Live-Blogging a Relatively Minor Congressional Confab

by , Dec 3, 2009 | 7:23 am

I may or may not be talking about this morning’s House Financial Services Committee hearing on today’s episode of The Poker Beat … so that’s why I’m up listening/watching/clicking. It’s kinda a big deal, I think … we got our 6-month extension on the enforcement deadline, and now, here in Barney Frank’s committee, the good rep is basically (re-re-re?)-reintroducing legislation that could effectively undo the UIGEA.

Here’s what I’m watching. Follow along if you we can …

* Yikes, video is great – HD! – but audio sucks, like irritatingly buzzy and scratchy.

* Barney’s opening argument … personal freedom. On the internet.

* He quotes John Stewart John Stuart Mill.

* Holy shit, you can pause this video? Like even without Tivo … awesome. I’ll be right back … need to get a beverage …

* OK, I’m back. While I was gone a press release came over the wire … apparently something that will be introduced forthcoming:

Study Shows Regulation of Internet Gaming Effective and Attainable
Study Unveiled During Financial Services Hearing on H.R. 2267

Washington, DC (December 3, 2009) –The Poker Players Alliance (PPA), the leading poker grassroots advocacy group with more than one million members nationwide, today commended the release of a study by Harvard Professor Malcolm Sparrow showing that the best way to address the risks of Internet gambling is through regulation, not a prohibition. The study, commissioned by Wired Safety, a leading Internet safety non-profit, was released during the House Financial Services Committee hearing on H.R. 2267, the Internet Gambling Regulation, Consumer Protection, and Enforcement Act.

“Following last week’s decision by the Federal Reserve and the Department of Treasury to delay the implementation of the flawed Unlawful Internet Gambling Enforcement Act (UIGEA), the release of this study adds even more fuel to the fire that a prohibition like UIGEA won’t work and that licensing and regulation, such as Chairman Frank’s H.R. 2267, is the right answer,” said PPA Chairman Former Senator Alfonse D’Amato. “Robust and effective licensing and regulation will not only protect poker players, children and problem gamblers, but also collect billions in tax revenue that is currently being lost. This is a win-win situation.”

As more attention is being paid to the appropriate way for the U.S. to oversee online gaming, the Wired Safety study provides an academic view of how best to protect consumers. The study cites evidence that millions of U.S. consumers currently gamble online through offshore gambling sites, outside of American oversight and thus offering no consumer protections. The study concludes that a prohibition on online gambling would only serve to continue down this misguided path and turn a blind eye to protecting American consumers, especially children and problem gamblers.

The second, and equally important, component of the study is that not only is licensing and regulation the best approach, it is also realistically achievable given the technologies available today – and being used in other countries. Learning from what works around the world, the report identifies regulatory tools and technologies that have reduced the risks associated with underage and problem gamblers, money laundering, fraud, privacy and security.

“The technology to effectively regulate Internet gambling in the United States is available today – and it works. The time has come for Congress to acknowledge that Internet gambling is not going away and that consumers need – and want – the security of Federal regulation of this industry,” continued D’Amato. “The PPA looks forward to continuing to work with Chairman Frank on this legislation.”

* There are not a lot of people here:

* The bald heads in the foreground are the people who will be testifying.

* In the back, you can see Barney Frank (D-MA), our strongest opponent Spencer Bachus (R-AL) … and I’m not sure who the woman is on his far right.

* Barney starts out addressing the issue of protecting kids — we have to stop kids from doing all sorts of things on the internet, he says.

* Spencer is still very concerned of this wave of internet addicted youth roaming the, um, internet.

* Anyone wanna place odds on whether or not Joe Cada gets brought up in this hearing?

* Spencer’s lead argument is that the 24/7 temptation is too much for kids to handle. I’m biased, but his arguments on why it’s different than buying liquor or porn or weak.

* We’ve heard all these arguments before. I could out-debate this guy in a neutral forum any day. #WorldSeriesofDebate

* Now he’s bringing up his real beef: Spencer wants to put these “illegal gambling enterprises” out of business, “not reward them like the Chairman [Frank] would do.” That’s a big friggin’ challenge man.

* Bear with me. Multitasking …

* Spencer Bachus is very unhappy that the Treasury and Federal Reserve have “allied” with Frank. He is very upset — it’s “particularly egregious” — that no one from the Fed or DOJ has been invited to this hearing.

* Most offensive Spencer Bachus statement so far: claiming that we are going against the will of the people — the American people have spoken — because the Congress voted overwhelmingly for the UIGEA. (No mention of the whole dirty Port Security thing.)

