More than 100 of America’s top poker players descended on Washington earlier this week to lobby politicians to rescind the controversial law that aims to prohibit online gambling.
Repercussions continue apace from the legislation, which last year sent UK betting enterprises such as PartyGaming scurrying back across the Atlantic and sparked huge falls in their shares. Earlier this week the World Trade Organisation and the US announced that they needed more time to work out the envisaged billions of dollars worth of compensation, as the ban breaks global trade rules.
At the same time, American legal and banking experts are attempting to decipher just how the ban will work when the law is finally implemented.
It was last October the then Senate majority leader Bill Frist, a Republican, pushed though the Unlawful Internet Gambling Enforcement Act (UIGEA), almost his last accomplishment before he retired, to protect children and problems gamblers from going astray.
The UIGEA does not ban online gambling per se but, when implemented, makes it illegal for banks and credit card companies to facilitate payments to and from gambling businesses.
America’s anomaly-rich attitude to gambling, which allows online betting on horse racing and lotteries, has been found to breach global trade rules and the US and the WTO have been arguing over compensation for months. A deadline for settlement scheduled for last Monday was pushed back to December 14.
Antigua takes on the US
The European Union, India, Antigua and Barbuda, Japan, Costa Rica, Macao, Canada and Australia have all filed for damages. If the WTO can force a multibillion dollar settlement in this case it will show whether it has the wherewithal to tackle an offender as big as the US.
Reports suggest that Antigua, which won the test case against the US as well as several appeals, does not want to negotiate for compensation but wants to litigate for the USD 3.4bn it is owed. Word is Antigua wants to suspend US copyright protections on films, music and software to the tune of that amount.
The latest financials from former FTSE 100 company PartyGaming vividly show the repercussions of the ban in the EU. A year ago, when it was active in the US, it reported third quarter revenues of USD 337m. This week it said its sales were USD 115.7m.
Even though the big British online gaming companies pulled out of the US last year, the UIGEA has still not been enacted and a US government estimate last year said 63 million Americans – around 20% of the total population – bet on the internet. Companies that did not rush for the exit door are still making good money.
The reason for the implementation delay is that the rules governing the UIGEA are nowhere near ready. Earlier this month – a year after the law was passed – US authorities announced regulations on enactment. Interestingly those rules do not hold actual online gamblers guilty.
Nor are the banks and financial institutions guilty should they process electronic gambling payments. The only entities which can commit a crime under the UIGEA are online casinos and their ilk.
The regulations do, however, place the onus on the banks to come up with procedures on how they will identify and stop payments; procedures which are to be implemented by the middle of next year.
Steve Kenneally, director of payments and technology policy at trade association American Community Bankers, thinks that deadline will be pushed back and it will be 2009 before anything concrete is ready.
By then, opponents hope UIGEA will be well on the way to being dumped and there are already two or three initiatives to that end working their way through Congress.
The Poker Players Alliance, a group that claims 809,000 members, argues that online poker is simply an update of a 150-year old US tradition. It met with Washington power-brokers earlier this week, lobbying for its view that online poker should not be banned but regulated.
Talking points from the PPA included its estimation that legalising online poker could bring in annually around USD 3b in tax revenues to federal government coffers. It also stressed the anomaly that Congress bans poker while allowing online betting on horse racing and lotteries.
At a reception on Tuesday, flamboyant World Series of Poker players mingled with besuited politicians and their staffs. Vanessa Rousso, the top earning US female and a full-time law student at the University of Miami, said internet gambling was important, especially for women.
„Being a woman, playing on the internet was a great way for me to become comfortable playing the game before having to sit down with a bunch of older guys in the intimidating atmosphere of a real casino. I play about 10 hours a week online and as a professional player, it allows me to constantly hone my game and improve,“ she said.
Her rival Annie Duke stressed the game’s skill level: „Poker is a game that is deeply complex, but the complexities don’t reveal themselves until you know a lot about the game.“