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Who Is Fighting For Your Right To Play Online Poker In America?

by Brian Pempus |  Published: Apr 30, 2014

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The poker boom began a little more than a decade ago and lasted just a handful of years. During that time, many new players were drawn to the game, causing tournament field sizes and cash-game waiting lists to burst at the seams. Many online poker sites popped up, hoping to cater to the growing demand for poker. The game itself was revolutionized, creating a wave of Internet poker wizards.

Unfortunately, thanks to some moves by the federal government, most notably in 2006 and 2011, the rush slowed. Americans who love online poker have been enduring a strange landscape over the past few years, as the debate over how to bring online poker back in a more controlled manner rages on. And, to confuse matters even more, in late March of this year a new bill was introduced, led by Republican Sen. Lindsey Graham (South Carolina), that would make all forms of online gambling, including poker now being run at the state level by Nevada, New Jersey, and Delaware, illegal under federal law.

It may take years and years for online poker in America to just slightly begin to resemble its former self. Despite the slow process and uphill battle, many well-known public figures have accepted jobs to push for regulated online poker in the United States. Card Player takes a look at five of them in this piece.

Mary Bono, “It’s a basic fundamental idea.”

As efforts have emerged that threaten to impose a ban on online gaming nationwide, former Congresswoman Mary Bono, thanks to her previous work holding hearings on Capitol Hill on the Internet gaming issue, was a natural fit to help fight for poker.

The 52-year-old Bono is a spokesperson for the Coalition for Consumer and Online Protection, a lobbying group funded by MGM, among others.

“The coalition came to me and wanted to talk about it because of my leadership role in the last Congress and my 15 years as a member of Congress,” Bono said. “When I chaired the Subcommittee on the Energy and Commerce Committee, we held hearings about online gaming and Internet poker. My approach was pragmatic and cautious, and I hopefully exhibited some thoughtful leadership on the issue. I was honored they came to me to see if I’d continue these discussions now that I’m not a member of Congress.”

Bono said she has a Hollywood background, as she was a Republican representing California’s 45th district. She thinks the online gaming issue has a parallel in the entertainment industry.

“One just has to look at what happened to the music and movie industries as they sort of tried to fight the Internet,” Bono said. “They never really recovered fully from trying to get in the way of innovation and disruptive technology. It has been proven in the gaming world because the black market sites continue to exist and the lesson is that we should be trying to shape the Internet and keep people safe.”

Like many others who are fighting for poker players, Bono isn’t herself a player. Taking up the work with the Coalition was based on principle. She said it was about an “idea.”

“I’m not much of a gambler, but it’s really obvious that to try and stand in the way of this makes it more dangerous for people,” Bono said. “Is it a freedom issue? You know, I suppose so, but that’s not really where I’m coming from. I know a lot people feel that way, but for me it’s thoughtful regulation and legislation. When I was a member of Congress, I represented a bunch of tribes and this was an issue that they were grappling with — how to embrace an Internet economy. By stopping legitimate American businesses from venturing into online gaming just empowers the bad guys.”

Bono doesn’t think Sheldon Adelson is one of the bad guys, though he is funding the group that Bono’s group is explicitly fighting against. Adelson is a large Republican donor, and thus well-respected within that party. For Bono, the issue “isn’t about personalities.”

“It’s so easy to turn this into a war of personalities, but it’s not. It’s a basic fundamental idea. My tenure as a Congresswoman was really during the huge growth and expansion of the Internet. Again, I watched it flourish, some of the good things and some of the bad, but it’s a very positive force. For me, this is about an idea…this has nothing to do with Sheldon. I can understand where Sheldon is coming from, I suppose, and I have tremendous respect for Sheldon, but we disagree.”

Ray Lesniak, “Atlantic City can be the Mecca of Internet gaming.”

The Garden State wasn’t first to legalizing online gaming, but when it arrived on the scene it quickly showed why it has the potential to be an online gambling hub in the Northeast.

The lawmaker who spearheaded the online poker cause was state Sen. Ray Lesniak, a Democrat from Union County. It took a lot of work and more than one attempt, but Lesniak delivered a bill to Gov. Christie in early 2013 that Christie liked well enough to sign into law. The state was then off to the races to license Atlantic City casino operators and their technology partners and see games debut.

The soft launch period for New Jersey online gaming began in late November 2013 and over the following months the industry was experiencing solid growth. Through the end of February 2014, online gaming in New Jersey was generating more than $10 million a month for the casino industry. Nearly 250,000 online betting accounts had been created across all the sites.

