-
Rachel Volberg, who studies problem gambling, is up next.
Majority of Internet poker players are young men with high levels of education. Contradicting Fahrenkopf's testimony that Internet gambling does not increase problem gambling.
"Research shows the problem gambling prevalence does level out and decline over time."
Says a free market will come at the cost of greater player protections. Says additional requirements are needed.
Wants self-exclusion, cooling off periods, etc., to be run by a third-party program so that people can't bounce from one site to another.
Also says there needs to be more funding - a minimum of $50 million - must be dedicated to problem gambling services.
-
Question time. Rep. Bono Mack (R-Calif.) wants to know if states should have the right to opt out and run their own intrastate gaming if they desire.
Fahrenkopf says they can opt out if they want. Fahrenkopf seems to be saying that UIGEA makes intrastate possible now, though the Justice Department says it's illegal.
(Clearly wants to know if California can opt out so that they can set up their own intrastate system so CA can get all the revenue)
Now asking how minors and problem gamblers can be protected.
Volberg: Dangers will still exist, but there are ways to set up roadblocks to make it more difficult.
-
Bono Mack: How should programs for problem gambling be paid for?
Fahrenkopf: It varies from state to state. Either way (directly from the gaming revenue or from revenues garnered by the government) is fine. Says a lot of states have a lot of money but haven't learned how to effectively spend it.
-
Butterfield is next. Wants to know about preventing children from accessing online gambling sites. Any concerns of a state-by-state approach of stopping children from accessing sites?
Volberg: While the technology may exist on a state-to-state level, there's not equal political will in every state to implement those measures. You will get variability across the states with what they are willing and able to do. Some will do a very good job, but others may not do as good a job. Also concerned about the number of youth that accesses the Internet to gamble - 30 percent of youth have, but most of them have gambled for entertainment, not for money.
Butterfield: Better addressed at the federal level?
Volberg: We have not seen the states step up to the level that governments have in other countries around the world. Those areas do require a stronger federal voice.
Butterfield: Any additional requirements? Standards for advertising?
Volberg: Yes.
-
Barton is next. Asks Volberg to describe the typical online poker player.
Volberg: While the online poker players, the majority of them were young men between the ages of 18 and 24 with relatively high levels of income, while online casino gamblers tended to be older women.
Barton: With the poker players, my experience is they tend to be very sharp. They all the odds, they are very sharp in math. They're not people that you would tend to say could be taken advantage of, that don't know what they're doing, that need to be protected.
Volberg: I think that is certainly characteristic of people who are professional poker players. I think there are a number of young men and a few young women who are very smart and very well educated. The problem is that there are people out there who think that they are pretty good because they've played on a free-play site.
Barton: Would online poker hurt or help brick and mortar casinos.
Liapparelli: If there's an impact, it's already being felt. The industry participants see it as an opportunity, as a complement, not something that would compete with their business directly.
Barton: Can issues between tribes and commercial casinos be handled?
Fahrenkopf: We respect the sovereignty of the tribes. No one should get a leg up or be hurt.
-
Rep. Edolphus Towns (D-N.Y.) is next.
Towns: Wondering about loss of lottery revenue - wouldn't revenue from Internet poker make up the difference?
McIntyre: Our research suggests 30 percent of NH residents visit casinos once a year; I don't think it would have an impact directly immediately. I think it would be a long-term impact.
Towns: Given the long-standing role of states authorizing and regulating gaming in their own borders, are states best positioned to handle this form of wagering?
Lipparelli: Given that this is an activity that crosses state borders, there ought to be some opportunity to harmonize the industry. Our position from the state of Nevada is we support some kind of national solution.
Towns: Has the been on online gambling prevented Americans from gambling online?
Fahrenkopf: Internet wagering has exploded. It started in 2003 or 2004, the passage of UIGEA has not been affective as it should have been. Regulation, taxation, is the best way to protect the people who might be vulnerable.
Towns: How would I know that I'm not playing against a machine.
Fahrenkopf: The technology that we've seen from those jurisdictions primarily in Europe, they have developed software that can monitor the way bets are being place to determine whether or not there has been a problem. Most of the bots have been discovered because players, human players have discovered that something is not right with how the game is going.