* If this passes, says Bachus, we will create a generation of 10s of millions of Americans who will be addicted to internet gambling from their youth.

* YES! That’s what we want! I mean, no, that’s not right. Check your numbers Beyot-achus. Coca-Cola! Baby stock trading commercials!

* LOL, they’re scratching! Addicted gamblers will be a danger because they will be playing from their Blackberries or iPhones while they drive, he says! Funny because it’s true. 🙂

* Bachus will do everything he can to make sure this never happens, he says. Sigh. My bullshit detector going berzerker.

* Awesome. Frank and Bachus fighting now over whether or not there was a request submitted for someone from the Fed or DOJ to be there.

* My inner Joe Wilson to Spencer Bachus: “You lie! You lie, distort, and jimmy! Liar liar pants on fire!”

* Barney shutting Bachus up — “It’s MY time!” — calling him out on his procedural mistruths.

* Barney no turning it on the matter of turning the banks into the internet police.

* Barney calling out mistruths related to Bachus’ numbers. Trying to shift it to efforts to stop adults from gambling online.

* Addiction addiction addiction. Barney is trying to dismiss relevance of addiction arguments.

* Ooh, first poker specific argument! He’s saying calling the millions of poker players addicts is unfair.

* Yikes. This is going to take a long time. Representative from Independent Community Bankers of America from West Virginia. (You say Darvin, I say Moon!)

* HR 2266 and 2267. Those are the bills we’re talking about.

* This bank guy likes our issue. He says the banks’ having to enforce a ban on internet gambling transactions would hinder their efforts to stop terrorism and rebound from the financial crisis. A little Spencer Bachusy with his linkage, but hey, he’s on our side, so yeah, you tell’em!

Mr. Samuel A. Vallandingham, Chief Information Officer and Vice President, The First State Bank on behalf of the Independent Community Bankers of America

* OK, wow, I’ve gone back (as per commenting with KevMath) and all sorts of stuff I missed from Bachus. He says $40 million has been spent lobbying to repeal this law.

* Listening to the part about the FBI letter … Bachus submitting it for the record, where it supposedly says that the technology exists for peer-to-peer transfer of ill-gotten gains from one person to another. (His words, mostly.)

* The FBI rejects claims from vendors that they can validate age and location.

* Any protections won’t work, says Bachus. Still nothing about Osama bin Laden.

* Ah, that $40 million lobbying figure goes all the way back to Abramoff. OK, fastforwarding back to the Independent bankers guy …

* Please don’t make us do this, the banker says. Leave it to law enforcement and courts, he adds!

* Uh-oh, Barney Frank admitting he did get an email from Bachus’ camp on Tuesday afternoon requesting testimony from the DOJ and Treasury. He apologizes. He was busy.

* Current score: Frank 4 – 1 Bachus

* We’d like more than one day notice, Frank says.

* Frank says he will have no problem with the Federal Reserver coming in to testify. He thinks they make his case great.

* I was wondering about the DOJ, though … it’s really hard to say where they stand on “our issue” (my term, not Frank’s). I think against.

* No taking the mic … a guy repping Indian casinos. Ooh, should be interesting. Wondering where they fall here.

* Ah, California. We know they want in.

The Honorable Robert Martin, Tribal Chairman, Morongo Band of Mission Indians

* Indian guy droppong President Obama’s name … something he submitted on November 5th of this year. Executive Order 13175: Tribal officials are supposed to be in on this action.

* Tribes were not consulted on the UIGEA delay.

* Tribal gaming = 600,000 jobs.

* By following the law, Indian tribes are not able to compete in international marketplace. “Please allow the current regulatory scheme to work and protect that which we have so carefully built.”

* Hmm, not sure exactly what that request is then.

* Skipping ahead to the end on Twitter:

Hearing is over. Last point made was that gambling with credit cards is bad, but debit cards are fine.

* The woman speaking now might be our best testifier yet:

Ms. Parry Aftab, Executive Director, WiredSafety

* She protects kids on the internet for a living, apparently. Says Aftab: “This is a consumer protection issue … it’s ironic that I am sitting here today saying the only way to protect the consumers from online gambling risk is by legalizing it. I never thought I would say such a thing. But if we don’t legalize it, we can’t regulate it.”

* She wants a holistic approach. Financial system regulation is only part of it. “I do not advocate gambling anywhere. I advocate the protection of consumers and families and children.”

* Aftab is now claiming that she works with Bachus regularly (and with volunteers in his district) … very interesting someone on his side taking our side.

* It’s all about who gets what cut.

* Murmur? Be careful what we wish for? The Indians have to get their money, the Family Safety people have to get their money … see how this works? We’re gonna get there — I’m almost sure — but we are gonna have to share the profits — big time. And not just via taxes. That’s what I’m reading into this.

