In debate of online poker, lawmakers invoke Prohibition, Abramoff scandal

By Karoun Demirjian (contact)

Friday, Nov. 18, 2011 | 12:54 p.m.

Advocates for legalizing online poker will aver that the debate should be about only one thing: poker.

Like it or not though, it’s about a lot of other things too.

The debate over poker is turning into a discussion about setting and respecting precedents, and online poker is becoming another test case for what the federal government’s role ought to be in commercial regulation.

In Friday’s hearing before the House Energy and Commerce committee’s subcommittee on Commerce, Manufacturing and Trade, supporters and opponents of online poker were constantly challenging each other in their effort to claim an understanding of the past and a mandate for the future.

“You can look at drinking. We tried making that illegal, we tried prohibiting it, it didn’t work,” offered Rep. John Campbell, a Republican from California who supports legalization of poker and all other forms of gaming, and has introduced a bill with Democratic Rep. Barney Frank to that effect. "We forced a lot of honest Americans, because they were going to do it anyway, into a dishonest and illegal practice...so Prohibition has ended. [But] we essentially have that kind of prohibition now.”

“A lot fewer people die from bad booze today than died from bad booze in the ‘20s when we had Prohibition,” Frank added.

But Rep. Frank Wolf, a Republican from Virginia, maintained the relevant historical precedent for the online gaming question is more recent, and shows it should be illegal.

“Has this Congress forgotten the Abramoff scandal?” he asked with a hint of incredulity.

“Gambling was involved in the Abramoff scandal. Has the Congress learned anything form it or is it just like the Simon and Garfunkel song: 'Man hears what he wants to hear and disregards the rest,'” Wolf added, quoting “The Boxer".

Passions intensified as lawmakers considered what precedent legal online poker might set for the future.

“Internet gambling is the crack cocaine of gambling,” Wolf warned. “Pathological gamblers will become easily addicted to online gambling because of the Internet’s easy access and instant result...It will result in an epidemic.”

Frank argued that online gaming ought to be a matter of “principle that frankly I think there should be bipartisan support on. I hear people talk about the nanny state,” he said, a thinly veiled reference to Republicans who in the last few months have objected to the federal government setting rules for everything from school lunch nutrition to neutrality of Internet access.

“If we don’t want to tell an 8-year-old what to eat for lunch, why are we telling the 8-year-old’s parents...'no you can’t gamble, that’s inappropriate?'” Frank continued. “I had thought there was a consensus in this Congress, particularly strong among Republican colleagues -- hands off the Internet.”

One can’t help but wonder if even the legalize-marijuana folks were listening and taking notes on the discussion of the plusses and pitfalls of legitimating and regulating a morally controversial industry.

But before a vote to legalize online poker can, in the lawmakers’ estimations, either drag us into the depths of gambling addiction or save the Republican Party from becoming freedom-haranguing hypocrites, there’s still a long way to go.

Subcommittee chairwoman Rep. Mary Bono Mack opened the hearing by suggesting there is already consensus that online poker needs to be re-addressed and regulated.

“Is it time for Congress to let the genie out of the bottle? Or is the genie already online with a pile of chips playing Texas Hold-em?” she asked, answering herself a few minutes later. “In many respects, the genie is already out of the bottle, and now it’s up to Congress to decide whether Internet gambling across state lines is legal or illegal.”

But the panel of experts advising how to push forward on the regulations appeared to be at odds on the scope of the problem.

“It is settled science that at any given time about 1 percent of the U.S. adult population are pathological gamblers,” said American Gaming Association Frank Fahrenkopf, as he attempted to refute Wolf’s assertion that legalizing Internet gaming would lead to “an epidemic” of problem gamblers. “That is a figure that has not changed despite the dramatic expansion of gambling opportunities in the last 30 years.”

Two minutes later, University of Chicago sociologist Rachel Volberg was refuting him. “The most common pathway is for Internet gamblers to develop problems subsequent to gambling on the Internet,” she said.

Volberg and Fahrenkopf also were at odds over how much revenue would likely result from a legalization: Statistics cited at the hearing that went undisputed put Internet poker at 60 percent of the share of all online gaming, and 23 percent of the revenue -- but while Fahrenkopf estimated that would amount to about $2 billion a year, Volberg put the figure at about $4 billion.

“One of the problems with anyone guesstimating the tax revenue that’s going to generated is we’re dealing with an unregulated industry,” Fahrenkopf explained.

In Thursday’s online poker hearing before the Senate Indian Affars Committee, tribal leaders complained about the amount of guesswork in determining what online poker laws would look like.

“The problem is the legislation is undefined,” said Glen Gobin, vice chairman of the Tulalip tribes, to the Senate panel Thursday. “We don’t know what the rules or the parameters of the legislation are going to be, so when we’re talking about the benefits, we’re talking from the best-wish, best-case scenario.”

Texas Republican Rep. Joe Barton, the chairman emeritus of the House Energy and Commerce committee, tried valiantly to offer some clarity during Friday’s panel, bringing up his bill that he offered with chief Democratic co-sponsor Shelley Berkley of Nevada over the summer no fewer than three times.

But nobody else seemed much interested in talking about the specifics of the Barton bill -- the experts were instead focused on having a broader philosophical discussion about Internet gambling and assuring and re-assuring that they indeed could accommodate everything from safe practices to unenthusiastic states, if only the Congress would allow them to begin regulating the industry on the up-and-up.

“We, for many years, were opposed to all [forms of] online gambling because we did not believe the technology existed to properly regulate it...that has changed over the last few years,” Fahrenkopf said.

“You can identify customers, you can identify play patterns, you can identify people accessing the Internet from what device they’re accessing the Internet," explained Mark Lipparelli, chairman of the Nevada Gaming Control Board, who was also testifying at the House hearing. “Gaming is a voluntary activity and it’s often an anonymous activity...In an Internet world, it’s down at the transaction level, accounts are established, internal controls have been adopted...they can establish the play patterns for an individual from time of day to amount wagered. Those kinds of tools do not exist generally in brick-and-mortar businesses.”

Volberg argued those capabilities should be used to put in place more safeguards, especially for the bulk of online poker players -- 18-to-24 year old college-educated males -- and to regulate against problem gambling before it starts with limits on time and money that can be spent on gambling sites and mandatory 24-hour “cooling-off” periods “before changes to limits can be made.”

And anyone who doesn’t want to play doesn’t have to.

“It took 10 years to become a lottery. Maybe the answer is 'no' for a while until it’s 'yes'... But [the question] should be posed to those whom it most directly affects,” said Charles McIntyre, the executive director of New Hampshire’s lottery. He wasn’t sure yet about New Hampshire’s participation, though he acknowledged that “we consider the Internet the next step.”

“We’re supporters and always have been of the 10th Amendment,” Fahrenkopf said. “We have no problem with states opting out that didn’t want to participate.”