House subcommittee to hold online gambling hearing

[GPWA Aaron]

The House Energy & Commerce Committee's Subcommittee on Commerce, Manufacturing and Trade is holding a hearing on the state of online gaming this morning at 12:30 p.m. today to "examine the status of Internet gaming in the United States" and to "review H.R. 2666, the 'Internet Poker Freedom Act of 2013.'"

Witnesses due to testify include John Pappas, executive director of the Poker Players Alliance, Andrew Abboud VP of government relations and community development for Las Vegas Sands, Geoff Freeman, the CEO of the American Gaming Association, Les Bernal, the director of Stop Predatory Gambling, Kurt Eggert, professor of law at Chapman University, and Rachel Volberg, associate professor in the School of Public Health and Health Sciences at the University of Massachusetts Amherst.

You can read about the hearing here: http://docs.house.gov/meetings/IF/IF...1210-SD003.pdf

I'll be live blogging the hearing here on in this thread, and you can also watch the hearing live here: http://energycommerce.house.gov/hear...-online-gaming

[GPWA Aaron]

Witness testimonies are now up at the link above. GPWA Dan and I are having a good time sorting through the opening remarks of some of the witnesses opposing regulation, most notably Abboud. Wish we could be on the Hill today questioning these guys.

[GPWA Aaron]

You can now start the live stream and hear background noise. T-minus 6-7 minutes until the hearing begins.

[GPWA Aaron]

Hearing is now underway. Lee Terry (R-Neb.) is the chair of the subcommittee and will run the hearing.

[GPWA Aaron]

Terry just pronounced "Amherst" as "Armherst" in the introductions ... this doesn't bode well.

[GPWA Aaron]

"I'm very interested in the state of online gaming in the U.S. ... A recent DOJ opinion that reinterpreted the Wire Act opened the door for online betting (other than sports betting) on an intrastate basis."

Mentions New Jersey now has regulated online gambling.

Over 85 countries have chosen to legalized online gambling, the U.S. has not.

Americans are patronizing offshore website to the tune of over $1 billion a year.

[GPWA Aaron]

Rep. Leonard Lance (R-N.J.), vice-chair of the subcommittee now testifying.

Online gaming in New Jersey allows consumers who are present within the state to play the same games of skill and chance that are available in New Jersey casinos.

Says Internet gaming has the potential to reinvigorate the state's gaming industry.

[GPWA Aaron]

Rep. Jan Schakowsky (D-Ill.), ranking member of the subcommittee now up.

Says understanding the online gambling industry is important and worthy of Congressional attention. Establishing a stronger federal role may help keep people from gambling on unregulated sites and offer greater consumer protections.

However, she is worried about the exploitation of vulnerable populations.

If an expansion of online gambling is allowed, they should have confidence that the games are fair.

"Bots? Is it bots? I don't even know what that is."

But apparently people should be safe from them.

[Alan_Vuetec]

Members on the committee:
Republicans
Chairman: Lee Terry (NE)
Vice Chairman: Leonard Lance (NJ)
Marsha Blackburn (TN)
Gregg Harper (MS)
Brett Guthrie (KY)
Pete Olson (TX)
David McKinley (WV)
Mike Pompeo (KS)
Adam Kinzinger (IL)
Gus Bilirakis (FL)
Bill Johnson (OH)
Billy Long (MO)
Joe Barton (TX)
Fred Upton (MI)

Democrats
Ranking Member: Jan Schakowsky (IL)
John Sarbanes (MD)
Jerry McNerney (CA)
Peter Welch (VT)
John Yarmuth (KY)
John D. Dingell (MI)
Bobby L. Rush (IL)
Jim Matheson (UT)
John Barrow (GA)
Donna M. Christensen (VI)
Henry A. Waxman (CA)

[GPWA Aaron]

Joe Barton (R-Texas), the Congressman sponsoring the legislation is up now. Explains what a bot is.

Explaining that the world was different when he was first elected to Congress. There wasn't an Internet. Congressmen got two free trips via train back to their districts. You could send a telegram.

Not sure Joe is the best advocate for online poker ...

That said, he says "In the Internet age, we need to regulate and set a level playing field for those of us that want to play poker online."

Emphasizes that it's a poker-only bill, it's a "states' rights, user-friendly bill." Allows for opt-outs.

[GPWA Aaron]

Terry (who lives in Nebraska) wants to know if a governor can "ban Texas Hold'em and only allow Omaha." Buh-dum-bum.

[GPWA Aaron]

Geoff Freeman, CEO of the AGA is up first.

"The experience of the past years has yielded one crystal clear conclusion: Prohibition of online gambling has not and will not work."

Points to all the gambling Americans do with operators not regulated by the U.S.

Demand will continue to grow. Just two weeks ago, when New Jersey opened, 50,000 people in New Jersey opened accounts.

Congress should provide a uniform set of rules for consumers, while allowing states the right to make decisions, too.

"As an industry, we are completely aligned on the need to protect vulnerable populations, though we may disagree on how best to do so."

