Tuesday, May 22, 2007

Online Poker Players Bet on Prohibition Repeal 

New article about the damn poker legislation from yesterday's Wired.


Refusing to Fold, Online Poker Players Bet on Prohibition Repeal

WASHINGTON -- Anyone who thinks poker isn't a game of skill should see Boy Wonder playing Texas hold 'em online from his D.C. apartment. The 24-year-old sharp starts with six tables. Then eight, then 11. He folds. He checks. He raises. New windows pop up on his monitor like whack-a-moles. Boy Wonder doesn't even break a sweat. This is a job to him.

Well, it was a job. Last Monday, he laid down his poker career to become an internet consultant. His roommate, Johnny CIA, had already done the same thing. They're hardly alone. A law passed last September by Congress outlawing financial transactions between online casinos and American banks and credit card companies has had a profound effect on the poker players in the United States. In less than a year, according to players and industry insiders, the Unlawful Internet Gambling Enforcement Act (UIGEA) has pushed online poker into the shadows and saddled a national pastime with a prohibition-like status that many compare to the booze ban in the 1920s.

"There was mass panic when the legislation came out," says Boy Wonder, who asked to be identified only by his screen name because he fears the IRS might target him. "(The Act) scared away the novice."

The novice used to pay the rent for Boy Wonder, who started playing poker full-time after graduating from Haverford College in 2005. He earned around $1,000 a week playing in $1/2 and $2/4 limit games, which specify the amount a player can bet during rounds of play. But now the game is more trouble to him than it's worth. "It's unstable," he says.

Some major sites such as PartyPoker.com ban Americans altogether. But others like PokerStars.com and FullTiltPoker.com don't, and determined players have found ways around the legal impediments. Boy Wonder and Johnny CIA describe pre-paid VISA debit cards sold through foreign middlemen that allow Americans to pay online casinos. Some gamblers bankroll friends that have existing credit. Americans can also set up offshore bank accounts or sign up for foreign credit cards. Some use phone cards. There are many ways to keep playing. Many are legally dubious.

In January, the FBI arrested the Canadian founders of NETeller, an online money transfer service based in the Isle of Man that was popular among poker players. Last week, a federal grand jury in Salt Lake City charged seven people and four companies with bank fraud, money laundering and racketeering for concealing money transfers for gamblers playing online.

"You've created a whole criminal culture," says former New York Sen. Al D'Amato. D'Amato is the chairman of the Poker Player's Alliance, a 500,000-member grassroots group of poker enthusiasts working to overturn last year's law. Instead of controlling and licensing the industry, D'Amato believes, UIGEA has only created the conditions for shady operators to flourish outside the reach of law. "Just like prohibition," he says.

Equally troubling to D'Amato and a growing group of federal lawmakers is that UIGEA, which then-Senate Majority Leader Bill Frist (R-Tennessee) tacked on to a port security bill in the dead of night, gives the government too much control over the personal liberties of citizens in a digital age.

"The fundamental issue here is a matter of individual freedom," Rep. Barney Frank (D-Massachusetts) said at a news conference last month. Frank introduced a bill that would re-legalize online poker and gambling and regulate the industry, requiring that all gaming sites build technological safeguards to prevent underage and compulsive gambling, crack down on cheating and protect user privacy. Better sites already use this technology, but lawmakers believe that without oversight, dishonest services will emerge, and the government will divert important resources to stop Americans from gambling on them.

Legalizing online gambling under a federal umbrella could raise around $3.5 billion a year in tax revenue, according to the Poker Player's Alliance. It might also get the U.S. out of hot water internationally. In March , the World Trade Organization ruled that America's online gambling ban has unfairly closed U.S. markets to offshore casinos. The U.S. Trade Representative's Office fought the ruling by arguing that restrictions on remote gambling were needed to protect American morals, but that argument fell apart when the WTO noted that the U.S. allows online betting on horse racing, which is supported by a powerful lobby and managed to carve out an exemption from UIGEA. The WTO ruling clears the way for lawsuits from online gaming countries such as Antigua and Barbuda or even the United Kingdom.

Frank's is not the only proposal that puts online poker back on the table. Rep. Bob Wexler (D-Florida) is drafting more narrowly-crafted legislation focused specifically on games like poker, mahjong and bridge that many players believe have been unfairly lumped with games of chance like roulette and craps. Indeed, a number of states already allow high-skill versions of poker such as Texas hold 'em, Omaha Hi Lo and seven-card stud, even if federal law does not. "We're looking at a standalone bill that would specifically identify poker and allow that and similar games without restriction online," says Josh Rogin, Wexler's press secretary.

Another measure , introduced May 3 by Rep. Shelley Berkley (D-Nevada), would commission a National Academies study to look into online gambling issues and other countries' regulatory frameworks. "If we banned every activity that someone had an issue with, that's all we'd be doing," says David Cherry, Berkley's spokesman. "We're setting up a cat-and-mouse game."

Cherry describes current U.S. law as "Swiss cheese." D'Amato, who grew up playing poker, isn't as gentle: "We talk about fair trade and free trade. We talk about individual rights. We're sanctimonious hypocrites."

For now, though, online poker players have been handed, as they say in the business, a bad beat. Stars like Chris Moneymaker and Greg Raymer cut their teeth in online poker rooms, then crossed over to win world championships in live tournaments. Their success fueled the growth of the industry. But today's aspiring sharks have had to temper similar dreams.

At least for one more night, however, Boy Wonder is in the clear. He's got trip tens and a fat fish on the line. He clicks. He bets. He wins.

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