman, D-Calif., who authored one of the amendments.
One amendment prohibits entities that “knew or should have known” they were operating or working for illegal online gambling sites and bans licenses for individuals involved in taking wagers, paying winnings or promoting such sites.
The restrictions, among many protections added in committee, received support from conservatives and moderates who either oppose or aren’t comfortable with Internet gambling.
“These are criminal enterprises,” Rep. Spencer Bachus, R-Ala., a gambling opponent who voted against the bill, said of the many betting websites.
These sites include popular poker brands that are widely advertised in the United States. The federal government considers all forms of Internet gambling illegal, however.
The amendments strengthen the bill’s original language, which prohibited licensing applicants delinquent in filing state or federal taxes. Internet poker sites operate offshore and do not pay U.S. taxes.
Some online gambling experts say the bill’s current wording will make it difficult, if not impossible, for the two largest gambling websites, PokerStars.com and FullTilt.com, to obtain federal licenses — effectively clearing the playing field for bricks-and-mortar casino companies such as Harrah’s Entertainment, which owns the World Series of Poker franchise.
The online poker sites and their supporters, such as poker advocacy group Poker Players Alliance, disagree.
“(N)othing in the committee-passed legislation precludes lawful Internet poker-only operators whom U.S. players know and trust today from the opportunity to operate under a regulated system,” the alliance, a group for legalizing online poker, said in a statement.
Poker sites have lobbied Congress for years for legalization. Internet gambling operators also have approached the Nevada Gaming Control Board, the state’s gaming regulatory body, seeking guidance on possible state authorization of Internet gambling or a federal regulatory system in which the state might play a role. Such efforts, experts say, may have backfired.
If Congress approves a federal regulatory system like Nevada’s, it would be “very difficult” for sites now accepting bets from Americans to operate legally, Nevada Gaming Control Board member Mark Lipparelli said last week. Lipparelli and Control Board staff are following the federal legislation and its potential effect on state agencies.
One amendment gives the Treasury Department the option of outsourcing Internet gambling regulation to state agencies, such as those with more experience regulating gambling, as an alternative to creating more federal bureaucracy.
“There’s no need for us in the federal government to reinvent the wheel here,” said Rep. John Campbell, R-Calif.
The bill includes many controls that parallel Nevada rules designed to keep out the mob, including requirements that regulators conduct background checks of owners and managers of online entities. Financing must come from a “suitable source,” and licensed operators must have “good character, honesty and integrity.” The legislation lacks details on the standards for such investigations, which would be established by the Treasury Department. Regulators would have to audit gambling software that prevents minors from gambling and imposes protections for compulsive gamblers.
Internet gambling companies doing business in the United States are mounting legal defenses to ensure survival should the bill pass Congress.
Web casinos have long argued that federal laws such as the Wire Act, passed during the Kennedy administration to crack down on mob-controlled bookmaking operations, don’t specifically outlaw online gambling. The Unlawful Internet Gambling Enforcement Act of 2006 further criminalized Internet wagers by making it illegal for banks to process such transactions using credit or debit cards. The law is focused on online gambling transactions and doesn’t alter existing gambling laws, poker sites say.
PokerStars welcomes the bill’s licensing standards because the company, which has long sought to be regulated in the United States, has built sophisticated controls to protect against underage gambling, money laundering and collusion, said Tom Goldstein, a Washington-based attorney for the privately held company. PokerStars is based on the Isle of Man, which has crafted Internet gambling regulations that pass muster with foreign governments that have legalized online wagering.
Recently, France and Italy vetted such controls when they approved the company’s poker websites, he said.
PokerStars, which believes it operates legally in the United States, applies “massive algorithms” to data on poker hands and players to detect fraud, Goldstein said.
The Wire Act applies to sports books, which is one reason why the federal government has not prosecuted companies involved in online poker only, he added.
