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Media Critical Of Feds Action Against Online Poker

Written On  5/1/11 By staff writer  Lenny Wasman :

Newspaper columnists slam federal actions as costly and unnecessary
There appears to be a growing media backlash to the US federal attack on three online poker sites mid-April , with several major newspapers carrying articles critical of the Department of Justice over the weekend.
Two - an op-ed piece by former BetonSports lawyer Chris Flood in the Houston Chronicle, and a column by Michael Hiltzik in the LA Times - are especially notable, displaying a good knowledge of the history of legal developments in the industry.
Flood starts his piece off with the trenchant observation that US gambling laws "...make about as much sense as the government banning gin, but not vodka, during Prohibition."
He goes on to outline laws which permit betting online for horseracing, but attack it on internet poker, observing that instead of collecting billions in taxes, the Justice Department is spending millions of tax dollars in trying to destroy a potential tax generator, and argues that it is now time to fix a system that he describes as "absurd."
Noting that there are millions of Americans who want to use their own discretionary money to gamble online, Flood speculates that the Justice Department's "complicated and needy grab" is totally unnecessary, and will have to be justified in court beyond reasonable doubt.
"The government is spending millions of dollars on the chance of raking in $3 billion," writes Flood. "Who is gambling now? Why not instead collect a steady stream of tax dollars on online poker, like many other countries do every day?"
Flood argues that the UIGEA is probably unconstitutional, and presents the US with a situation where it must appease fellow members of the World Trade Organisation "...miffed at our illogical and short-sighted laws that violate the spirit" of the trade treaty.
He reminds readers that the technology exists to safeguard vulnerable players and guard against criminal exploitation, and that there is a strong element of skill in the game of poker that sets it apart from the many other forms of gambling that are allowed by the government on land and in internet law carve-outs.
"We need not make this a no-limit game," Flood asserts. "We don't need more charges of bank fraud and money laundering against poker companies. Instead, we need to end this madness with a solid challenge to the constitutionality of the Unlawful Internet Gambling Enforcement Act, which is aimed at preventing financial services firms from processing funds for online gambling.
“It's worth noting that Congress hasn't targeted the online poker players in this country, where lawmakers know full well its popularity."
Flood concludes with the observation: "The current poker prosecution echoes "the Noble Experiment" of Prohibition. It is an attempt to enforce a morality that average citizens don't find immoral. Just as the 18th Amendment to the U.S. Constitution begat the 21st Amendment to repeal it, if Congress won't legalize online poker, we should go all in and let the U.S. Supreme Court take a good look at this cockeyed prosecutorial tool."
Michael Hiltzik's column in the Los Angeles Times opines that: "Online poker won't go away any time soon, and placing artificial obstacles in its way is bad for players and worse for government, which wastes scarce resources in pointless regulatory pursuits."
He goes on to suggest that whenever the government is involved in legal actions, the situation is likely to be "confused, hypocritical and costly," pointing to the circumstances surrounding the Black Friday indictments as an example.
Hiltzik considers each of these negative values, covering the confusing illogicality and inequity of US laws on internet gambling; the hypocrisy of a profusion of all manner of land gambling sanctioned across the United States; and the dubious economics of eschewing billions in tax dollars in favour of spending millions in prosecutions.
Hiltzik opines: "Far from quelling interest in online poker, the Black Friday indictments have whetted the appetite for California to step into the lead in legalizing the business. California may be one of a very few states hosting a critical mass of players.
“Californians accounted for as much as 15 percent of the U.S.-based business for the poker sites shut down this month, estimates Howard Dickstein, a Sacramento gaming attorney who represents several Indian tribes hankering for a piece of the action.
"It has been estimated that legalizing online poker for play within California could generate tax revenue for the state of $100 million a year. This figure comes from state Sen. Louis Correa (D-Santa Ana), who's pushing a bill to do just that."
The strong possibility of tribal gaming interests negotiating an exclusive entry into the intrastate online poker sector is discussed in the article, along with the probability that the federal action against Pokerstars, Full Tilt and Cereus has opened a window for California or another entrepreneurial state to take the initiative in legalising Internet poker.
In a sharply critical look at how the UIGEA was passed by Congress, Hiltzik describes the process as "....a neat bit of congressional sleight of hand that would have impressed even the most hardened riverboat card sharp.
"This was the passage in 2006 of the Unlawful Internet Gambling Enforcement Act, which was slipped into a "must have" anti-terrorism bill by blue-nosed Senate Republicans in the middle of the night (literally)."
He goes on to examine the now notorious lack of precision in the definition of "illegal online gambling" enshrined in the Act and the manner in which it has since been abused by the authorities.
"UIGEA falls into the legislative category technically known as "a mess." It bristles with vague definitions and unworkable legal mandates," Hiltzik claims, noting that attempts to overthrow the legislation have thus far not been successful.
"So it remains on the books as a wrong-headed attempt to address a regulatory issue that doesn't exist," he explains, recalling his prediction in a 2009 article that barring reputable financial institutions from the online gambling money stream merely would open the way for shadier manoeuvrings, and asserting that the allegations unveiled in the April 15 indictments prove that case.
The millions of Americans who want to play online poker in the privacy of their own homes would prefer that the federal government regulate the industry, claims Hiltzik, who opines that "...the half-baked federal American legal obstacles complicate efforts by U.S. players to obtain redress if they detect something wrong."
He concludes on a similar theme to that of Flood, opining that: "The most striking thing about the Black Friday case is that it seems to be so much a relic of the past.
"Online poker won't go away any time soon, and placing artificial obstacles in its way is bad for players and worse for government, which wastes scarce resources in pointless regulatory pursuits and looks petty and priggish to boot.
"There's money to be made from poker, if the Congress would gear up to collect it. Didn't it learn any lessons from Prohibition?"

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