Quasi-Legal Ramble

Today, I don't have any screenshots for the blog. Today, no tournament histories, and no bad beat stories (though I did go out a respectable 14th in the WWdN last night). Right now I just have a quasi-legal ramble on the recent anti-gaming legislation. So here goes.

The more I think about it, the more I can't help but believe that online poker in the U.S. isn't actually going anywhere. I simply cannot get around the fact that the feds explicitly did not make a law that states that it is illegal for anyone in the U.S. to gamble online. Clearly they could have done that, but they chose not to. Instead, they're trying to attack the financial mechanisms by which online poker is most often played by Americans. As I mentioned yesterday, the action that this new bill prohibits is not the actual playing of online poker in the U.S., but rather the transfer of funds by financial institutions in to or out from online gaming sites.

Under current federal law, the Wire Act, passed by Congress in 1961, prohibits making gambling wagers over the telephone. Since the Internets came along, it has not been legally clear if the Wire Act actually applies to the Internets, a situation that the House addressed head-on when they approved the anti-gaming legislation this past summer, including explicitly expanding the Wire Act to include things like non-exempted wagers over the Internet. But then the Senate took this bill from the House -- the one which explicitly extended the Wire Act to online gaming activities not subject to the lottery / horse racing and other seemingly arbitrary or lobbying-related exemptions -- and gutted it, changing its entire focus from officially making you and me criminals for playing online poker, instead to preventing the electronic funds transfers that currently make online poker go in the U.S. As I said above, if the Senate truly wanted to criminalize actually playing online poker, they could have. They would have. It was already done for them by the House of Representatives! But the Senate affirmatively changed the entire focus of the House-approved bill, to ensure that it does not actually make playing online poker illegal.

Why would Frasshole et al do this in the Senate? To me, there seems to be only one likely answer. Frasshole doesn't actually care about preventing online poker. There is no doubt that making it an official crime for anyone in America to play poker online would have a far more chilling effect on the popularity of online poker here (and therefore around the world) than instead only making the financial institutions liable for online gaming transfers. To think that Frasshole actually went out of his way to change the existing bill as it came out of the House of Representatives, to specifically eliminate the criminalization of online poker for U.S. players, is really saying something. And what it's saying to me is that Bill Frasshole is just interested in pleasing the religious right freaks who are most in control of him winning the next Presidential primary for the 2008 elections in Iowa. How can he do this, without actually being the guy who actually makes online poker actually illegal? He publicly calls the bill "anti-gaming legislation", and he tacks it on to a non-gaming-related bill to make sure it gets passed. And he doesn't actually criminalize the act of gambling online. He opts instead for this focus on financial institutions as the criminals of online gaming, instead of the players who could potentially be voters in the upcoming elections where he wants to be President.

So to me, the Senate does not really want to outlaw online gaming, at least not right now. Bill Frasshole does not really want to outlaw online gambling, and risk alienating all those potential voters who either like to play a holdem tournament a few times a week, or who like to bet on the occasional NFL game on a Sunday during the colder half of the year in most of the U.S. Frasshole just wants this to look like he is anti-gaming, like he is doing something that the highly conservative political elements of his state will like to see and will remember during primary time in 2008. It's that simple. And that to me means that this bill -- this whole movement to ban online poker -- simply does not have the teeth behind it to stick. Nobody here with actual power actually cares enough to ban online poker. If they did, they would have banned it with this bill this past weekend. But this is a political thing, not an actual desire to turn millions of Americans into criminals overnight. And with nobody actually caring to actually stop online poker, I am becoming more and more confident, the more I think about it, that some workaround will be found.

And I'd also like to take a few minutes to discuss those workarounds. As I mentioned yesterday, I am still not clear whether a company like Firepay or Neteller, which is not based in the U.S. and has no operations here, is even subject to U.S. jurisdiction when it comes to the new anti-gaming law.

