The House Financial Services Hearing Live!

[GPWA Ryan]

We (me and vinism) are going to blog the hearing live on this thread, pulling out the key points for GPWA members. Hopefully, this helps people who are not able to see the hearing live.

If you want to see the broadcast, click here.

[GPWA Ryan]

Frank is the first to speak this morning.

He has started off by saying that this gambling ban is something that concerns him greatly.

He feels adults "should be able to spend money they earned, as long as it doesn't hurt other people."


He called the UIGEA "the most substantive interference of Internet freedom...ever."

Said - you can buy wine, cigarettes and pornography on the Internet. Points to pornography as something the supreme court has deemed a constitutional freedom...as long as there is a separation between adults and minors.

[GPWA Ryan]

Snooptodd is reporting that there is three people in the audience at this hearing...

seems this 80+ person committee does not want to touch this issue...

[GPWA Ryan]

Is the first to speak against Frank...

Most of his arguments revolve around minors and young people...

three main concerns...

1.) The earlier you begin gambling, the more likely you will become addicted.

2.) Young people who begin online gambling, increasing withdraw themselves from "regular" activities

3.) Young people run up debt, then turn to criminal activity

Called the UIGEA effective, supported by the MLB, NFL, NCAA, and NBA all suport this bill.

Most of his arguments are pointed towards online sports betting.

[GPWA Ryan]

Said there are misconceptions about the current state of the law...

He's very loud and emphatic!

1.) Because you can bet on the Horse, the law is uneven. If you're a horse racing fan, you can bet on the Internet. But if you play poker or Mah jong, you can't be on the Internet.

2.) Comments about personally repsonsibility. Says he has three kids. Said you can turn on HBO at 1:30 a.m. and watch movies that kids shouldn't see. Should we shut down HBO. Believes its the parent's responsibility to watch their kids.

Says Horse racing, dog racing and lotteries are preferred terms of betting. Doesn't understand why.

[GPWA Ryan]

Agrees with Frank and says prohibitions don't work.

Says responsibility is the job of the individua,l family and church.

He doesn't like gambling (suprise!), but believes he needs to protect the Internet and the country from act of prohibition.

[GPWA Ryan]

Said many of the people who are against people using credit cards in Congress, voted for measures that would allow "free and rampant" solicitiation of minors by credit card companies.

Says if you're nine year old has you credit card - take it away!

Brought up the free trade arguments, says Congress is ignoring the WTO because the countries with complaints are small. Said it's OK to have an opinion on one side or another, but can't have a split decision based on an issue.

[GPWA Ryan]

The first witness is Radley Balko, Senior Editor, Reason Magazine .

Civil Liberties expert that applauded Frank for his fight for civil liberties.

Said the UIGEA was passed under dubious circumstances.

Says poker is as mainstream and American as baseball. The game saturates television and is carried in many newspapers as columns.

Says the Internet removes the geographical issues for poker players who want to sit down and play. He respects the people who have a moral issues with gambling, but to them says "then don't gamble."

Says a parent could just as easily spend all the families money on exotic travel, ebay, or fancy cars...not just gambling. Called these personal decisions that are an individual responsibility.

Says if Congress allowed online gambling, big brands like Harrahs, MGM, Party Poker and Full Tilt would set up shop, giving player reputable companies to gamble on...called it protection for the individual.

Says Congress should fix this wrong and let Americans do what they wish in the privacy of their own home.

[GPWA Ryan]

Gerald Kitchen, Chief Executive Officer, SecureTrading Ltd is next.

Speaking on behalf of credit card processors, called it a maturing and growing industry that balances convience and risk.

Says it takes a regulated world to ensure these processes can provide protected services...pointed to the U.k.'s work on this issue.

The Regulated Environment

1.) It is easier to monitor players when they use accredited bank cards

2.) Say validation processes are lengthy and tedious, but necessary to protect people's money, and identity on the Internet - under prohibition, unregistered processors will make transactions harder, if not possible to track - says he fears for his children in this environment

3.) The challenge of compulsive gambling - said there is an issue, but that his industry has worked to correct these problems by placing regulations on usage, limits, and tracking

4.) Geo-location technology allows his industry to ban gaming in areas that do not allow gaming, such as states in the U.S. with specific bans. This is not possible in an unregulated environment.

[GPWA Ryan]

Nearly two decades of experience in the U.K. on this issue.

