Lawmakers hear another bid for legal online gaming

WASHINGTON, D.C. -- Professional poker player Annie Duke urged Congress on Wednesday to legalize and regulate online poker, saying the game is booming and in some ways is safer to play on the Internet than at a card table.

Duke told House lawmakers she had just attended the World Series of Poker in Las Vegas, whose growth over the past decade has been driven by the popularity of the game on the Internet.

She estimated 70 million people now play poker.

"This industry is growing and not going away," said Duke, who promotes an online poker site. "We should not stick our head in the sand."

Duke said she understands that some people dislike gambling.

"What is harder to respect is the idea that, because someone disapproves of a particular activity, they would seek to have the government prevent others from engaging in it," she said.

Duke said in some ways it may be safer to play poker online than live. She said it can be impossible to tell whether someone sitting across the table is cheating, "and even if you suspect it you can't do anything about it."

By contrast, she said, online sites employ software to track every hand, the distribution of cards and the habits of every player.

"If they suspect an individual, they can look at every single hand that person has played and who they have played with," she said. "They can see how much money every individual on the site lost to that individual."

When a cheating scandal was discovered at Ultimatebet.com a few years ago, its owners refunded $22 million to victims, she said.

But as far as cheating at a table game, "I have never seen a penny refunded to the players affected," she said.

Duke, who also battled on national television to become a Donald Trump "apprentice," was the celebrity witness at a House Financial Services Committee hearing on a bill that would legalize, regulate and tax online gambling.

Lawmakers are split on the legislation, but U.S. Rep. Barney Frank, D-Mass., the bill sponsor and also the committee chairman, has signaled he planned to proceed.

People opposing the bill, Frank contended, fall in two categories. Either they are competitors seeking to slow the online industry, he said, or they are "busybodies" who want to restrict gambling as socially unacceptable.

Although the arguments for and against the measure were familiar, the hearing provided clues about possible amendments and warnings of where opposition may emerge when the bill is debated.

Lynn Malerba, chairwoman of the Mohegan Tribe of Connecticut, said Indian tribes want the bill amended to ensure that they can operate Internet gaming sites, apart from agreements they have with states on their brick-and-mortar casinos.

"Indian tribes must have the ability to participate on a level playing field with other gaming interests," said Malerba, whose tribe operates the Mohegan Sun casino.

Tom Malkasian, the owner of Commerce Casino, a poker club outside Los Angeles, urged the bill be scrapped. Rep. Joe Baca, D-Calif., echoed Malkasian.

Baca said legalizing Internet gambling "will create problems for California and its economic recovery. It does nothing to protect American jobs."

Malkasian challenged estimates that as much as $42 billion could be raised over 10 years in taxes on the online industry. He said the estimates are based on the assumption that all online gaming companies would agree to be based in the United States.

Malkasian said companies outside the United States that have been offering online gaming illegally should not be licensed.

"They have built brand-name recognition and a strong customer base at the expense of American casinos and Indian tribes, who would have been shut down had they engaged in the same activities," he said.

"If Congress were ever to decide to legalize marijuana, certainly no one would suggest that the first federal permits to sell it should go to the Tijuana drug cartel since they have the most money and experience in marketing and distributing the product," he said.

Michael Fagan, a former federal prosecutor in St. Louis, said lawmakers who advocate legalization are believing in "fairyland arguments." Online gaming proprietors, whom he called "corner-cutters and sharp operators" who mimic organized crime, will be difficult to tame, he said.

"A least responsible brick-and-mortar casino operators can look a gambler in the eye and make the human assessment of whether he is too drunk, mentally unhinged, despondent and desperate, or otherwise at a point where it is simply unfair to take advantage of him any longer," Fagan said.

"Internet gambling operators not only cannot assess those characteristics, in my experience they don't care to, preferring to prey on the weak and the strong equally."

Steve Tetreault, GamingWire - 2010-07-26 08:32:35

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