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Arguments Raised In Online Gambling Regulation Bill Hearing

Posted on July 27th, 2010

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Last Wednesday, the House Financial Services Committee held a hearing on Barney Frank’s H.R. 2267 or the Internet Gambling Regulation, Consumer Protection and Enforcement Act. Those who participated in the hearing raised their respective points of view on the issue. On the opposing side, besides Rep. Spencer Bacchus, a staunch enemy of Frank’s bill, there were Tom Malkasian and Michael Fagan who voiced their opposition to the bill. Tom Malkasian, a businessman from California who owns Commerce Casino, said he is in strong opposition to H.R. 226 as written because of the many flaws he has seen in the legislation. He said his company is in favour of legalizing online gambling, but the bill needs to be amended to tackle the many defects of the measure.

He also voiced his disapproval on the $42 billion revenue that online gambling supporters say legalized online gaming will produce. He said those projections are made from inaccurate information and incorrect basis, since they consider the internet sites would be American, but the bill does not stipulate that the sites be based in the United States. The casino entrepreneur also noted that the bill would disregard the rights of the states and tribal lands, both of which have their own gaming laws. He suggested changes in the bill that would allow states and tribal lands to opt-in.

Michael Fagan, a former federal prosecutor and law enforcement consultant, raised the issue of how to compel obedience to the regulations of the bill which he believes would be harder than the present situation. He said, “It would be irresponsible to take any steps toward expanding the availability of internet gambling — such as giving up on controlling the problem — in the United States before first directing and funding the Department of Justice and/or the states’ attorneys general to enable a coordinated, systematic approach to enforcing existing laws prohibiting and taxing such conduct.”

The chairwoman of the Mohegan Tribe in Connecticut, Lynn Malerta represented the Mohegan Tribe and the alliance of other Indian tribes. She said Native Americans have received a great deal of economic advantage from tribal gambling and they are thankful to the federal government for involving the Native Americans on H.R. 2267 and that the tribes are supporting the bill in regulating and legalizing online gaming. However, she said the tribes hope that the bill would make a clear provision that tribal gambling facilities and tribal governments would be authorized to operate Internet gaming sites and that the bill’s provisions would not contradict with rules in the Indian Gaming Regulatory Act.

Edwin Williams, member of the board of directors of the Credit Union National Association (CUNA) and president and CEO of Discovery Federal Credit Union spoke on behalf of the CUNA. He said credit unions and other financial services companies, in order to avoid illegal Internet gambling transactions, are forced to obey the rules of the Unlawful Internet Gambling Enforcement Act or UIGEA which are very difficult and taxing. Williams said that with H.R. 2267, a bill that would require Internet gaming sites to be federally registered, pay for licenses and some fees, it would be easier and safer for the financial institutions to deal with these sites and at the same time comply with UIGEA’s rules.

Congressman Ron Paul also testified in favour of the bill. He said there would be no new federal laws that would be created by the online gambling regulation bill, only a process to be followed by the online gambling providers in order to comply with present laws. He said that personally, he sees gambling as a waste of money, but he also feels that the people should not be dictated upon by the government on how to use their money. He said the ban on online gambling is an intrusion on the Americans’ right to use their money as they want. He appealed to his fellow lawmakers to support the bill and give the American people the right to decide if they want to gamble online or not.

Annie Duke, a professional poker player represented the Poker Players Alliance. She testified that the bill will not attempt to expand online gaming, but will only provide protective measures and regulations to an industry that is rapidly growing. She said American poker players would want to play online on American sites, instead of playing on sites based overseas. That way, state and federal governments would get the tax revenues due them. She said the bill is also about personal freedom, and that American people should be allowed activities in their own homes.