Pointed to agencies like FSA and other in U.K., built to protect individuals and companies in a mulit-layered process of regulation.

His point...

1.) Regulations helps solve disputes in e-commerce

2.) Internet gambling can and should be regulated "the genie can not be put back in the bottle, internet gambling is here, and must be dealt with."

3.) In a prohibition regime, people go underground. In a regulated environment, the situation can be controlled and thrive.

[GPWA Ryan]

Information security expert. Does not have an opinion on gambling.

Two areas of expertise...identity information and geo-locating.

Says they are not reliable in their current form. Says 20 percent of the time when dealing with age or location, this mechanisms will fail.

Wrote his name and age on a card, then passed the card to the person next to him. Said the person next to him is now Jeff Schmidt, same age and locations.

Used a youth at a bar analogy, said use of forged age document occurs at a rate of 20-25 percent. Said on the Internet it's worse, and happens with greater frequency.

Mentions Boston! Said he used his Verizon wireless card in Boston, then in Washington D.C. Checked his wireless card IP location and got conflicted locations, and some locations he'd never been.

[GPWA Ryan]

Parent - father of four

Dec. 9, 2005 - his son called him crying and said he robbed a bank. he was in prison.

Son was a good person and a good student.

Had to take the computers out of his house, keep his wallet by his bed. had to keep his family finances safe from his son.

His son took $2,000 from his family's safe when he went back to college. Gambled at the Library of Lehigh. He was shut off from all gambling sites for bad transactions. His friend loaned him money, and he never paid them back. he held a fundraiser, then kept the money.

He robbed a bank to pay his debts. He pleaded guilty - 22 months to 10 years sentence.

Said instead of watching his son graduate from Lehigh, he will watch his son leave prison. He said he is happy that his son is alive, believes other dads will not be that lucky..

Said the WSOP is glamorous, but the life of an addicted gambler is not.

[vinism]

This father's testimony, and others like it, will prove to be the chief obstacle to passing legislation. There is a wide body of people who believe that Internet gambling will create generations of youths addicted to gambling. And it is this mindset that needs to be addressed and overcome.

[GPWA Ryan]

CEO of industry leader in online id verification.

Two issues

1.) look at what society wants to - protect it's vulnerable

2.) What does the market

Technology flies...and continually changes. Shows a 60-minutes clip that has a son using his father's credit card to gamble on Paradise Poker. He was denied, then tried and tried again until a site accepted him. An argument that people will keep trying even if it's illegal...and that must be regulated because it will happen anways.

He says - right now, 10-100 millions of age verification. Said it happens in movies and tobacco sales on the Internet without a problem with his software.

"We have to have an honest and truthful discussion about what it real and what is possible."

Says when you use just a credit card, it's not enough. But when you used a layered approach, geo-targeting ect...it becomes more effective. Says the report by Scmidt is faulty, and that companies do not want "to be bothered with the difficulties of child protection."

[GPWA Ryan]

The morality argument

Says he has a low attention span and would lose his pants gambling because he doesnt pay attention. He doesn't gamble.

But that does not mean this is true for everyone, nor should it keep someone who wants to gamble from being able to do it.

Points to Mass. state lottery as once considered "evil" and going to cause a problem with addicted gamblers...now an acceptable practice.

Says he wishes no one gambled...but that does not mean his opinion should be law.

[GPWA Ryan]

Says he was relieved when Congress passed the UIGEA because he felt his son was doing something illegal, and he was powerless to stop it.

[GPWA Ryan]

Slams Full Tilt and Professional Poker Player Ross Boatman...

Says in his biography that he started learning and playing poker at age 12. Asks why this is on the site.

Radley Balko responds jokingly and says that was "well before the age of Internet Gambling."

[vinism]

This is clearly shaping into a morality play -- will impressionable youth become addicted gamblers if Internet gambling is legalized. Bachus cited evidence that top poker pros started playing early. Congressman from Ohio is focusing on age verification. Frank, in terms of morality, is arguing one person's morals shouldn't be forced on others.

[vinism]

At issue now is the geolocating software. and its reliability. The obvious underlying question is whether geotargeting and age verification will work.

[GPWA Ryan]

The two age verification and geo location experts are giving conflicting reports.

Scmidt says the leading providers report flaws in the system with ways of getting around it. Said his verizon wireless card test was done without trying to circumvent the system.

Colopy said his facts are faulty and that the technology exists to do verification processes and they must be used.