Here is a very quick, very basic legal primer. In order for anyone to be subject to prosecution for violation of a U.S. law, the U.S. has to have both subject matter jurisdiction and personal jurisdiction over the intended target. Subject matter jurisdiction basically exists in this case to the extent that any online poker site, funds transfer site like Neteller or Firepay, or any other party, is actively enabling United States players to play online in violation of the new bill. Personal jurisdiction, however, is another matter. The U.S. can't in most cases just send some officials over to, say, France, barge in on some French dude's dinner with his family, and arrest him for violating a law in the United States and then take him away. We can't do that because we don't have personal jurisdiction over that guy when he is sitting in his home in France. In order to have personal jurisdiction over someone violating a U.S. law (again this is a very basic discussion and clearly glosses over a number of key nuances), that person most likely needs to be here, in the United States. This is why we've seen the highly-publicized arrests of the CEO of UK-based Sportingbet PLC and another online sportsbook over the past month or so -- because these guys made the mistake of taking a plane and landing somewhere in a U.S. airport, and in both cases U.S. officials were waiting for them at the jetway to take them away, arresting them with clear personal jurisdiction over them because those people voluntarily stepped foot on U.S. soil, and were thus subject at that time for past and present violations of U.S. laws.

So here's the thing. I've heard and read a lot of people this week saying that it is not likely that officials at a place like Neteller or Firepay would be willing to continue to allow Americans to circumvent the U.S. laws (pretty clearly "aiding and abetting" these violations under U.S. laws) by continuing to allow money transfers to and from U.S. players and online gaming sites, because that would mean that these officials could not travel to the United States for fear of being arrested and detained while here (which they probably would be). People argue that it's bad for these companies' businesses for their officials and management not to be able to travel to the U.S. People also argue that most people desire to travel to the U.S. at some point, and they will not want to give up this possibility. But let's be honest here. How many of you out there are placing bets these past couple of weeks on NFL and college football games? Unless you live in Vegas, almost all of you are using (illegal) online sports books to place these bets.

But how can that be? Do you mean to tell me that, even after the highly-publicized arrest of the head of sportingbet plc last month as he disembarked from his cross-Atlantic flight at JFK airport right here in New York, that there are still one or two online sports books willing to take on all these risks -- not being able to travel to the U.S. for personal reasons, giving up the ability to make personal business contacts here, etc. -- and continue to accept wagers from U.S.-based bettors? No, there aren't one or two of these sites. There are hundreds. Maybe thousands, I don't know. All I do know is, it doesn't actually match up with practical reality that managers of offshore financial institutions or other companies will be too afraid of giving up their ability to enter U.S. soil to continue to provide a mechanism for Americans to pursue a legal activity in the U.S. Rather, every bit of evidence I have indicates to me that, while online gambling itself remains affirmatively not illegal in the United States, there will continue to be a significant demand for such services here. And where such a demand exists, especially when we're dealing with the multibillion-dollar industry of online poker, offshore institutions have shown time and time and time again that they are always -- not often, but always -- willing to step up to the task.

So, don't get me wrong. As of yesterday, I have almost nothing left in Partypoker since those asshats with the worst software in the entire online poker world have publicly stated that they will "block" all U.S. players (whatever that means, exactly) as soon as President Bush signs this anti-gaming bill into law, which is going to happen any day now. I've dropped my pokerstars and full tilt balances down to amounts which I could accept losing if I had to. But I think the odds of that happening are exceedingly low, at least anytime soon. I still think it is more than 50% likely that the online poker sites and the offshore financial insitutions will come up with another way for U.S. players with an interest in online gaming to get the job done. I believe that based not only on all the historical evidence I find in this industry, but also on what I perceive to be a clear lack of legislative intent to actually follow through in keeping U.S. players from playing poker online. What I see is one Senator who has made a purely political move by pushing through a bill -- one that he has purposely gone out of his way to remove the actual teeth from -- and a demonstrated history in this industry of finding a way. The U.S. pressured the major credit card companies not to accept and receive funds for online gaming activities, so what happened? Firepay and Neteller were born. Something else will pop up, or the Firepays and Netellers of the world will find another way themselves, or they will just take on the risk. That's what I think is the most likely outcome here. If the U.S. legislators actually gave two shits about preventing online poker from actually occurring right now, I would be more concerned. But they don't. So I'm not going to get my panties in a bunch.

I will close today with a quote from one of the greatest writers/bloggers out there in my view, Change1OO. Change said it best on her blog, and I could not agree more with this sentiment:

"I don't have a lot of faith in my government anymore. We go to war with a country that never attacked us while 9/11's mastermind still drinks tea and eats llama with his cronies in a cave somewhere. 50 million Americans don't have health insurance. 37 million live below the poverty line. There is a hole in the sky that is slowly giving us all cancer and Republicans with their hands in the oil industry's deep pockets are still telling us that global warming doesn't exist. People can still get weapons and explosives on airplanes. A bodybuilder-turned-action star governs the state I live in. And our elected representatives are jerking off to IM conversations with 13-year old boys."