Thursday, July 13th: A Confederacy of Dunces

So some people have written me asking for my take on the latest internet gambling legislation that recently passed the House. I actually watched C-SPAN for the first time in my life during debate about the bill. Here are my thoughts on the bill and a summary of the relevant provisions, but despite my legal eduaction, don't take this as anything other than a layman's editorial.

1) First off, this bill does NOT prohibit online gambling. It merely regulates how people can fund their online gambling/poker accounts. All it does is prohibit US financial instutions like banks and credit cards from processing transactions with offshore gaming sites. News flash: this doesn't actually change anything. If you tried using your credit card to deposit at a site any time in the last 5 years, you're probably already aware that nearly all US credit card companies haven't allowed transactions to poker sites since 2000 or so. Some sites used to have direct bank transfers available (and still do; e.g. IGMpay with Party Poker), but if this bill passes the Senate and is signed into law then those will come to an end. So guys like me (and you) aren't going to have any trouble continuing to use Neteller or other methods to fund our accounts, but the concern is that any measure that makes it less likely that Joe Blow with a "real job" will drop a few hundred into his poker account on the weekend is bad news. Will it kill online poker? Absolutely not, but it might somewhat impede the willingness of fish (at least American fish) to play.

2) Secondly, we're still very far from seeing this signed into law. What happened yesterday had been fully expected for months...so the bill has essentially passed phase I and II. Phase I: it made it out of "committee" (this is where a bunch of House reps simply talk about the bill and decide what provisions to include...more often than not, the reps can't come to an agreement, and the bill dies here. That it actually made it out of committee was more of a surprise than what happened yesterday.) Phase II: It was approved by a full vote of the 435-member (i think?) House -- like I said, really not a surprise, it had pretty broad support from both Republicans and Democrats, although since it was sponsored by 2 Republicans, the Democrat approval was narrower (about 2:1 in favor of the bill, whereas Republicans were almost unanimous in their support.) Most previous bills seeking to regulate online gambling have died in committee...the reason this is causing a stir is that it's more or less the furthest a bill like this has ever gotten.

So what's next?
Phase III: The bill must now be voted on by the Senate, the other body of Congress for you non-Yankees. Well, actually Phase III-a is that the bill must actually make it to the Senate for a vote...if they have too much other stuff to do, the bill might not make it there before the current Congress expires later this year...other people have written that if that happens, then the bill dies, but I'm not so sure that's the case...I don't see why a bill would be completely dismissed from the Congressional docket simply because it isn't voted on by mid-term election time. But again, I'm just not sure. But assuming it does make it through for a full vote by the Senate, well there is not a clear consensus on how most Senators feel about it right now...my personal intuition is that it would pass the Senate if it made it to a vote...Republicans would feel inclined to vote for it because it was sponsored by Republicans in the House of Reps. and was supported nearly unanimously by other House Republicans...and I think there are enough conservative-leaning Democrats who would vote for it...certainly enough to outweigh any rogue Republicans who opposed it...
Phase IV is that it has to get signed into law by the President, but once a bill has been approved by both the House and Senate, this is really just a formality...a Presidential veto would be highly, highly unlikely.
(Tenative) Phase V is that it would have to survive a Constitutional challenge in court, which I can nearly guarantee would be filed almost immediately after the bill is signed into law, if it gets that far. I'm not entirely sure how likely such a challenge would be to succeed, because the bill doesn't really abridge a protected freedom: there's no constitutionally-protected right to gamble, and certainly not to gamble online. Bottom line is that the government can outlaw it completely (like alcohol during Prohibition) and we wouldn't really have much to say about it.

3) Let's be clear on one thing: this bill is NOT designed to "protect the children", which was the preposterous rationale crowed about in the political rhetoric. It was almost sickening to see the House Reps try and play on peoples' hearstrings during the debate with tales of students who lost so much gambling that they killed themselves or robbed a bank (in one ridiculous and isolated case). If that truly is the purpose of the bill, it will be one of the worst and least effective pieces of legislation ever passed...after all, there are explicit exceptions in the bill for betting on horse-racing, and interstate lotteries. Wait, so you're telling me that you want to 'protect the children' from the evils of online poker and sports betting, but that gambling on horses and State lotteries somehow doesn't pose the same threats? Please. There is one reason, and one reason only that those were excluded from the bill's language -- the politicians crafting the bill realized that it would never pass if they were included: horse-racing has very influential and wealthy lobbyists in D.C. -- not a group you really want to alienate -- and States derive so much income from their State lotteries that they'd never support anything that cut into that revenue stream. So sports gambling and online poker become the whipping-boys of choice. No, what this bill is about is the US government getting its cut in tax revenue. Reps. Goodlatte, Leache, and Sensenbrenner, in defending the bill on the House Floor tried to keep their arguments about "protecting the children", but every once in a while would let a few words slip about how much money was flowing out of the United States and into the coffers of "fly-by-night" and "unregulated" offshore gaming companies, leaving no doubt about what the real motivation for this bill is: the ultimate REGULATION of online gambling within this country's borders so that they'll be able to reap the BILLIONS of tax dollars they're missing out on because they're being drained by offshore gaming companies. Now I'm not saying that everything would be just hunky-dory if they admitted that's what the real driving force for this legislation was -- admittedly, I'd still be pretty exasperated -- but I just hate the hypocrisy of it all. How are opponents of the bill supposed to rationally and logically express their opposition if its sponsors are intentionally or negligently misleading about what their real motivatioons are?

Anyway, that's a brief synopsis of what's going down on that front.