Such arguments don’t pass muster with the Justice Department, however. Federal authorities say Internet gambling is a largely anonymous enterprise that can’t be adequately regulated and lacks effective technology to verify the age, identity and location of players. Specifically, the FBI has said Internet gambling allows players to cheat others and launder money in the process.
Most of Nevada’s casino giants — some of which have arm’s-length business arrangements with online poker sites — support legalizing Internet gambling but are not taking sides on whether major online poker sites should be out of the running for a license.
While Nevada casinos wait on the sidelines, they must determine whether to risk potential licenses by aligning with competitors that have long-standing relationships with millions of potential customers and years of expertise running virtual casinos.
Online poker sites aren’t about to give up their competitive advantage and will fuel future debate about whether their business is illegal, Cabot said.
“Whether it plays out in the courts or in Congress, there’s probably going to be a lot more debate before the end of this controversy,” the attorney said.
FWIW:
The Internet Gambling Regulation and Consumer Protection and Enforcement Act (H.R. 2267), legislation introduced by Representative Barney Frank (D-MA), Chairman of the House Financial Services Committee, passed by a 41-22 vote.
This bill, which during the mark up process was amended several times, aims to fully legalize, regulate and tax internet gambling in the U.S., while basically rendering moot the highly unpopular Unlawful Internet Gambling Enforcement Act (UIGEA) in the process.
California Representative Brad Sherman amendment to the bill prohibits any future licensing to websites currently flouting U.S. gaming laws.
According to a Joint Committee on Taxation tax revenue analysis, regulated Internet gambling is expected to generate as much as $42 billion in federal government revenue over its first 10 years. Additionally, a recent analysis by H2 Gambling Capital predicts that Internet gambling regulation would create as many as 32,000 jobs over its first five years.
"Leaving in place a failed prohibition should no longer be the government's misguided policy approach, leaving millions of Americans vulnerable as they continue to find a way to gamble online in a thriving underground marketplace."
The legislation has the support of 69 bi-partisan co-sponsors. Support for the legislation was also announced last week by the U.S. Chamber of Commerce, the Financial Services Roundtable and the National Association of Federal Credit Unions.
Those supporting the legislation include:
- Harrah's Entertainment, Inc.
- Interactive Gaming Council
- Safe and Secure Internet Gambling Initiative
- Poker Players Alliance
Those Opposed:
- Morongo Band of Mission Indians
- Christian Coalition of America
Full text of H.R. 2267 can be found here:
http://www.govtrack.us/congress/billtext...
Refs:
http://www.webpronews.com/topnews/2010/0...
http://www.pokerroad.com/news/newsbrief/...
http://www.govtrack.us/congress/bill.xpd...
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Al Capone wouldn't get a license because incidentally he killed a few people not just sold booze. However the Bronfmans who delivered whiskey from Canada where it was legal were not blocked when the prohibition ended.
Comment removed by moderator. Flaming.
Funny that thief cannot be licensed to be a thief.
Harrah's should be allowed to operate internet casinos so they can run them into the ground like everything else they touch.
Instead of standing in line for 45 min to check in you can wait online for 45 min for your credit card to be approved. Oh yeah and make sure to have a customer service number in india where u wait for an hour to talk to a human being who doesn't speak english and eventually drops the call. (that way it will still feel like a Harrah's property)
At least the cocktail service won't be so brutal since you can just walk to the fridge and get your own drink and the restrooms won't be filthy since you can pee in your own toilet while you lose your money on your laptop.
Just make sure to have plenty of "marketing" gurus to fix it all. Yeah that's the ticket! Marketing fixes everything. We will never run out of suckers. MARKETING!
Customer loyalty. "Total rewards" will be the answer for it all.
Gary Loveman can't wait to get his paws on this one.
In every poker magazine is a story about an online poker player that brags about how they started playing in their teens in high school. Annete obrestad a famous online player started at 15.
Cheating runs rampant in online poker regardless what the sites lead you to believe. How many players are on the phone with their friends while playing high stakes pot limit Omaha?how strong is it to know your king high flush is the nuts because your buddy folded the ace.
