US Lawmaker Raps Internet Gambling Enforcement

[The Judge]

November 15, 2007

By Peter Kaplan
Reuters.co.uk

The Democratic head of the House Judiciary Committee voiced frustration on Wednesday about what he said are disparities in the enforcement of U.S. Internet gambling laws.

Chairman John Conyers questioned "the selective nature" of Internet gambling enforcement and said a ban enacted by lawmakers last year could end up hurting U.S. relations overseas.

"Continuing with the same old failed policies for the sake of feel-good politics doesn't make sense," Conyers, of Michigan, said at a hearing on the issue.

Conyers did not signal whether he supports any changes to the current law. A bill introduced by House Financial Services Committee Chairman Rep. Barney Frank, of Massachusetts, would roll back the ban on Internet gambling that was enacted by Congress last year.

However, Conyers and several other lawmakers on the committee pressed officials from the Justice Department and Treasury Department at the hearing to explain why they are cracking down on some forms of Internet gambling but not others.

As part of the crackdown, two founders of payments processor NETeller, PLC were arrested in January. In May online gambling operator BETonSPorts, PLC, pleaded guilty to U.S. racketeering charges and agreed to cooperate in a case against the company's founder and other co-defendants.

The Justice Department interprets a decades-old U.S. law, known as the Wire Act, as banning all forms of gambling over the Internet, although the gambling industry has argued the law only bars sports betting.

At Wednesday's hearing, Conyers and other committee members questioned why the Justice Department had not sought to prosecute other forms of Internet gambling, such as online horse-racing.

"To cherry pick ... is what I find to be particularly intellectually dishonest," said Rep. Robert Wexler, a Florida Democrat who has introduced a bill that would exempt poker and some other games from the Internet gambling ban.

Conyers also wanted to know why horse-racing and some other forms of gambling "will continue to proceed unfettered" under new regulations proposed last month by the Treasury Department and the Federal Reserve.

The regulations were drawn up to enforce a law enacted by Congress last year that makes it illegal for banks and credit card companies to make payments to online gambling sites.

The ban has been closely monitored by investors in some British-based gaming companies, such as Partygaming Plc (PRTY.L: Quote, Profile , Research) and 888 Holdings Plc.

Conyers also echoed critics of the new Internet gambling ban, saying it could run afoul of the United States' international obligations.

European trade officials argue that the online gambling prohibitions discriminate against European companies that want to offer online gambling services in the U.S. market.

The World Trade Organization in March found U.S. prohibitions on online betting illegal in a complaint filed by Antigua and Barbuda several years ago. However, U.S. officials have said they will maintain the ban anyway and retroactively remove gambling services from its market-opening commitments.

[The Judge]

By Sean Gallagher
InternetNews.com


WASHINGTON, D.C. -- The House Judiciary Committee listened to testimony yesterday from Justice Department representatives, outside experts and lobbying groups in an effort to confront the legal tangles surrounding Internet gambling.

The committee's hearing comes on the heels of last year's passage of the Unlawful Internet Gaming Enforcement Act (UIGEA), which prompted a number of further bills that that would, in various ways, legalize and regulate Internet gambling.

The UIGEA, which came as part of a maritime port security measure, places the onus on financial institutions to ensure that electronic cash and credit card transactions are not used to pay for wagering debts or payouts.

Speaking yesterday the Judiciary hearing, pro poker player Annie Duke blasted the UIGEA, which she said, "essentially deputizes financial institutions as the morality police."

"More than any other value, America is supposed to be about freedom," said Duke, who spoke on behalf of the Poker Players Alliance, an advocacy group. "Except where one's actions directly and necessarily harm another person's life, liberty or property, government in America is supposed to leave the citizenry alone. Examples of Congress straying from this principle are legion, but few are as egregious" as the UIGEA.

Criticism for the act also came yesterday from the Justice Department, which has been aggressive in applying existing laws to Internet gaming. Catherine Hanaway, U.S. District Attorney for eastern Missouri, testified on behalf of the department that adequate legislation banning Internet gambling is already on the books.

"While many of the laws do not mention Internet gambling [specifically], we believe it to be covered," she said.

Enforcement of existing legislation has become a hot topic unto itself for legislators and the Bush administration. In recent months, the administration's enforcement of current laws to target online gambling -- particularly the prosecution of London-based BetOnSports, PLC -- has escalated into a major showdown within the World Trade Organization.

Other countries have since won judgments in the WTO against the U.S. for failing to live up to its treaty obligations, which they charge should allow foreign gaming companies to offer services to American customers.

However, Hanaway said challenges to the U.S.'s ability to use existing law to limit online gambling remain specious to date.

"There have been motions saying our prosecution violates WTO treaties," Hanaway said during questioning by Rep. John Conyers (D-Mich.), the Judiciary Committee chairman. "Individuals as private citizens don't have standing [to make those motions] ... This Congress said nothing in these treaties would overturn existing laws of the U.S."

But Joseph Weiler, head of New York University's Hauser Global Law School, testified before the committee that there is "no question in anybody's mind that the [U.S.] ban on Internet gambling is a violation of the U.S.'s legal international obligations."
"The executive branch continues to threaten prosecution of executives [of foreign companies] for activities that the U.S. guaranteed its trade partners that it would [allow]," he said. "This is not a good example of how we conduct ourselves in the international community."

He added that the withdrawal of the U.S.'s commitments regarding Internet betting would set a dangerous precedent, and could place at risk American interests in other industries overseas.

Likewise, Rep. Shelley Berkley (D-Nev.) also fired at policy regarding existing Internet gambling regulations.

"The WTO has ruled that our laws unfairly discriminate," Berkley said. Should the administration withdraw its WTO commitments on gambling to continue prosecuting international betting sites, a move would seem like "the trade equivalent of taking our ball and going home," she said.

The Judiciary Committee is weighing a number of other bills that would alter current Internet gambling laws. Rep. Barney Frank (D-Mass.) introduced a bill in April that would allow licensed Internet gambling operations, and Rep. Robert Wexler (R-Fl.) introduced a measure exempting poker and other "skill games" from the scope of federal prohibition. Both these bills have yet to be reported out of the committee.

Nevertheless, the possibility of lawmakers rolling back prohibitions already affecting Internet gambling seems unlikely, if rhetoric from Judiciary Committee leadership is any indication.

For instance, Conyers, the committee's chairman, opened yesterday's hearing by calling gambling a "social evil".

Ranking minority member Lamar Smith (R-Texas) similarly laid out his distaste for online gambling, saying, "The dangers of Internet gaming are well known ... turning back the clock [on the prohibition of online gambling] will only encourage more problems."

In addition to the Judiciary Committee, the Treasury Department may likely be the next government body to tackle Internet gambling. The department is currently taking public comments on its proposed rules for enforcing UIGEA. The comment period ends Dec. 12.

[captaincapper]

These politicians are such hypocritical shit stains. It's completely fine if I go across the street to the local convenience store and gamble by buying a State Lottery ticket in which I have about a one in a zillion chance of winning. Yet if I place a sports bet over the Internet, I'm deemed as some sort of immoral criminal degenerate according to our law-makers. If only the public knew the extent in which these ass wipes are given under the table "donations" from "legal" gambling entities, then they might be exposed for the true frauds that they are. In my world view their actions are criminal, not mine.