House subcommittee to hold online gambling hearing

[GPWA Aaron]

Rep. Jan Schakowsky (D-Ill.) now up.

Mentions that the Venetian is owned by the Sands and that it promotes mobile casino gambling on property and that you can play in the room. Promotes mobile sports betting product that allows betting from anywhere in the state.

"It feels to me a little hypocritical." - ZING

Asks Eggert if consumer protections can be built into legislation.

Eggert - I'm not sure if you can ever have a perfect system. I think the problem of poker bots is a difficult one. For slot machines, we can have better protection, specifically better information about hold percentages. We can do a lot better, but I don't think you can have a perfect system.

Schakowsky - We're often sold the lottery and other kinds of gambling revenue helping our schools. I know for a time it really displaced money that would normally come from the general fund in Illinois. I believe that's fixed now.

Bernal - No one can name a state in this country where the policy has worked. Gambling is not a sustainable revenue source.

Volberg - Challenge of determining amount of revenues from problem gamblers is difficult because it varies a great deal by jurisdiction. In the end the industry is going to be dependent to some degree to people who spend more than many of us think they should on gambling.

[GPWA Aaron]

Rep. Marsha Blackburn (R-Tenn.) now up for questions.

Says Barton is wrong because that God is on his side because his flight got it, but the bill number, H.R. 2666, indicates that
The devil is in the details."

Wonders if bots are spamming their Twitter accounts.

(No Rep. Blackburn, those are called poker players.)

Wants to know what the expectation of privacy is.

Freeman - When it comes to privacy, that's an area we value considerably. Consumer protection should be an issue. The only way to address privacy is through effective regulation. With online gaming, all of this is voluntary. They're choosing to enter that information. That's what makes this situation unique.

Pappas - The messages you've been receiving on Twitter are from real people. The issues of privacy and data security are no different than they are for any e-commerce business. Today we have a situation where American consumers are playing on offshore sites that aren't subject to any American laws or regulations regarding data privacy.

[GPWA Aaron]

Peter Welch (D-Vt.) now up.

Welch - Anything we do has to include some protections. How do we insure that minimizing the harm is baked in as a priority from the start?

Eggert - You plan it before you legalize Internet gambling. It should be something that is written in from day 1. There should be a lot of room for research, but it's pretty straightforward what people want in terms of information. Worried that a state-by-state approach will yield a "race to the bottom."

Volberg - You do have to start even before the regulations, you have to bake the language into the legislation. It's about consumer protection and making sure what you put in place is going to work.

Welch - PPA and AGA's views on including those protections.

Freeman - It's not often an industry comes before Congress and asks for regulation, but that's what we're doing today. Any state in which we do business can punish us in another market.

Pappas - A regulated market is going to protect consumers much more than an unregulated market or the status quo.

Welch - Are there no protections that could be part of legislation that could get the job done.

Abboud - The day the Wire Act was overturned was not the day the Internet became safe.

(The Wire Act was not overturned; it was -- finally -- interpreted correctly)

[GPWA Aaron]

Leonard Lance (R-N.J.) now up for questions.

Lance - The bill doesn't force anyone to participate and allows states to implement their own regulations. Would this bill preempt what New Jersey is trying to do?

Pappas - It would not restrict the ability for New Jersey or other state to offer other games. It would require states to submit to federal regulations for poker.

Lance - Is it the view of both of you that there needs to be statutory legislation in regards to the Wire Act?

Freeman - It is our opinion that the online gaming environment with Congress putting together minimum thresholds. States are putting together comprehensive regulations.

Abboud - We think the Wire Act being overturned, the states that are going forward are going forward with great risk.

Lance - Would Barton's legislation restrict New Jersey from offering blackjack or slots?

Pappas - No, only poker would have to submit to federal legislation. We support New Jersey's law and we also support Mr. Barton's law and we hope that those would work well together.

[GPWA Aaron]

Joe Barton (R-Texas)

Says he was being flippant about God being for this bill. Says God does give men and women free will and law should respect free will.

Says members of the Indian gaming community chose not to participate in hearing.