While the games have been successful so far, the 67-year-old Lesniak is already eyeing ways to bolster web betting. He wants the Garden State to become a “Mecca of Internet gaming.” Lesniak, who has been involved with New Jersey politics for more than two decades, is trying to accomplish that in the form of a piece of legislation that would entice foreign online casino operators to set up shop in New Jersey. He also is hoping that when other states in the U.S. legalize online games, the groundwork will already be completed for New Jersey to partner up with those jurisdictions in order to increase liquidity for the games. Poker, especially, thrives on large player pools. Lesniak mentioned that Pennsylvania and California could one day be partners for New Jersey.

While U.S. law apparently would not allow Americans to play with those in other countries, making New Jersey an online gaming hub could have huge economic benefits.

“New Jersey going international will attract some interest because there are countries which do allow Internet gaming to emanate [from] within their borders, but they don’t have the same stability, reliability, integrity and oversight that the state of New Jersey has,” Lesniak explained. “I’m hoping that that will be an attraction for overseas operators to come here. Certainly, it’s a good argument for other states to open their borders, as well.”

Another component to his legislative efforts includes making it easier for people, who are physically within New Jersey and of legal age, to get money on and off Internet gaming sites.

“It will also license payment processors, which has been one of the impediments to Internet gaming growth in the state of New Jersey,” Lesniak said. “The major banks and credit cards aren’t allowing their cards to be used because of a concern about compliance with the law, so, I have been told by some of the banks that if they were licensed in the same way as the operators were, they would then allow their cards to be used. This would be a major boost to our state’s Internet gaming activity.”

Lesniak’s efforts aren’t only about saving the Atlantic City casino industry, which has been slumping since 2006, from doom. “This is a personal freedom issue,” Lesniak said. “Also, certainly states should be able to decide for themselves about letting their citizens go online, like citizens in Nevada, Delaware and New Jersey currently can, and citizens in many countries throughout the world can.”

And while he started off with the intention of applying a tourniquet to Atlantic City’s hemmorhage, he soon realized that fighting for personal freedom gained him notoriety within the poker community.

“Once I got into this issue, I found out that I have friends who have played online poker. My uncle, a very quiet guy, told me, ‘Hey, you know we’ve been playing poker online, and have to jump through hoops to do it, but we loved doing it and we’d like to do it.’ I found out that there are indeed, in New Jersey alone, hundreds of thousands of people who would (and of course millions throughout the country) like to play online and why not? It’s their right, and they should be able to do it in a safe, secure and legal environment.”

John Pappas, “We aren’t out of the woods yet.”

The Poker Players Alliance, which was founded in 2005, has been one of the strongest advocates for online gaming during this transition period from offshore sites to sites regulated by U.S. states. The industry was dealt a heavy blow in April 2011, on a day known to the poker community as Black Friday. Tens of millions of dollars of player money was locked up, sending shock waves through the poker economy. Thousands of players had sour tastes in their mouths from the online game.

Fast forward to early 2014, and all the efforts by the Poker Players Alliance to help victims of Full Tilt Poker’s fraud had finally paid off. The U.S. government, with assistance from a third party claims administrator, returned more than $70 million of player money in the first wave of remission.

The PPA had been pushing hard for players to receive their full account balances since the site shut its doors. There was word that the government was pondering a plan to compensate people based on what they had deposited over the years, but the PPA reiterated to the feds that such a method would be incredibly unfair to players, especially winning ones. There was no other way, according to the PPA, but to refund account balances — and in full. Some received seven-figure ACH deposits from the government.

The process took months and months, and the PPA was there along to the way to update the poker community, as well as to exert pressure to keep the remission payments on schedule.
At the helm of the PPA throughout this grueling process was Executive Director John Pappas, who personally met with government officials to go over issues related to the Full Tilt Poker fund.

“It was a long time coming for the players,” said Pappas, who has been leading the PPA since 2007. “We were extremely pleased that the players who had undisputed balances were getting 100 percent of what they believed they were owed. There was a lot of hard work that went into making the DOJ understand that 100 percent of players’ balances was the appropriate remission. But, we aren’t out of the woods yet. There are still several million dollars and several thousands of players who have not received their money, and we are going to continue to make sure that every dollar is returned.”

Pappas also gave credit to his legal team and the poker community itself. He said that players did a tremendous job making the DOJ understand what was at stake in the remission process.

“Based on my conversations with people at the DOJ, they were overwhelmed with how knowledgeable and how self-motivated the poker community was with getting their money back,” Pappas said.

In addition to trying to bring the Full Tilt Poker scandal to a conclusion, Pappas is going to be leading the group’s campaign to convince lawmakers in states across the U.S. that licensing and regulating online poker is the right course of action. What he says, whether in testimony at hearings or in private conversations, “really depends on the audience.”

“Some lawmakers may only care about the revenue, and maybe more libertarian-minded lawmakers would be inclined to support messages of personal freedom,” Pappas said. “I don’t think we’ve ever approached this as one message fits all. I think we have to use a combination of messages and personal freedom ranks up there in the top three.”