* Her group did a study — paid for by gambling interests — but she insists the data was protected and not manipulated.

* Now here comes the Harvard professor who ran the study … Macolm Sparrow, from the JFK School of Government, with an expertise in regulatory policy.

* They assessed risks associated with regulation. No moral issues considered, and no attempt to take a side on legalize online gambling or not.

* I’m fading …

* Really fading …

* Numbers. $6 billion. Status quo.

* Here’s a picture of Barney:

* US market currently represents 1/3 – 1/4 of the global market (despite existing restrictions)

* Gibraltar … ooh, wait, this is interesting. Rewind …

* OK, British companies, those in UK, Gibraltar, and Alderney are well-regulated.

* Those run out of Antigua, Grenada, and the Kahnawake not so much. “Less well-regulated or completely unregulated.”

* US incurs all the social costs.

* US has no jurisdictional control for its citizens who play.

* US offers no consumer protection. (These are the Professor’s arguments.)

* US, currently, is unable to prevent organized criminal growth.

* (Do you get the idea that Spencer Bachus is saying the same thing we are to these?)

* Conclusion: Legalization + Regulation ~ licensing = Good. Current legislation provides adequate framework.

* Eventually, he says, US sites will be able to dominate the industry, and all categories of risk would be better controlled.

* Now: Mr. Keith S. Whyte, Executive Director, National Council on Problem Gambling

* Neutral on these two bills. Just here to discuss problem gambling to establish a baseline (my interpretation) on what’s what when they are arguing problem gambling issues.

* 1 percent of Americans have a really bad gambling problem. A few percentage points more have a kinda bad gambling problem. Including 500k kids age 12-17.

* $7 billion a year in social costs of problem gambling.

* Internet gambling has the lowest participation of any form of gambling. It’s an “add-on” for people already involved in gambling.

* UIGEA had no affect up or down on problem gambling helpline calls.

* The problem gambling guy appears to be wearing his nice cufflinks:

* He wants the law to require money for his research. He finds it appalling (but not in an angry way) that the current bills don’t have anything in them for research on problem gambling.

* $7ish million in grants should suffice.

* He claims to be working for Bachus’ issues, too.

* New guy: Mr. Jim Dowling, Dowling Advisory Group

* Says he has dedicated his whole professional life to preventing fraud, money laundering, and now financing of terrorism. I think he said he’s a former IRS special agent.

* He’s now on the casino payroll, helping them prevent money laundering.

* Another Barney:

* Dowling says he takes no side on the legislation. It’s a banking, law enforcement, and technology problem as-is.

* Billions of dollars at stake. And terrorist financing.

* I think this is important … but I’m zoning out …

* Land based casinos have good stuff in play. Sophisticated electronic systems, foot surveillance, strong compliance department doing transactional monitoring, state regulatory agency … 24/7 365 …

* (Efforts to blacklist sites is impossible, he said earlier.)

* Frank jumps in to tell him to rap it up … and he did.

* Last guy. Mr. Mike Brodsky, Executive Chairman,

* Microphone problems. Lots of starch in his cufflinks.

* Youbet is the largest legal online gambling op in the US … they handle horse racing. In the process of being acquired by Churchill Downs and the Kentucky Derby.

* He really really wants legalized internet gambling. Even though he technically already has it.

* They love technology. He has kids. Legal is the best! Only way to protect kids.

* Barney Frank closing it all up, addressing Indian concerns … don’t worry you can be in on it, too, he says.

* Indians concerned about jobs being shipped off-shore.

* Ah, the horse racing people are concerned because the DOJ still considers some of their business illegal, because their UIGEA-protected transactions — 88 percent of them — take place over state lines.

* Spencer Bachus gets his final questions and words. He’s trying to discredit the studies based on their being funded by the PPA and Harrah’s.

* The lady insists her data (and Prof. Sparrow’s) is pure.

* Bachus trying to site a study that shows addiction problems dropped after the UIGEA, and then came back up when Treasury didn’t enforce it.

* No way, he’s trying to bring the suicide factor back in while trying to discredit the National Council of Problem Gambling guy?

* Some new guy speaking … not sure who it is, but he is bringing up the historical problems with alcohol prohibition, and why regulation is a better way to curb its destructive potential.

* Yeesh, I kinda fast-forwarded … there’s still a way to go. Taking a break …

* Here’s the Youbet bloke. He seemed to have the most self-interest on display:

* A letter from some law enforcement guy … saying yeah, regulation is better than black market. Rep. Moore (?) wants to drive it into the sunlight.

