Live blogging the Internet poker bill House Subcommittee hearing

[GPWA Aaron]

Questioning now open, Bono Mack opens, asks Whyte about whether limitations would be effective.

Whyte: There's evidence in Canada and Europe that limits on time/money and payment processors may not be effective with pathological gamblers, but seem to work with people at risk of becoming problem gamblers and keep them from "stepping over the edge."

[GPWA Aaron]

Ask Stevens why NIGA should have exclusive rights to deal.

"If anyone deserves to be at the front line it's the Indian people."

Bono Mack wants to know why they shouldn't have to renegotiate state contracts.

Says it's a new industry and they shouldn't have to renegotiate existing contracts to take part.

[GPWA Aaron]

Rep. Butterfield now up with questions. Starts with commentary. Says he's "beginning" to understand online gambling, and that it's complicated. Intrastate online gaming is moving forward in a few places, including Washington DC and California. Wonders if the Justice Department will shut these operations down (they won't), says they need to hear from Justice Department on these issues.

Finally a question, to Romer: Wants to know if there are differences along racial and ethnic lines in Internet gambling.

Romer says he wouldn't be surprised.

Is there anything that could be written into the law that would protect minority children?

You want to prevent people from using online gambling sites that can't control their gambling.

[GPWA Aaron]

Charlie Bass (R-N.H.) now up. Perplexed about all the money that's been lost in Internet poker. "I know quite a few people who play Internet poker and none of them will ever admit to having lost anything."

Question is for D'Amato: "In your organization's opinion, what impact would passage of Internet gambling have on state lotteries, and would your organization have any objection to allowing the state lotteries to compete in the market."

D'Amato - no objection to allowing state lotteries to compete. Doesn't believe that the lottery ticket player is the same person as the Internet poker player.

[GPWA Aaron]

Edolphus Towns (D-N.Y.) up next. "Over the next several weeks, Congress is going to decide how it's going to get our nation's physical (sic) house in order."

Yep, he said "physical house."

And he's wearing the most colorful tie I've ever seen.

[BingoHouse]

Great thread Aaron, just wanted to chime in and let you know I'm following it and agree with 90% of your editorial comments so far. From what little I've heard, the attitude seems generally open and positive. Keep us updated.

[GPWA Aaron]

Says he's sympathetic with the fact that revenue will be raised, but worried about unintended consequences.

Then asks Stevens why he's opposed to the act in general. Stevens re-states his reasons/concerns that Indian tribes are treated fairly.

"Based on programs that are in place, we could make sure (youth/problem gamblers) are safe."

Sounds like he just wants to make sure that safeguards are put in place.

[GPWA Aaron]

Joe Barton up next. Asks for unanimous consent to submit a letter from Frank Fahrenkopf, chairman of the AGA, who was unable to attend because there were too many people on the panel.

Asks is anyone on the panel if they don't believe millions of Americans are now playing online; no one raises their hand.
Asks if there is any way to prevent Americans from playing online; Aftab says they could prevent anyone under the age of 21.
Asks Stevens if the opt-out option is afforded to the tribes, why doesn't that protect their sovereignty. Says Stevens says it's a problem of their government being recognized.
Asks if D'Amato thinks if safeguards can be put in place to stop underage/problem gamblers; D'Amato says yes.

[GPWA Aaron]

Leonard Lance (R-N.J.) opens his time with a statement from Louis Frey, former director of the FBI who is now a board member of FairPlayUSA. Requests consent to submit Frey's statement.

Asks Stevens if tribes can do business outside their lands and subject themselves to the state and federal laws. "If tribal gaming is going to be expanded beyond the borders with the Internet, isn't it inevitable that tribes will have to deal with federal and state laws? Indian tribes have been pushing the idea of pushing Internet gambling at the state level. Seems to me this would only benefit a small number of tribes in large states."

Stevens: "We've yielded to state tribal authorities to handle those situations."

Lance: Says he wagered $10 on D'Amato's election in 1980.

D'Amato: You must have gotten good odds!

[GPWA Aaron]

Greg Harper (R-Miss.) up next.

"I've not been given any real comfort here that since it can't be regulated offshore that we will be able to do that."

"The idea of online gambling, legal or illegal, gives me great concern."

Wants to know if any organizations receives any money from offshore casinos.