However, regardless of who he is speaking to, the argument really gains its power and persuasiveness in its totality. “There’s a bit of a split when you talk about regulation and personal freedom,” Pappas said. “There are people who believe we don’t need to be regulating anything, that the government should have a totally hands-off approach. We think leading with consumer protection through regulation is the strongest message we can deliver, and then we talk about how that provides freedom for responsible adults to be able to play, and then by doing both of those things, the states will get revenue from it.”

Joe Barton, “I would not risk my son’s college fund against Phil Ivey.”

Numerous politicians have tried to legalize poker at the federal level, but one Congressman from Texas has proven to be as dedicated, if not more so, to the idea of a nationwide framework as any of his colleagues, past of present.

Rep. Joe Barton, a Republican, has for years been the sponsor of legislation that would authorize poker across the country, while allowing individual states to easily opt out if they so chose. His plan has had a handful of hearings, but hasn’t made much progress. Barton, a poker player himself, hasn’t been deterred.

He said that he’s confident that his bill will one day come to fruition, whether in this Congress or the next.

Barton said that while he respects Adelson and thinks he has a right to argue for what he believes in, he thinks Adelson is “on the wrong side of history, so to speak.”

“The question is not if it is going to happen; it’s already happening, but how soon we set up a national system so that it’s a fair option for those that wish to participate,” the 64-year-old Barton said. “My bill is not a mandatory bill. It’s a state-by-state opt out bill. We start out with all states being in, but it’s real easy to opt out. The governor just sends a letter and the state is not involved. In terms of the concepts in the bill, I haven’t heard any real kickback from anybody. Some of the companies want people to use credit cards, and I only allow debit cards. I think it’s just like the live poker table, you play with the money you have, not the money you can go borrow, so to speak. I think I have a real good bill and a lot of support.”

Barton admitted that legislation similar to his bill could also pass in the future.
According to the Congressman, Capitol Hill is pretty “dysfunctional” right now, and that makes it even more challenging to pass an online poker bill. “It’s a new concept and breaking new ground,” Barton said.

He noted that thousands of bills are introduced each year, and only a tiny fraction become law. In that sense as well, Barton isn’t surprised about his bill stalling. He does think that every year he brings up the issue it gains greater and greater visibility. If one looks at it that way, Adelson waging a very public campaign against online gaming isn’t such a bad development, according to Barton.

“Six years ago when Barney Frank was still here in the House, and he was the sponsor of the main poker bill, there were still a lot of people who didn’t want Congress to even address it. I don’t hear that argument much anymore. I can’t say Mr. Adelson is helping the cause by spending this much money, not necessarily against my bill, but against the concept, but the fact that he is doing so brings recognition that it’s a serious issue now. In my opinion, we will almost certainly address this issue in a positive way, if not in this Congress, then probably in the next Congress.”

Barton remains committed to the idea that only poker should be allowed on the Internet. He is a firm believer that poker is a game that requires great skill, and that’s another reason why it should be available for Americans. Though few can do it, it’s a legitimate way to make a living.

“I’ve been pressured to some degree to broaden my bill, to lotteries and things like that,” Barton said. “I have kept mine poker only, because what I think sets poker apart is that you aren’t playing against the house, but against other people at the table. Over time, the better players win. Phil Ivey is going to do a lot better than Joe Barton (laughs).” It’s worth noting that Barton is confident he could beat many of his colleagues at the poker table, whether virtual or in a brick-and-mortar establishment.

When told about the story of a Norwegian poker pro challenging a Norwegian lawmaker to a heads-up poker match to demonstrate to other members of that government that poker is a game of skill, Barton replied: “I would not risk my son’s college fund against Phil Ivey, or some of those guys, but I might be willing to put my $100 against their $100. Or if I could get Andy Beal down in Dallas to back me, I’d certainly put up Andy’s money against some of these guys, especially if he could advise me on what to do.”

Geoff Freeman, “The Internet cannot be forced back into the bottle.”

The largest casino lobbying group in the country is the American Gaming Association. The leader of that group is Geoff Freeman, who took over for gaming industry legend Frank Fahrenkopf. The latter retired in 2013.

The AGA works on Capitol Hill and is an advocate for the legalization of online gaming nationwide. It doesn’t lobby at the state level, even though that’s where the most promising developments occur. Despite all of this, the AGA hasn’t explicitly endorsed a bill. It once flirted with introducing a proposal of its own.

The 39-year-old Freeman is at the helm of a group that boasts members such as Caesars Entertainment, MGM Resorts International, Penn National Gaming, and International Game Technology. Ironically, Las Vegas Sands, which opposes regulated online gaming, also belongs to the AGA.

The new AGA President/CEO has been reiterating Fahrenkopf’s talking points since assuming his role.