* Yep, Rep. Dennis Moore … from Kansas.

* Unknown alcohol prohibition comparison guy giving Bachus credit for his concerns, acknowledging they are real, but disagreeing with his solutions.

* Lady says: Technology can do a whole lot to help problem gamblers.

* Self-set betting limits help. (Indeed. I’ll set mine to one BILLION dollars!)

* Ahh, now they are bringing into play the billions and billions of data on online gambling transactions … and how that can help with predictive behavior.

* Rep. Peter King (R-NY) in the house. He apologizes for being late, but says it’s because he had something to do as the ranking member of the Homeland Security Committee.

* King says he’s dealing with major Constitutional issues there, so he apologizes for the pop-in, as he just came over from a Homeland Security hearing on the White House party crashers and related separation of powers.

* He thanks Rep. Bachus for his hard work, even though they haven’t seen eye-to-eye on this issue over the years.

* King got in a spat with another Congressman from Illinois earlier this year:

Rep. Rush says Rep. King should apologize for calling Michael Jackson a pervert

* King brings up how the UIGEA was passed … without barking on the process of last-minute hardly related add-ons … simply saying that those who voted for it were well-intentioned, but the law has had unintended consequences.

Important Rep. Republican Popper-Inner.

* I wonder if it’s a Republican issue … that King didn’t want to seem too supportive.

* OK, probably not. He’s speaking very strongly in support of both UIGEA repeal bills.

* King gives a shout-out to Ron Paul and his libertarian ideals.

* Frank gives King props as a former Chair of the Homeland Security Dept. and now ranking member.

* Rep. Brad Sherman (D-CA) now pushing for the States. “You have to leave your house to lose your house,” he says. Huh?

* But maybe we can’t stop it anyway, he says, since the internet has no boundaries.

* Ahh, now I get it … he’s discrediting the Indians. Pointing out that Robert Martin is against the federal regulation but pushing for the state regulation in California. Or something like that. Not sure where Martin stands. Or Sherman for that matter.

* Damn states.

* Someone’s cell phone rings briefly. Not an embarrassing ring. Standard phone sound.

* Martin choking a bit on trying to explain the consortium of California tribes.

* This whole California state thing is directly referencing “online poker” … and working with the card rooms.

* Fugk, I’m getting a phone call. “Ignore”.

* Where was I?

* Oh, right … so the Indians are just saying they want to compete like any other business enterprise, but it may or may not be outside their compacts, which is why they need to work with the state to establish this entity that they would like to have competing for any federally regulated online poker pie.

* I kinda get it.

* Yeah yeah, leave a friggin’ voicemail, I’m typing …

* Sherman poses question to Martin (the Tribal rep) … what are your fixed costs? Martin goes silent, consults with notes and associate.

* In the interim, Sherman, from Caifornia mind you, calls out Nevada for not having a representative at this meeting … and then points out that Nevada is at the epicenter of the foreclosure crisis.

* It is. My landlords are letting Pokerati HQ go into foreclosure. Forced move forthcoming. A-holes

* I can’t tell if Sherman is working with or against the California Indians.

* Dude, Martin … he’s faltering!

* Rep. Lee — not sure what state or party he’s from — now doing his own pop-in, bringing up the issues of credit cards … claiming, essentially, that gambling on a credit card is getting an unsecured loan to gamble with.

* Interesting.

* He says he is making no moral judgment, just bringing up the credit card issue. It’s unfair to taxpayers if they’re stuck with bad debts on that sorta thing.

* Hmm.

* So here’s the only comment he wants on the record — that online gambling should only be allowed on debit cards. Not credit.

* And he’d like to know how much, percentage-wise, of online gambling takes place via credit card. As opposed to debit.

* Frank adjourns the meeting: “We will be returning to the subject next year.”

* And likewise, I adjourn.

21 Comments to “Live-Blogging a Relatively Minor Congressional Confab”

  1. Kevin Mathers

    I missed the first hour, but in the thread over on 2+2 there was mention of Bachus receiving a letter from the FBI saying that online gambling was worse than Osama bin Laden?

  2. DanM

    I didn’t hear that. I did hear mention of some letter from the FBI … I can rewind, let me listen closer.

  3. Kevin Mathers

    Are you able to rewind from the link in your post?

    Regarding the bin Laden reference, Bachus didn’t say that. My apologies.

  4. DanM

    yeah, i can rewind. it’s semi-streaming.

    here’s the url i’ve got:

  5. Kevin Mathers

    Executive Order 13175 in full:

    The guy for the Morongo tribe appeared clueless throughout.