Lipparelli: You can probably get away with playing with a bot once, but you're going to leave big fingerprints behind.
-
Charlie Bass (R-N.H.) next.
Bass: I believe Barton's bill limits gaming opportunities to corporations with licenses. Why shouldn't lotteries be allowed to run online poker if they want to.
Fahrenkopf: If a state wants to have their lottery offer online poker, I have no objection to that. Wants all gaming entities to be treated equally.
McIntyre: Believes the NH lottery would be able to handle that, similar to Canadian provincial lotteries.
Lipparelli: Agrees that lotteries should have the opportunity to offer online poker.
Bass: None of you have any objection to amending the bill to allow lotteries to be involved in the same online poker activities.
Fahrenkopf: Key to online poker is liquidity. Not sure smaller states will be able to provide player pool necessary to make it worthwhile.
-
Rep. Gregg Harper (R-Miss.) is next. Wants to know if online gambling will canabalize brick and mortar gambling.
Fahrenkopf: The Internet gambler is very different than the destination resort gambler.
There was a bunch of other stuff, but my browser froze.
-
Rep. Leondard Lance (R-N.J.) is now up for questions to the panel.
Lance: I'm concerned whether this would be competition not only for various aspects of the regime but also for state lotteries. Do you think that there might be only a certain gaming amount in the pie? Would this lead to a certain cannibalization of state lotteries?
Lipparelli: We've got this incredible imbalance. There are people who keep their operations above board, versus those who have no desire to follow those concerns (i.e., sites that currently allow U.S. players), and we're already seeing that cannibalization happening.
Fahrenkopf: If a state is concerned about cannibalization, then they can opt out.
-
Rep. Brett Guthrie (R-Ky.) wants to know why two problem gambling studies are showing such different results.
Fahrenkopf: Dr. Volberg's studies had 135 and 179 people. The Harvard study had 40,000 gamblers who were studied. You have to be careful with your sample whether you're getting the right
Guthrie: There was not an appreciable difference in the number of problem gamblers?
Fahrenkopf: The Internet does not seem to lead to an increase of problem gambling. Some problem gamblers use the Internet as another avenue.
Volberg: People who gamble on the Internet are three times more likely to be problem gamblers. But they also gamble in other venues. Only two percent of people who we studied had gambled on the Internet, but 11 percent of them were pathological gamblers and an 19 percent were problem gamblers.
Guthrie: Is it because of the anonymity?
Volberg: It's the anonymity, it's the ease of access. i think there's a number of different features that are concerned about the issue of problem gambling.
-
Rep. Bill Cassidy (R-La.) is up next.
Cassidy: How much revenue is going to be raised?
Fahrenkopf: We're not sure, we're currently dealing with an unregulated industry. I tend to go on the low side because.
Cassidy: If it's taxed too much, then it will drive people to the offshore sites.
Fahrenkopf: In the U.K. they've driven sites to the Isle of Man because the taxes are too high.
Cassidy: We shouldn't view this as a cash cow because if we tax it too much we'll drive people off shore.
Fahrenkopf: That's why we have to tighten up UIGEA.
Cassidy: Only 2.5 percent of college students play online poker, but Dr. Volberg, I believe you said 30 percent of college males are online. What is the prevalence of Internet gambling among college males.
Volberg: We don't have any recent studies that gives us that number. I would estimate that 2 percent of the general population gambles on the Internet, among college aged males, it's going to be 8-10, possibly up to 15 percent.
Fahrekopft: A recent study says 2.5 percent of college males in 2003 gambled online.
-
Rep. Pete Olson (R-Tex.) is up next. He is incredibly awkward.
It's been three minutes and he's yet to ask a question.
-
Finally a question: Do you think most companies will be willing to limit transactions to debit cards and not credit cards.
Fahrenkopf: We haven't taken a position on that.
Lipparelli: In the state of Nevada, the use of credit cards for gaming is illegal.
McIntyre: I'm at the direction of the NH legislature and the governor.
Volberg: I would be in favor of that.
-
Bono Mack: "I look forward to working with you should this move forward."
The hearing has wrapped up. The next step, should it happen, would most likely be a markup, where members of the subcommittee would have the opportunity to offer amendments to the bill. If it happens, we'll be here to live blog it once again.
