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Scare tactics could force federal legislation but don’t hold your breath

18th July 2013 7:48 am GMT

Yesterday’s senate hearing on internet gambling suggests industry-friendly federal legislation is a long way off

There was much hope invested in the senate hearing, coming on the back of two federal bills. However, the line-up of witnesses chosen to provide expert testimony on the pros and cons of online gambling did not look promising.

Chuck Canterbury, the president of the Fraternal Order of Police (FOP), is a trade union official more used to talking about pensions than online gambling.

Catholic Advocate president Matt Smith is a former member of George W. Bush’s White House team, where he served as Deputy Assistant Secretary for Public Affairs at the US Department of Veterans Affairs. Smith is more used to fighting abortion than the proliferation of gambling on the internet.

Thomas Grissen, the CEO of Daon, a company supplying biometric identification software, looked likely to provide some balance until he admitted absolutely no experience in online gambling. Interesting software but primarily used by banks.

The final witness was Joe Blum, an attorney who specialises in money laundering compliance and believes “gambling is dumb” – his opening words.

Generally, the majority of witnesses who appear before a congressional hearing have been invited by the committee chair (in this case Senator Claire McCaskill from Missouri) or sometimes by the ranking minority chair (Senator Dean Heller). It’s a shame Nevada’s Heller couldn’t have tapped some expertise from his home state.

Ultimate Gaming’s CEO Tobin Prior could have provided some real life experience of regulated online gambling in the US. Or Heller could have asked someone at Caesars to give some input on their experiences operating online gambling in the UK.

As it is, the so-called witnesses (who did not seem to have witnessed much online gambling) could have been handpicked by internet-sceptic Sheldon Adelson. The casino industry’s premier opponent of internet gambling would have been pleased by the testimony of the “experts”, who – with the exception of Smith – claimed to be neither for or against internet gambling. Despite the merits of their supposed independence (and one would think that Grissen at least could have a lot to gain by the roll out of regulation), all seemed very sure of the links between online gambling and organised crime.

“We know organised crime is using offshore gambling sites to launder money,” said police chief Canterbury. “There are also indications that terrorists in Afghanistan are using online gambling sites to launder money.”

Canterbury and Republican Senator Ayotte of New Hampshire then conjured up some links between online gambling, drug dealing, prostitution and human trafficking from nowhere. It all got a bit confusing by this stage, such was the general lack of evidence for any of these allegations. However, if Heller’s tactic is to scare Congress into acting he might well succeed.

After Smith had chipped in that his three-year-old child could probably log onto an online gambling site, Ayotte declared: “Shame on us if we don’t do anything on this. I hope this is something we move on very quickly.”

Who knows what sort of bill these jokers could dream up though. Heller, and several of the other politicians, seemed more concerned with political point scoring than finding out any facts about how to protect minors and the vulnerable from online gambling.

He decried the Obama Administration’s “unilateral decision when we were all out of town” on December 23rd 2011 to “help out their friends in Illinois and New York” with the Department of Justice’s memo on the Wire Act.

As a result, “the internet has turned into the Wild West of gambling,” declared Heller. More than one of the other politicians dubbed it a “free-for-all”.

Catholic Advocate Smith stated: “By reinstating the 50-year-old interpretation of the Wire Act and strengthening UIGEA we can protect our children.”

It was left to lawman Canterbury to point out that a 50-year-old law is no way to govern modern day technology.

Money laundering lawyer Blum took the conversation further into the realms of fantasy when he told the hearing that if he was a Russian mafioso he would use an online casino to get people’s credit card details.

Senator Blumenthal responded: “Even an honest online gambling operator, absorbing huge amounts of data, could potentially be a victim – I put the word ‘victim’ in very heavy quotes – of theft of that data.”

Blum said he thought public companies were probably better at securing data but he did not seem very sure. Blumenthal, who went on to speculate about the links between porn (and human trafficking) and gambling (“the two worlds merge”), seemed blissfully unaware that UK public company Sportech is already running an online gambling operation in his home state of Connecticut.

The world of politics is such a crazy place that such warped opinions just might get Congress to act. It might be telling that the Poker Players Alliance has started lobbying hard on Barton’s bill despite recently admitting that federal legislation efforts were a waste of time and resources.

However, one feels that a more balanced debate is necessary if the politicians are to assemble a bill that does anyone any good. This rhetoric smells more like the precursor to a crackdown than any form of liberalisation.

sah@gamingintelligence.com

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