Lists a slew of countries that regulate the market, including the U.K., Canada, etc. Says the best protection for consumers is to regulate.

[GPWA Aaron]

Abboud of the Las Vegas Sands now up.

Says Internet gambling takes gambling too far. Says the land-based industry has to negotiate every point, and turning every iPhone (waving it in the air) into a casino.

If they legalize it, it's going to be the kids who teach their parents how to get on.

Simply because we can, doesn't mean we should.

Rather than my industry rushing to make the marketplace more safe, it has become a rush to the marketplace. The Internet is more dangerous than ever.

Now citing Fahrekopf letter that states the DOJ's reversal of the Wire Act could be temporary. It's not law.

Wants Congress to restore the Wire Act to its previous understanding

[GPWA Aaron]

John Pappas of the PPA now up.

"It is my hope that the committee will respond by taking up legislation introduced by Congressman Barton, H.R. 2666, the Internet Poker Freedom Act. The PPA stands in strong support of Congressman Barton’s bill and I would like to take a moment to congratulate the Chairman Emeritus for his leadership on this issue. "

"While the PPA would prefer the passage of a federal Internet poker bill, we strongly support the rights of states to pursue Internet gaming opportunities in the absence of a federal law."

"While the U.S. market is still very new, it is notable that in Nevada, which began accepting Internet poker play in April of this year, there has not been a single reported incident of underage access."

"Finally, opponents of Internet gaming have claimed that the activity is vulnerable to fraud and criminality. Let me first say that prohibition will just play into the hands of the criminal element, just as it did in the 1920s when alcohol was banned. It is far better for the players’ financial fate if the safety and security of Internet gaming transactions are in the hands of the U.S. banking system and the responsible and regulated American gaming corporations."

"This committee need not ask the question of whether Internet gaming can be successfully regulated; today, it is successfully regulated in many European jurisdictions, online casino and poker games are regulated in three states, and online lottery and horse bets are successfully regulated in dozens more. The question before this committee is who, if anyone, will provide U.S. players with a safe and well-regulated
place to play poker on the Internet."

[GPWA Aaron]

Les Bernal of Stop Predatory Gambling is now up.

Government is not merely permitting private consensual behavior. Says government sponsors gambling and its a public policy that's failed.

"Ever-increasing appeals to gambling and ever-increasing opportunities to gamble are the primary way our government communicates with us on a daily basis."

Government-sponsored gambling has increased the gulf between the "haves" and the "have-nots."

This guy really hates slots.

"Gambling operators spend millions of dollars to create the impression that they're not exploiting people."

Wants to know the percentage of revenues that come from people with gambling problems and how much comes from people without gambling problems.

Government's partnership with gambling has failed. The evidence is all around us that it has failed. It's time our government stopped cheating our citizens by sponsoring gambling.

[GPWA Aaron]

Rachel Volberg now up.

Remains concerned that there is no specific mention of research on online gambling and problem gambling with online gambling.

Says there will likely be an increase in problem gambling if online gambling expansion occurs.

Constructive public policy requires research.

[GPWA Aaron]

Kurt Eggert now up.

Three aspects of consumer protection that need to be considered
1. Gamblers should be provided with all the information they need to be good shoppers. Gamblers are consumers. They should have access to information, such as the hold percentage. Especially important for Internet casinos.
2. Bots need to be stopped, unless people choose to play against them. If bots are strong enough to win, they are a significant threat. There's a bot playing limit Texas Hold'em that can beat most people in the world. As computers get better, making bots is going to get easier and easier. Wants ratings for poker players so you can tell how good your opponents are.
3. Need to give players the opportunity to self-exclude. Consumers should be empowered to make good decisons, including self-exclusions.

[GPWA Aaron]

Terry - this is a DOJ opinion about the Wire Act. People tell me it's the law. Could you work us through, as well as you can as a law professor, is that the law?

Eggert - "I think it's a valid interpretation of the law. It isn't the law itself, but it isn't a horrible interpretation of it."

Terry - What happens if New Jersey goes forward and there's a new administration and the DOJ goes back to the previous four administrations' interpretation of the Wire Act.

Eggert - the states and the DOJ would have to battle it out in the courts.

[GPWA Aaron]

Terry - how do we prevent children, how do we know if a minor is playing if their using their parents' credit card.

Abboud - Don't legalize it. Shut down illegal operators that are operating today. You can get into a long technological discussion about whether you can prevent children from gaining access.

For the industry to go state-by-state, to try to scare Congress, was the worst bluff in poker history.

Poker is not a sustainable market. It's fine if people want to play poker online. But it's about this. It's about slot machines. it's not what we're about. That's where the industry is going to go.

[GPWA Aaron]

Pappas - I think it's important that we recognize that age-verification technology systems exist throughout e-commerce. If a person wants to make a deposit on an online gaming site, they have to go through a rigorous process to verify ID and age.

Underage access in Nevada is zero. There has not been one verified instance of underage access.

Terry - how do you know?

Pappas - Because regulators are constantly testing, and no parents have reported it happening. Age verification is here, it's working very effectively today. Welcomes the opportunity to improve it.