A positive delay
Editor's note: If you aren't familiar with the Unlawful Internet Gambling Enforcement Act, Paula Lavigne's article from July is a great way to bring yourself up to speed.
It's been a long, hard three years since Sen. Bill Frist (R-Tenn.), Sen. Jon Kyl (R-Ariz.), Rep. Robert Goodlatte (R-Va.) and a cast of conservative Republicans tacked on the Unlawful Internet Gambling Enforcement Act into the Safe Port Act during the final session of Congress in 2006. It was among the darkest moments in the online poker industry's short history, leading to myriad hassles since.
The cumulative frustration caused by that one moment of abuse of the political system made Wednesday's news of a six-month postponement of the UIGEA's deadline for enforcement shine all the brighter.
As originally planned, Dec. 1, 2009, was to be "D-Day." That was the date by which American banks, in a function to which they were grossly unaccustomed, were expected to begin interpreting and enforcing the undefined parameters of the bill, which called for the blocking of "unlawful Internet gambling transactions." How the term would be defined was left to individual interpretation, a fact that had many financial institutions planning the safe play of banning all online gambling transactions. Erring on the side of caution was the only reasonable approach the banks could have taken. Since banks were not prepared to have determined exactly which transactions were "unlawful," they were prepared to block all related transactions, including wagers placed on horse racing and state lotteries (which were deemed to be acceptable in the UIGEA). Now they won't have to.
In a joint announcement, the Federal Reserve Board of Governors and the Department of the Treasury say they believe the delay is necessary for a very specific reason:
"The Agencies believe that a six month extension is sufficient for regulated entities to address issues related to the definition of 'unlawful Internet gambling.'"
The pressure is now on those who have worked to achieve this temporary success once again to prove the case for adjusting the legislation. The weight sits primarily on the shoulders of those at the Poker Players Alliance who appealed to Treasury Secretary Timothy Geithner and Fed chairman Ben Bernanke and urged them to take action before the deadline. However, the success of this initiative was due to the efforts of not only the PPA, but also two seemingly strange bedfellows -- the National Thoroughbred Racing Association and the American Greyhound Track Operators Association -- who faced issues similar to those facing poker. Now, the Dec. 1 deadline has been moved back to June 1, 2010.
"It's a clear signal from the administration that there's a problem with this bill and they have to change it," said John Pappas, the executive director of the Poker Players Alliance. "The six-month delay is better for us than a year delay would have been because it forces Congress' hand.
"In the past, we've been forced on the defensive because of the language of the legislation," Pappas continued. "Now we can be positive and proactive going forward. I think the White House and Congress are coming around not only because it's just, but also because it offers significant monetary benefits. In these trying economic times, we're the only industry that's coming forward and saying, 'Here's a pile of money!'"
In order to claim said pile, the federal government will have to clarify the definitions UIGEA provided as to what is legal and will have to put into place a framework for regulation.
To that end, in a statement issued Nov. 27, House Financial Services Committee chairman Barney Frank said: "The Department of the Treasury and the Federal Reserve Board of Governors deserve a great deal of credit for suspending these midnight regulations promulgated by the Bush administration which would curtail the freedom of Americans to use the Internet as they choose and which would pose unrealistic burdens on the entire financial community. This will give us a chance to act in an unhurried manner on my legislation to undo this regulatory excess by the Bush administration and to undo this ill-advised law."
The legislation, Frank's HR 2267, will be the focus of a hearing Dec. 3.
"Dec. 3 is a good opportunity to address the pros and cons -- the issues -- to Congress," said Rich Muny, a member of the PPA's board of directors and unofficially the bridge between the PPA and the community it represents. "It's a chance to start going forward on some opportunities. We're definitely looking forward to the hearing."
At present, billions of American dollars are going offshore to online poker companies, the largest of which would gladly pay a percentage of the profits in order to re-establish legal credibility with the public. While this is an oversimplification, the pro-poker arguments Dec. 3 will likely be centered around poker's character as a game of skill and on the potential windfall of regulation.
"I think the government pretty much admitted the delay was because of the difficulties with enforcement," Muny said. "It's an admission something has to change. At the end of the day, we envision one of two bills [Frank's or Sen. Robert Menendez's S. 1597] has to happen. In the [Dec. 3] hearing, horse racing, poker, gaming and lotteries will present why they need access to banks for gaming purposes.
"I think the PPA was absolutely instrumental in making the delay happen," Muny continued. "The banks were unhappy being the enforcers, but they had come to the consensus they could just lock everything. At the end of the day there was no financial reason to make any other decision. This was about permitting small transactions, so they had no reason not to block all offshore gambling."
In all, the work of the PPA and the horse-racing and thoroughbred lobbies resulted in more than 300,000 letters sent to President Obama and members of Congress. As Pappas points out, "The PPA has given poker players a collective voice that's being heard."
The delay of the deadline is just one of many steps necessary for the dream of online poker regulation to come to fruition.
"We'd like to see regulation become a reality sometime in 2010," Muny says. "If we have it done within these six months, that would be great, but I believe that as long as we show progress, that will go a long way towards holding things off in 2010."
So now, the poker world awaits word from the Frank hearings with the hope. The PPA urges the continued diligence shown by its constituents.
"I would encourage everyone who believes in this to write their congressmen," Muny said. "We have a Web site where they can write Congress in less than 60 seconds. Congress needs to hear from everyone who supports us because the opponents are trying to stop it with their own letter-writing campaign."
The inherent message is clear: This was a victory in a small battle, but there's still a war to be won.
Gary Wise is a poker columnist for ESPN.com.
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