Online Poker
What’s the problem?
Millions of Americans gamble on the Internet even though such gambling is illegal, unregulated, and offers no consumer protections. The market for internet gambling is run by offshore operators.
Some operate from regulated foreign jurisdictions, but many operate from small Caribbean islands that do little to regulate the activity and do nothing to protect consumers and minors. They even offer online sports betting and casino banked games such as slots and roulette.
Given the inherently interstate nature of the Internet, which has no borders, and the demonstrated willingness of offshore operators to violate U.S. laws, the modernization of federal law such as the Wire Act of 1961 is necessary to keep illegal offshore operators out of the United States and provide strong and consistent enforcement protections that would not be possible should individual states enact legislation legalizing intrastate Internet gambling.
Offshore operators have flagrantly violated existing federal law to build a $4 to 6 billion per year U.S. market. The recent indictments of offshore operators have impacted the market, but not solved the problem. It has simply led to new operators taking new market share.
Do we really need federal legislation to deal with the problem?
In short, yes.
The fifty-year old Wire Act must be modernized, with coordinated changes made to the Unlawful Internet Gambling Enforcement Act. Internet commerce in the area of gambling transcends state borders and requires clear federal policy and law setting forth what is allowed and what is not, as well as law enforcement and regulatory tools to ensure the laws can be enforced. For example, although recent indictments of certain operators accused of violating U.S. banking laws put a temporary dent in the Internet gambling market, the business is shifting to many other overseas Internet gambling operators who accept bets on all forms of gambling from American citizens. The mechanisms that do exist to sanction such operators do not give law enforcement authorities strong tools and they do nothing to shield American consumers from potential exploitation by these operators.
Given the inherently inter-state nature of the Internet which has no borders, the enforcement protections that federal legislation would provide would not be possible should individual states enact legislation legalizing intrastate Internet gambling. The status quo means ceding the Internet gambling market to illegal offshore operators and to state governments that will continue to push the envelope and greatly expand the Internet gambling market. It means online poker would remain in legal limbo, out of the reach of federal regulation to ensure fair games and the integrity of operators. And it means continuing to drive thousands of high tech jobs and billions of dollars in potential state and federal tax revenue to offshore jurisdictions.
Only federal legislation can address the problems associated with illegal offshore gambling and online poker, and provide much needed enforcement of our Internet gambling laws and consumer protections. Such legislation would establish a strict regulatory framework for poker while preserving the sovereign rights of states and tribes to opt-out of this activity.
Why do we need to regulate online poker?
Poker is a beloved pastime enjoyed by millions of Americans from all walks of life. It has played a strong role in our nation’s cultural history. Poker is not a house-banked game. Individuals play against each other, not the house, which receives only a fee for hosting the game.
The millions of Americans who are playing poker online deserve to know they are playing safely with law-abiding operators. Licensing and regulation of online poker in the U.S. would ensure American consumers are protected and that the jobs and revenues associated with this billion-dollar industry are realized here in the United States.
To the extent that poker is permitted under state laws, it is essential that there be well-designed minimum standards for regulation that can effectively address the principal public policy concerns that surround playing poker online.
What’s the solution?
Commonsense federal law enforcement legislation that will:
- Modernize and strengthen the Wire Act of 1961 with conforming amendments to the Unlawful Internet Gambling Enforcement Act of 2006 (UIGEA) to unambiguously eliminate illegal internet gambling.
- Provide tools to crack down on unlicensed foreign operators who do not comply with U.S. law, empowering law enforcement to shut down the illegal operators coupled with assistance from financial institutions.
- Enhance penalties for those who violate the law.
- Give states and tribes the authority to authorize or prohibit online poker -- a peer to peer game that has been part of the cultural and recreational fabric of our Nation for years and has never warranted a specific federal prohibition as with house banked gambling games -- subject to strict regulatory mandates and sophisticated tools to block consumers in those states that choose to prohibit online poker.
- Establish a strict state gaming regulatory framework for licensing and enforcement of online poker in jurisdictions that choose to accept it.
- Require licensed operators to offer state-of-the-art problem gambling controls, including limits on wagers, deposits, losses, and playing time.
- Mandate that operators of licensed online poker sites maintain a transparent record of all transactions and player identities and comply with existing U.S. laws on federal bank secrecy and suspicious transaction reporting.
- Require that technologies currently used successfully in other age-sensitive industries be used to combat underage poker play.
- Mandate technological safeguards be utilized to ensure that games are fair and honest, offering the same strict regulatory scrutiny as commercial poker rooms.
- Mandate that players' deposits be maintained in escrow accounts and available on demand.