  6. Kevin Mathers

    More links:

    PPA response to FBI letter:

    Thread in PPA forum on 2+2 regarding hearing:

  7. Mean Gene

    Kinda makes you long for a benevolent dictatorship, doesn’t it?

  8. DanM

    Ha! Yes, the USA, I think, would really benefit from a good Tournament Director-in-Chief.

  9. Dave

    I didn’t like the bloke from youbet…he must have mentioned his company about 10 times during his dreary speech. A shame an opportunity to impress people was wasted by this shameless self-publicist.

  10. DanM

    Totally agree … he came off as more smarmy than all the rest. Howard Lederer woulda given better testimony, but I think we all understand why he couldn’t be there today.

    Wonder if they wanted or didn’t want Mitch Garber.

  11. Gydyon

    TD in Chief? No way. Everyone knows Savage is weak on national security. Even if Day 2 of your hospital stay is smooth and has lots of play….

  12. DanM

    really though … TD’s are the ultimate benevolent dictators, no?

  13. Kevin Mathers

    I’m sure the Youbet guy is also concerned because of Betfair owning one of the other major online horsracing sites in the US, TVG. Also, they’re worried about the overblocking thing, which is what got the NTRA and greyhound track owners to write their letters to Bernacke/Geithner.

  14. Kevin Mathers

    Chris Lee is a Republican from New York.

  15. Short-Stacked Shamus

    Rep. Sherman is right when he says “You have to leave your house to lose your house.” Happens to me constantly, which is why I got GPS.

    Thanks for the play-by-play, Dan. It was like being there, while sometimes switching over to Andy Griffith, The Flinstones, etc.

  16. Kevin Mathers

    Also, here’s the letter from Shawn Henry (of the FBI) to Spencer Bachus regarding manipulation in online poker:

  17. DanM

    Shawn Henry of the FBI …

    Particularly Interesting to see the FBI addressing issues of collusion and bots.

  18. Jordan

    Great job, Dan. This was a great read…much better than actually watching the thing. Thanks for taking the bullet on this one.

  19. DanM

    LOL, it was a bullet, too. This meeting admittedly kicked my ass a bit!

  20. DanM

    Here’s the PPA Response to the FBI Letter:

    PPA: FBI Letter Wrongfully Cites Online Poker Myths,
    But Underscores Need for Licensing and Regulation

    Washington, DC (December 3, 2009) –The Poker Players Alliance (PPA), the leading poker grassroots advocacy group with more than one million members nationwide, today challenged statements made during the House Financial Services Committee hearing on H.R. 2267, the Internet Gambling Regulation, Consumer Protection, and Enforcement Act. During the hearing, U.S. Rep. Spencer Bachus (R-Ala.) claimed there is potential for criminal activity through online poker by citing a letter written by Shawn Henry, Assistant Director of the Cyber Division of the Federal Bureau of Investigation.

    “Every concern the letter raises is better addressed by licensing and regulation than by prohibition,” said John Pappas, Executive Director of the Poker Players Alliance. “The letter misconstrues much about the current state of online poker, but it does so in a way that clearly makes the case for why federal oversight is necessary.”

    U.S. Rep. Peter King (R-N.Y.), the current ranking member and former chairman of the Committee on Homeland Security, also attended today’s hearing and said publicly that he is not aware of money laundering or terrorism financing through Internet gaming. He went on to say that if financial crimes were a legitimate concern, then regulation and oversight as proposed in H.R. 2267 is the best way to mitigate that risk.

    Additionally, a study commissioned by Wired Safety, the leading Internet safety non-profit, and conducted by Harvard Professor Malcolm Sparrow, was released during the hearing that shows the best way to address the risks of Internet gambling is through regulation. In his testimony, Dr. Sparrow, who is a former Detective Chief Inspector of the British Police Service with extensive experience in criminal investigation, states that “At a minimum, even an imperfect legalization and regulatory regime for online gambling would give Americans much more protection than they have now.” The report includes important findings on issues of gambling by minors and the potential for criminal and fraudulent behavior, in which the study concludes that improved technology and enforcement mechanisms that are currently available are more effective than an outright ban.

    “Licensing and regulation is the most protective measure we can take to ensure the online community can be properly monitored while maintaining our internet freedom,” Pappas concluded.

    A detailed response to the letter can be found on the PPA’s website.

  21. Charles brooks

    Hai..Oh, right … so the Indians are just saying they want to compete like any other business enterprise, but it may or may not be outside their compacts, which is why they need to work with the state to establish this entity that they would like to have competing for any federally regulated online poker pie.
    and also here’s the letter from Shawn Henry (of the FBI) to Spencer Bachus regarding manipulation in online poker

    part time work