Aftab - no
Stevens - not to his knowledge
Whyte - Says they have received one; have a long tradition of accepting funds sources from that promote gambling
D'Amato - Yes we have; and we submit that online gambling should not be offshore, it should be onshore
Eggert - Works for a University, so probably not
Romer - No

"Perhaps the way to deal with offshore or illegal casinos is to come up with ways to block payment to those sites."

"This is something that we need much more to look at. I'm not confident that we have the tools in place to do what we need to do."

"In September of this year, I know the US attorney in New York referred to Full Tilt Poker as a global Ponzi Scheme ... Does the Poker Players Alliance receive funds from Full Tilt Poker or Absolute Poker."

D'Amato: "No we don't. There should be a requirement, as there have been for PokerStars, where those dollars are segregated and placed in a special account so those kinds of things can't take place. And that's why it cries out for regulation."

[GPWA Aaron]

Marsha Blackburn (R-Tenn.) up next.

Asks why Whyte says access to regulated online gambling would not increase participation, and then why are entities so eager to offer it.

Whyte says in the UK only young men have seen an increase. Lesson is you have to have a balanced approach with regulation and public protections.

D'Amato: We can and should provide revenues to treat youngsters, to treat addicted people, and $50 million easily could be made available. Robust verification - we can do that today, so we know who it is who is playing. Seeing to it that funds are utilized and segregated. There are things that we have learned that they have done well, and we can expand on them.

Blackburn: Asks each of them if brick and mortar regulations should be paired with online gambling.

Aftab - yes, plus more
Stevens - says it's two completely different
Whyte - yes plus more
D'Amato - yes plus more (easier to do)
Eggert - Yes, and stop the bots
Romer - Yes plus more

[GPWA Aaron]

Cliff Stearns (R- Fla.) wants to know what the situation is in Europe, what's available? Roulette, slots? Poker? Sports betting?

Whyte says it depends on the country.

Stearns asks Aftab how to protect children.

"We don't age verify children, we age verify adults."
Check against authenticated bank accounts, voter registration, etc.

There would be a third party verification system that would be required.

Would require several levels of authentication to show that gamblers were 21+.

Stearns: "Can't you gamble on a Blackberry in Nevada."

Whyte: "Yes, it is allowed. Think of it as offtrack betting. It's regulated within a state, but you're able to use a wireless remote."

Aftab: "We have a problem now that only you can solve ..."

[GPWA Aaron]

Rep. Bill Cassidy (R-La.) doesn't believe Whyte's assertions that online gambling regulation won't yield a significant increase in gambling.

Whyte: The experience in other jurisdictions seem to show that people who gamble online regardless of whether it's legal or not.

Cassidy: Do we have numbers that illustrate how many underage gamblers in countries that regulate?

Aftab: Yes, it's good and it's getting better and better.

Cassidy: Asks Eggert if there's a way to block data mining.

Eggert: Says there's no way to stop a bot from telling a person how to play. It's a huge problem to the industry because recreational players don't want to play against expert bots.

Cassidy: How do address the bot situation?

Aftab: Online sites can watch for that. Once you're dealing with full authentification, you'll know who everybody is and you start tracking information.

[GPWA Aaron]

Mono Black is back as second round of questioning begins.

Talks about how the music industry tried to fight the internet, and lost.

Asks D'Amato if tribal Internet operations should be open to customers wherever legal.

D'Amato: We want a competitive marketplace for everyone. The problem we have now is parallel to what we had with prohibition. Here we are 50 years later, we're well behind the world. You're going to say you're not going to use the Internet for commerce? Are we going to ban poker on television?

Bono Mack: Our problem is to try to advance technological problems as well as legislative solutions. Asks about Eggerts assertion about bots.

D'Amato: If we do nothing, that problem will grow and we will have no opportunity to fix it.

Bono Mack: How do you handle something as innocent as losing Internet connectivity in the middle of a hand? (Clearly she's never heard of all-in protection)

D'Amato: This legislation can't protect everybody at every time in every instance. But it can go a long way towards protecting people who have no protection at all right now. It will be imperfect, but a heck of a lot better than what we have now.

[GPWA Aaron]

Butterfield is back again, and is asking Eggert about slots. Not quite sure why.

