pokernews.com
There's a lot of discussion these days about what governments, most
notably ours here in the United States, are going to "do" about online
gaming.
The issue of online gaming and its lack of recognition or regulation in
many jurisdictions is quickly becoming a hot-button issue, and it
appears the button may become hot enough to get some action.
House Reps Bob Goodlatte (R-VA) and Jim Leach (R-IA) have reintroduced
the Internet Gambling Prohibition Act, an act that was soundly defeated
when its predecessor was run up Capitol Hill. These bills have been
finding their way onto lawmakers' desks since 1997. But while some of
the different versions of this bill have passed the Senate over the
years, none of them has made it out of the House of Representatives.
One fact makes the introduction of the bill this time around much more
interesting. Since the last version of the bill was introduced, the US
Government lost a decision in the World Trade Organization brought by
the tiny island nation of Antigua. The US has until April 3rd to comply
with the WTO ruling. The WTO ruling essentially said the US could not
enforce the Wire Act in this case, and any enforcement of the Wire Act
would violate Antigua's rights under prior trade treaties. Since the
ruling, the US has taken no action toward compliance with the ruling,
and indeed the only Internet gaming legislation introduced since the
WTO ruling proposes the exact opposite of the ruling, a ban.
Early returns on this bill don't give it much of a chance, and even if
it did pass, the WTO ruling could throw a roadblock into any action a
passed bill would attempt to take.
Other nations around the world are taking interesting steps to try to
control the Internet gaming "beast." On February 24th, Italy announced
they were going to restrict access to Internet poker sites, only to
announce the next day that it was OK to play on one site, in effect
creating a single government-approved gaming site... at least for now.
Sweden has done the same thing, allowing two Swedish gaming companies
to build out a government-approved online poker site.
In a perfect world, we could model a system in the US after the
U.K./European system, which is proven and clearly works. Under this
system companies are licensed and regulated, and while often based in
tax-friendly EU territories like Malta and Gibraltar, these companies
happily comply with any and all regulatory requirements, as they are
treated like any other internet related business.
The debate about the regulation of online gaming raises thoughts of a
similar issue that surfaced in recent years—the illegal downloading of
music and file sharing. In those cases, the content providers were
standing side by side with the government, and interested in working
with them on controlling Internet use in this way. In contrast, in this
situation, the online gaming companies are clearly going to do
everything they can to oppose any type of government control of
Internet gaming, unless those controls are in the form of regulation,
not prohibition.
The government and the online gaming industry really have some tough
road ahead of them. Much of the current administration's conservative
base will not go for blanket legalization and regulation of online
gaming, despite the massive revenues regulation would bring to the US.
The land-based US gaming companies are licking their chops at the
thought of being able to brand their own online gaming sites, and
legally take US customers. This fact may be the one real "wild card"
the online gaming industry has to play in this game of ultra high
stakes poker currently playing itself out behind closed doors.
Not surprisingly, it doesn't seem that the pressure from the
international community has any affect on the US government's attitude
toward online gaming. The US has had since April 7th 2005 to address
the WTO ruling, and according to the ruling has about 3 ˝ weeks left
until it is supposed to be in compliance with the ruling. The
government has taken no action that I have seen toward attempting to
comply, and it appears this 'deadline' will pass without any
action...which seems to boil down to the US government essentially
thumbing its nose at the international trade community.
Which brings up a really interesting issue. If the US government is not
interested in coming into compliance with an international trade
ruling, what makes the government think the online gaming companies
will comply with possible legislation "banning" online gaming? If the
government blocked ISPs, how long do you think it would be until the
online companies used things like proxy IP addresses to circumvent
this? About 30 seconds. Would legislation prevent the bulk of users
from playing? No.
This is a really big hand of poker being played, with a
multibillion-dollar industry hanging in the balance. This particular
hand of poker will, even in a best-case scenario, take years to get to
the "river." I think we will see a few more raises and re-raises in
this hand of poker. Eventually, the two parties will agree to some kind
of 'chop'.
Let's get people from the online gaming industry and US political
leaders into a room to discuss real solutions. We as an industry must
be sensitive to the fact that the government is in a difficult position
here. But by the same token, the government needs to realize that no
amount of political pressure or technological barriers are going to get
these billion-dollar offshore companies to fold their hands (and their
tents) and give up on the US.
What an exciting and nervous time this is. Now, we wait to see if the Senator or Congressperson calls the next bet. Stay tuned.