Annie duke speaking at a recent hearing was a joke. She reps ultimate bet famous for most notorious cheating scandal and her brother makes millions from full tilt. Who are they kidding when they spout off about freedoms? They only care about there pocketbooks
At this past wsop it was a freak show with all the online poker shirts and hats.
Online gambling sucks!!
Here's an idea. Harrah's can experiment with online type gaming in their casinos right now. They can set up a BJ table an put a curtain around it (so you can't see it) and then just tell you what the cards are. You can just take their word on it and assume everything is on the up and up. I'm sure that's even better than 6/5 BJ. More exciting and "fun". I would get the marketing machine cranked up on this idea right away.
Outstanding idea that Harrah's will be involved.
When I get a beer from the fridge, they will bill me $8.00 as a "service fee"
hahaha
Does this mean that when you log onto HarrahsPoker.com you will be charged an "internet resort" fee? Will they charge you huge fees to transfer your money into their online account? Will regulation require that poker games be dealt randomly or will Full Tilt's "speed up the game by giving the big stack the edge" be allowed? After all, bandwidth costs a lot of money. So, best end the games ASAP, so you can book more games with a 10% fee.
stay away from the online big tourneys and any cash table that is larger than .50c/$1!!! the big players all have AIM and text, they back each other after they bust out and share accounts. i know, i used to help several players.
i used to play professionally online until the Absolute Poker/Ultimate Bet scandal hit. it hasn't been the same since.
a few of my friends and i had a good run at the cash games and we were able to live it up at the expense of people who thought online ring games were kosher. i feel bad but it was opportunity knocking.
now i only play in b&m so i can see who i am playing against and i can pay attention to the person dealing cards as well.
the one thing vegas lacks is a straight up card room like the ones in california. no slots, no other table games, just poker and a few other card games.
There is no doubt that collusion is much easier and rampant online. That said, I found that I could usually get a pretty good idea of who was using it by paying attention to betting patterns.
Also, it was much easier to pick up on this on the short-handed games. I found the $2/$4 and $5/$10 6-handed games to be the best ones to play at. There is also a reduced tendency to collude on those tables as well because of the reduced return due to the smaller number of players.
I have no idea if online poker is rigged or full of dishonest players.
All I know is that I could not play enough live poker in my lifetime to even come close to seeing the amount of river suck outs and bad beats that were inflicted on me in a few months at Poker Stars.
Higher straight flushes beating smaller straight flushes, quads against quads, A/A K/K repeatedly losing to 10/6 off, 3-6 off, J/2 off, I could go on and on.
And if Harrah's gets involved in on-line poker... God help us all.
Check out my LV blog:
http://jimmyhoofa-lv.blogspot.com/
Using online poker sites for free 2 learn how 2 play is a good idea. It helps U know the rules b4 U even sit down at the table. But I get a kick out of these goofs who think a real deck of cards will give them the crap that computer-generated decks throw up on the screen!
(Hello from Ohio!)
I look forward to the comps that the casinos offer at the actual casino from playing online. So, if I play a decent amount of online play at the Venetian online poker room, then I will expect a free room (for example).
I think one can sort of see the writing on the wall as it gets more focused. Off shore websites/companies will be denied licenses and banned. Companies like Harrah's, MGM, and so forth will come in and gobble up the US market (and who can blame them). Pro players currently allied to fulltilt or pokerstars will slowly drop one by one to the new US corporate hegemony. The ones that don't will either move out of the US, or keep their huge off shore bank accounts while switching to "american" poker sites. Casino games on the web for money will still be banned. Their will be taxes and regulations placed, mostly on the websites side of business. Players will hardly notice unless they exceed the threshold of a taxable win, whatever limit that will be placed. It will be fun and interesting to see how it all plays out. There will be positives and negatives to it, I am sure. Bottom line, there is nothing constant except change.
Great post, harley, thanks for the detailed information. Great blog, Jimmyhoofa, keeps the reader informed about Vegas from past to present.
Regards
Banana_Joe