What are the worst deceptive tactics in the online gambling world?

Eggert: The worst are online poker sites not having the money that gamblers have (deposited). Another bad practice is insiders being able to see the hole cards of their opponents. Another bad thing is not being able to tell what the hold percentage of a slot machine is.

Butterfield: What kind of expertise/authority should the regulatory agency have?

Eggert: We should have a regulatory agency that focuses on consumer protection, and focus on what consumers understand, what information do they want, and what information can they use.

Butterfield: How to vendors describe their games?

Eggert: Slots are describes as "loose, looser or loosest," but no way to know what that means.

Butterfield: How do you protect people who are preying on people who aren't as good as them and may be using database information.

Eggert: Have a skill rating and make it available and public.

[GPWA Aaron]

Barton back for his second round.

Barton: I will acknowledge that it's technically possible to set up a scheme to use computer bots at the table. You're not going to set up a computer bot to sit in a $.01/.02 game online. I've got $10 million in play money in online poker sites. When I look at the for-money sites, most of them are for less than $100. So anybody with any sense at all, a recreational poker player, you're going to be an absolute idiot to go online and get into a high dollar poker game. You go into that game knowing that everyone else is really good and unless you're an heir to the Rockefeller family or Bill Gates, you don't want to play in that game.

If you know that they're adults and maybe even stipulate that they don't cheat, if they cheat we can catch them, right?

Eggert: I don't think you can catch someone using technology to beat you at the poker table.

Barton: We can put penalties in the bill where you can ban people, penalize and if the committee wants to, we can put them in jail.

[GPWA Aaron]

Adam Kinzinger (R-Ill.) is up first, asks Aftab about the offshore industry.

Aftab: Offshore sites are legal in the jurisdictions where they're regulated. The vast majority are unregulated and have no checks and balances. They regulated sites keep kids out; they have trust systems to keep player money safe; you never know who's running unregulated sites - could be terrorists (yep, she went there). Anything that could possibly go wrong, could go wrong; $4-6 billion of American money is going to offshore online gambling sites. Consumers here don't know where to turn.

Kinzinger: Have sites that are regulated had problems?

Aftab: People will always break the law, but if the tools are there you can prosecute it.

[GPWA Aaron]

Gregg Harper (R-Miss.), one of the few who has put up a massive resistance to this, is back.

Wants to know if sites that currently allow US bettors should be allowed to open if regulated in the U.S.

Aftab - No, they shouldn't
Stevens - No they shouldn't
Whyte - Organization doesn't have a position on online gambling; Harper pushes him on what he thinks personally, says they shouldn't
D'Amato - If they're violating the law, then they shouldn't
Eggert - No they shouldn't
Romer - No they shouldn't

D'Amato then interjects and says online poker sites are not breaking the law.

Harper: an expert on online identification says ID verification can't be reliable on the Internet. Asks Eggert if it's possible.

Eggert: Not qualified to answer.

Aftab: It's changing radically and very quickly. You can't verify kids, but you can identify adults.

Harper: If we legalize Internet gambling in the U.S., what will prevent someone from going to the offshore sites?

Aftab: When you get a lot of players who now have a vested stake on the inside, they can help you blow the whistle on the outsiders.

[GPWA Aaron]

Bill Cassidy (R-La) back again. Wants to know if legalized internet gambling will increase problem gambling.

Whyte: In the jurisdictions we've looked at, the rate of problem gambling has not exploded. There are subtle increases in severity of problems, especially in young men. There are at risk groups that may shift their gaming patterns.

Cassidy: Wants to know what percent increase it will be.

Whyte: Says it's not much, problem gambling has increased from 0.5 percent to 1 percent over the last 30 years.

Cassidy: Is this legislation a positive or a negative.

Eggert: There are good things about Internet gambling that you can put in harm minimization strategies.

Cassidy: Is this legislation a positive or a negative for consumer protection.

Eggert: Haven't seen legislation yet that has good consumer protection, but it could happen. You have to build in strong consumer protections.

Cassidy: Would this legislation be good for adolescent problem consumer gambling.

Romer: I think it could. I think consumers ought to know the odds.

D'Amato: We would have no problem supporting legislation that says we have to know what percentage the house keeps.

[GPWA Aaron]

Bono Mack has wrapped up the hearing.