Barton - Says first hotel-casino he stayed in in Las Vegas was at the Sands, and held a fundraising event at the Venetian earlier this year.

Puts Cantor Gaming advertising up on the screen offering mobile gaming "Is there anything you can't do on a smartphone or a tablet? You can even play from your room." Also mentions sports wagering anywhere from Nevada.

Wants to hear the comments --

"What you're advertising here is the same thing we're talking about in my bill for poker only. It's just a matter of how wide the geography is."

Abboud - It's all about human interaction, right. You all have the right to eyeball me and determine whether I'm telling the truth. It's also about the location. That's a very controlled environment. You have to show up. Make sure you're not on the self-exclusion list, make sure that you haven't had too much to drink.

Barton - what your company is advertising here is the same thing that my bill does, and my bill is poker only. I've never met a professional roulette player, I've never met a professional slots player, but there are a lot of professional poker players because it is a game of skill. All my bill does is allow free will at the state level if the governor allows it to play poker online.

[GPWA Aaron]

Rep. Greg Harper (R-Miss.) now up.

How are we doing anything to address offshore and out of country illegal sites? If we allow states to make it legal and then states can opt out, it would seem to me if you're going to go that route, the better route would be to make it illegal and let states opt in.

What would it take for the United States to regulate Internet gambling and control the offshore illegal sites?

Abboud - I think that we do. Goverment is doing it with online pharmacies today. To say that we can't do it is not a plausible answer. No one's proven to me that you can't collude against each other (online). It's a rush to market because the Wire Act was overturned.

If it was to be legalized today and we don't shut off the illegal operators, it will be easier to go to the illegal sites.

[GPWA Aaron]

Rep. Bill Johnson (R-Ohio) up next.

Johnson - Self-proclaimed "IT geek" ... "The AGA has changed its position on Internet gaming over the years. What is its current position on Internet poker and online gaming? Do you want a federal law or do you want the states to be in charge of it.?

Freeman - We support a federal role in online poker legislation. In the absence of federal action, we've seen states like New Jersey go forward in a very effective manner.

Johnson - "My concern is to say we're going to regulate it is one thing, to do it effectively and protect the innocent ... I do believe that gambling is an enticement to some that would see a quick fix to a financial problem. I also understand that we don't outlaw prescription drugs because some people fall victim to addiction to prescription drugs." How to protect people that shouldn't be allowed to gamble online?

Pappas - We're not talking about a theoretical. This is being regulated today in three states and it has been regulated in European jurisdictions for 10 years. It's not simply going on and clicking "I'm 18" or "I'm 21." It's not like any other form of ecommerce that is not age restricted. I would argue that it's easier to protect problem gamblers online than it is in a brick and mortar facility. The wealth of data is gold in terms of regulators.

[GPWA Aaron]

Rep. Bill Long (R-Mo.)

Long - Wants Abboud to clarify Sands' position on Internet poker only.

Abboud - We're against it.

Long - Wants more info on bots.

Eggert - Talks about the difference between bots playing on their own and bots providing info on what player should do.

Long - Brings up super-user cheating scandal. How can people be assured that activity does not happen.

Freeman - I think you speak to exactly the type of market we want to prevent. We're talking about a regulated environment with licensed companies. There's a reason companies don't want to see cheating and underage gamblers on their sites: They can lose their license, and not just online.

Long - If this legislation passed, would that be MGM, Caesars, Sands, Wynn? Or would it be smaller operators?

Freeman - How do we protect the brick and mortar investments that exist now? Let them adapt. Up to states to determine how to structure it.

[GPWA Aaron]

Terry includes some statements from folks for/against the bill in the record and tells witnesses that they should answer any questions that they have down the road in 14 days.

Barton - Says his crazy ideas, like a bill that repealed natural gas policy and that created a playoff for college football have come to pass, so it's only a matter of time before his poker bill goes through.

Okay Joe ...

Hearing over. On the whole, the pro-gaming sides offered real arguments, the anti-gambling folks offered up the same old arguments. Definitely enjoyed seeing the Sands get raked over the coals for promoting gambling through smartphones and tablets while arguing against online poker.