“Time and again, government efforts to prohibit use of everyday products have failed,” Freeman said. “The Internet cannot be forced back into the bottle — nor can market demand. We support pragmatism and strong regulation of online gaming that protects consumers, prevents underage play, ensures the integrity of the games and empowers law enforcement. New government efforts to prohibit online gaming will unintentionally strengthen black market providers, create more risk for American consumers, including children, and drive U.S. jobs and potential revenues overseas.”

Though still new to the job, Freeman had the chance to testify before Congress this past December on the online gaming issue. He told lawmakers that it was “crucial” they give their attention to online gaming. Again, his message was clear and concise: “Prohibition does not work.”

“The federal government has tried the prohibition approach through legislation –specifically the Unlawful Internet Gambling Enforcement Act of 2006 and the Wire Act — and through multiple Justice Department crackdowns on offshore operators, as well,” Freeman testified. “What was the result of these attempts at prohibition? Last year, before a single state authorized legal online gaming, Americans spent nearly $3 billion on illegal, unregulated offshore gaming sites. To put that into further context, Americans accounted for nearly 10 percent of the entire $33 billion worldwide online gaming market in 2012.”

Bringing full-scale online gaming to the United States would be the best way to guarantee the economic benefits that the industry offers, according to Freeman. He said that more than 22,000 jobs could be created in America, and more than $26 billion in tax revenue could be generated nationwide. All it would take, he said, is “strong minimum regulatory standards that would provide a uniform set of protections for consumers while respecting states’ rights to choose what is in their best interests.”

Freeman has stressed that online gaming is already here in the United States, and elsewhere in the world, where the “sky has not fallen” after they legalized online poker. It just makes sense to regulate.

Near the end of his testimony in December, he cited data that showed 95 percent of people who gamble “do so in a responsible manner.” In this way, the AGA is fighting for the right to engage in online gaming as entertainment. Implicit in that data is an issue of personal freedom, and the AGA is trying to get that message out, and across, especially to policymakers.

Those Working Against Poker

Not everyone is working towards a better gaming landscape. For every politician or activist touting online gambling as an economic recovery tool, there are dozens who wish to stymie growth or paint a negative picture about the industry.

Here’s a look at some of names fighting against poker.

Pennsylvania Rep. Mario Scavello

Pennsylvania is now home to the nation’s second biggest gambling market, bringing in a total gross gaming revenue of $3.15 billion annually. Pennsylvania has one of the highest gaming tax rates at 55 percent for slots and 16 percent for table games, resulting in a $1.487 billion contribution to the state. Yet the idea of an online gambling platform doesn’t appeal to Rep. Mario Scavello, who is pushing for a proposal to send online poker players to jail. Scavello wants to “crack down on the lawbreakers,” sending players to jail for 90 days with a $300 fine.

Virginia Congressman Frank Wolf

Virginia Republican Rep. Frank Wolf has never been a fan of the gaming industry, claiming he is morally opposed to such vices, but in January of 2014, he took his argument to extremes. In a letter to his fellow congressmen, Wolf quoted an FBI report alleging that online poker could easily be used by the al-Qaida terrorist organization “to fund several 9/11 attacks.” In a classic example of fear mongering, he used an online heads-up match between Brian Hastings and Swedish poker pro Viktor Blom as an example of how quickly millions of dollars can change hands.

South Carolina Sen. Lindsey Graham

In Dec. of 2011, the U.S. Department of Justice clarified that the Wire Act did not apply to online gambling and that it was up to the individual state to determine legality. It was a move that prompted Nevada, New Jersey and Delaware to regulate the online gaming industry. However, South Carolina Republican Sen. Lindsey Graham doesn’t agree and, on March 26, 2014, introduced a federal bill to wipe out legal poker in the U.S and completely outlaw all forms of online gambling.

Nevada Sen. Dean Heller

Although not as dastardly as Graham, Nevada’s own Republican Sen. Dean Heller is also seeking a federal ban on online gambling. Heller, however, wouldn’t dare lobby against an industry that is already up and running, earning tax revenue for the state. So instead, his proposal would include a carve out that allows online poker operators to continue with their product. Heller believes that other forms of online gambling would hurt Nevada’s brick-and-mortar casinos.

Las Vegas Sands CEO Sheldon Adelson

Vowing to “spend whatever it takes” to put an end to online poker, Las Vegas Sands CEO Sheldon Adelson is undoubtedly public enemy No. 1 in the poker community. The billionaire casino mogul has poured millions of dollars into the anti-online gambling movement, even funding the Coalition to Stop Internet Gambling. He has penned anti-online poker op-ed pieces for the Las Vegas Review Journal, commissioned a survey to show that online poker legalization isn’t popular and even went so far as to call the industry a “toxin” and a “plague.”