MAINSTREET MEDIA COVERAGE FOR CONYERS HEARING (Update)

16 November 2007

Confusing responses from DoJ enforcement


Few would disagree with Congressman John Conyers, when he said at a House Judiciary Committee hearing in Washington on online gambling this week that he was frustrated by disparities in the enforcement of U.S. Internet gambling laws.

Chairing the hearings, Conyers questioned "the selective nature" of Internet gambling enforcement and in a reference to the WTO compensation dispute said a ban enacted by lawmakers last year could end up hurting U.S. relations overseas.

"Continuing with the same old failed policies for the sake of feel-good politics doesn't make sense," Conyers, of Michigan, said.

Experts with a diversity of perspectives attended the hearings on the confusing state of US Internet gambling legislation and enforcement.

The witness list included:

The Honorable Shelley Berkley - U.S. House of Representatives Nevada, 1st District

The Honorable Bob Goodlatte - U.S. House of Representatives Virginia 6th District

The Honorable Catherine Hanaway - United States Attorney Eastern District of Missouri, Department of Justice

Professor Joseph Weiler - New York University School of Law

Tom McClusky - Vice President of Government Affairs Family Research Council

Valerie Abend - Deputy Assistant Secretary Critical Infrastructure Protection and Compliance Policy Department of the Treasury

Annie Duke - a poker player from Los Angeles, CA

Michael Colopy - Aristotle Inc.

Several of the witnesses called for the U.S. to reverse its policies on Internet gambling, arguing the prohibition of Internet gambling activities, the approach most recently undertaken in the Unlawful Internet Gambling Enforcement Act (UIGEA), violates American principles of personal freedom and individual liberty.

The experts explained how the ban on Internet gambling violates U.S. treaty obligations with other countries and exposes U.S. businesses to potential business retaliation overseas. Additionally, Internet verification software technology was described that successfully protects against underage and compulsive gambling, further eliminating the rationale for banning online gambling activity.

"Today's hearing made clear the arguments why Congress needs to reverse its current policies related to Internet gambling," said Jeffrey Sandman, spokesman for the Safe and Secure Internet Gambling Initiative.

Representative Shelley Berkeley provided testimony on the need for Congress to change its policies related to Internet gambling and protect the million of Americans that continue to gamble online despite passage of the UIGEA.

"A combination of outdated laws, selective enforcement by the Justice Department, and an intentional lack of clarity by Congress has resulted in a confusing environment for those law-abiding Americans who want to wager online, and that was before enactment of last year's so-called Unlawful Internet Gambling Enforcement Act," said Berkeley.

"The UIGEA actually made things even more confusing by targeting the financial sector rather than gamblers, and further memorializing the carve-out for horseracing. An estimated 10 million Americans are still wagering online on poker alone, and they are doing so without the benefit of the protections afforded by effective regulatory oversight. . . . I applaud this committee for attempting to lay the groundwork for a legislative solution that ideally would legalize online gaming, subject it to some sort of regulation, and protect underage and problem gamblers."

Professional poker player Annie Duke testified that Americans deserve the right to determine whether to gamble online without government intrusion.

"What's at stake here is the right of individual Americans to do what they want in the privacy of their homes without the intrusion of the government," said Duke. "This country was among the first to embrace the idea that there should be distinct limits on the ability of the government to control or direct the private affairs of its citizens. More than any other value, America is supposed to be about freedom. Except where one's actions directly harm another person's life, liberty or property, our government is supposed to leave citizenry alone. Examples of Congress straying from this principle are legion, but few are as egregious as The Unlawful Internet Gambling Enforcement Act of 2006."

Joseph Weiler, a professor of law at the New York University School of Law and an expert in World Trade Organisation law provided testimony that the U.S. is in violation of its WTO trade agreements around Internet gambling and should seek to bring itself into compliance.

"The U.S. bans online gambling offered by overseas operators even though it made treaty commitments to allow it and even though it allows online wagering domestically, including for horse racing," said Weiler. "We should bring our law and conduct into compliance with our international legal obligations. Our country is the trendsetter and leader in so many international arenas. Whether we like it or not, we lead by example. As our economy moves increasingly towards a high tech, knowledge based service oriented model and as we realize that our future prosperity will depend increasingly of tapping into export markets, notably the huge emerging markets such as China and India, is it really in our self interest to teach this particular example? How would we feel if China prosecuted and imprisoned American businessman for engaging in commerce in China that the government there decided to ban despite its treaty obligations?"

Michael Colopy, a representative of Aristotle Inc., a leading provider of verification services for child protection online, provided testimony on the opportunity to use technology and controls available on the Internet to combat compulsive and underage gambling.

"Online age and ID verification has matured as a needed solution such that any merchant may do online what is routinely done at stores every day across America," said Colopy. "In fact, as ever more efficient technologies and databases have been developed, online transactions have become in many instances faster and less risky than the visual driver's license scans that suffice for alcohol or cigarette purchases in America's neighborhood convenience stores, restaurants and bars."

Colopy added that a self-exclusion list program is an example of a solution to keep compulsive gamblers from wagering online. "A central self-exclusion list program (SEL) has been under development over the last several months and is now deployed. Through the SEL, individuals will be able to put their own names on a confidential list of those who do not wish to be solicited or allowed to open an account with a casino."

Detailed recordings of the hearings at http://judiciary.house.gov:80/oversight.aspx?ID=396 appear to showcase some confusion on enforcement even among DoJ officials. U.S. Attorney Catherine Hanaway said that gambling online is not illegal in the US, but accepting money for it is, and then offered that the Department of Justice "operates under the belief" that all online gambling is illegal. She also appears to be in conflict with the notorious Congressional carve-outs for online lottery and horseracing betting, saying that betting on horses online is illegal. When asked if online lotteries were illegal she replied in the affirmative, but could not recall whether there had been any prosecutions.

The hearings immediately attracted widespread mainstream media coverage with major wire services like Reuters and AP leading the charge. It was reported that Conyers and several other lawmakers on the committee pressed officials from the Justice Department and Treasury Department at the hearing to explain why they are cracking down on some forms of Internet gambling but not others.

The Justice Department contention that the Wire Act bans all forms of gambling over the Internet was also examined, as Conyers and other committee members questioned why the Department had not sought to prosecute other forms of Internet gambling, such as online horse-racing.

"To cherry pick ... is what I find to be particularly intellectually dishonest," said Representative Robert Wexler, a Florida Democrat who has introduced a bill that would exempt poker and some other games from the Internet gambling ban.

Conyers also wanted to know why horse-racing and some other forms of gambling "will continue to proceed unfettered" under new regulations proposed last month by the Treasury Department and the Federal Reserve in support of UIGEA (see previous InfoPowa reports).

Reuters reported that Conyers was critical of the new Internet gambling ban, saying it could run afoul of the United States' international obligations. European trade officials have recently argued that the online gambling prohibitions discriminate against European companies that want to offer online gambling services in the U.S. market.

The World Trade Organisation in March found U.S. prohibitions on online betting illegal in a complaint filed by Antigua and Barbuda several years ago. However, U.S. officials have said they will maintain the ban anyway and retroactively remove gambling services from its market-opening commitments, opening the US up to possibly heavy compensation claims from a number of other WTO member nations.

The four hour hearing appears to have concluded that Internet gambling needs to be studied and examined far more closely by the legislative body, state Governors, enforcers and state attorneys. This could be leverage for the appointment of an independent enquiry into Internet gambling in the United States, something Conyers and Berman have previously suggested.

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