- The Washington Times - Wednesday, April 5, 2006

Two bills in the House, and one likely to come in the Senate, are trying to force the online poker juggernaut to fold. The House bills, one sponsored by Virginia Republican Bob Goodlatte and the other by Iowa Republican James Leach, are poor attempts to regulate a forum that has flourished precisely because of the absence of constricting regulation.

The popularity of poker has surged in recent years, heavily driven by the boom in Internet play. An estimated 23 million people in the United States play poker online, and 3 million of those play for money. A tenfold increase in three years in online poker revenue reflects this popularity. The sport’s premier event, the World Series of Poker, has exploded from 800 entrants in 2003 to 6,000 last year — and the majority of those 6,000 players won their spots in the tournament playing online.

It’s not just poker players who are concerned about this legislation: A recent survey shows that more than 74 percent of Americans oppose a ban on online poker.

Online poker is big business — around $5 billion annually — but it is also competitive business, meaning sites already have a strong interest in maintaining fair and legitimate games. Professional poker player Howard Lederer, in a meeting Tuesday with editors and reporters of The Washington Times, noted that, because online games can be easily monitored, a site would surely flop if its dealing was found to be unfair. Likewise, sites strongly enforce age restrictions because they find themselves liable for winnings or debts incurred by underage players. Mr. Lederer said he was confident that online players get a fair game.

The Goodlatte bill would expand the Wire Act of 1961 to explicitly prohibit Internet gambling, but oddly makes exceptions for online lotteries, as well as wagers on horse racing and fantasy sports teams. Because online gambling is not expressly legal, most online poker sites established themselves outside of U.S. jurisdiction. To enforce this prohibition, therefore, the Goodlatte bill would put the onus on communication providers and financial institutions, including credit cards, to stop transactions connected to online betting.

The Leach bill, which was introduced late last year, would further this very heavy-handed enforcement. According to the CBO estimate, the cost of compliance to these institutions hasn’t been determined, and there is concern that this requirement is really an unfunded mandate. Deputizing banks to consistently monitor credit card charges and deposits for a connection to online gambling is invasive and overreaching.

In online poker, the house only takes a 10 percent cut of the money that is wagered — substantially lower than what an online lottery keeps. That people win and lose money in poker is understood, but fundamentally it is a game of skill, much different than chance gambling. It’s important to consider that the Internet is substantially different than a brick-and-mortar casino, and therefore should not be regulated as such.

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