PPA Executive Director Pens Testimony Ahead of RAWA Hearing

With the Congressional hearing for H.R. 707, the Restoration of America’s Wire Act (RAWA), looming tomorrow, Poker Players Alliance (PPA) Executive Director John Pappas has submitted written testimony to the United States House Subcommittee on Crime, Terrorism, Homeland Security. Pappas is unfortunately not included in the live witness panel (that is no accidental oversight), but has decided to make sure that the voice of the poker player is heard by the members of the Subcommitee (or at least by those open-minded enough to listen).

He starts by introducing himself and the PPA and stresses that RAWA is a horrible idea, saying:

As an organization, the PPA has been at the forefront of advocating for strong consumer protections and accountability. Unfortunately, H.R. 707 will achieve neither. It is a misguided prohibition that seeks to impose a federal ban on states’ ability to govern within their borders. It should not be characterized as an “Internet gambling ban” because it does nothing to address the off-shore, unregulated market. It solely extends its reach into the prerogatives of states, restricting their ability to authorize and regulate Internet gaming.

ppa logoHe then proceeds to detail the history of the Wire Act, stressing the fact that it was written to make sports betting illegal over communications lines, even though the Department of Justice perverted its meaning to include all forms of gambling over the internet. Pappas goes on to make the interesting point that the one successful attempt by Congress since the Wire Act to block internet gambling actually works in poker players’ favor as the fight currently stands. Though the Unlawful Internet Gambling Enforcement Act of 2006 (UIGEA) was a sneaky, politically motivated law that hurt online poker by making financial transactions to and from gambling sites illegal, it really bolsters our positions against Sheldon Adelson and friends and their attempts to pass RAWA. As Pappas points out, the UIGEA blocks payments for “unlawful internet gambling,” not any and all online gambling. The UIGEA, in fact, has a carve-out for intrastate online gambling, something RAWA would specifically take away. Says Pappas:

From UIGEA’s definition of exempted “internet gaming”…it is clear that Congress never intended to ban states from authorizing and regulating online gaming within their own borders. In fact, it is clear that Congress suggested just the opposite as the UIGEA prescribes regulatory safeguards for the states that choose to authorize the activity.

Supporters of H.R. 707 suggest it is executive branch overreach that has led to state regulated Internet gaming, however, the evidence, and the precise language of the only Internet gaming bill enacted by Congress (UIGEA), tells a much different story.

Pappas soon moves on to address the valid concerns that people have about internet gambling, focusing on the technologies that are already in place in the U.S. and around the world. To the point of underage access and identity verification, he explains, in part:

All online betting companies require customers to open an account to make a bet. Let me be clear: to open an account for real-money play, a player does not have to merely prove that he or she is an adult; the would-be player has to prove that he or she is a specific adult whose identity can be verified through existing third-party databases, such as credit reporting agencies. Identity verification and know-your-customer requirements in the regulated online gaming space are as robust as those in the online banking space. The suggestion by some that you can open an account as “John Smith” just because you have John Smith’s credit card information is simply wrong.

In discussing problem gambling, Pappas cites a number of studies from the last few years that have all shown that the rate of problem gambling has not increased in countries after internet gambling has been legalized and regulated. In some jurisdictions, problem gambling rates have actually decreased. He does not ignore that problem gambling is indeed a thing, adding, “While gambling addiction is indeed an issue, I believe it is best addressed through proactive regulation that seeks to mitigate the problem, rather than be left to an ill-advised prohibition that protects no one.”

He keeps it simple with geolocation, pointing to New Jersey as an example of a jurisdiction where such services have worked well.

Where Pappas really drops knowledge is answering the fears about online gambling and the possibility of money laundering and terrorist financing. He starts out with obvious logic that for whatever reason, opponents of online gambling have been unable to see:

Let me first say that prohibition will just play into the hands of the criminal element, just as it did in the 1920’s when alcohol was banned. It is far better for the players’ financial fate if the safety and security of Internet gaming transactions are in the hands of the U.S. banking system and the responsible and regulated American gaming corporations. If anything, a prohibition would make the likelihood of money laundering or other fraudulent activity far greater because it would be forced underground without any oversight or control.

Then he tackles the infamous FBI letter that opponents always cite when engaging in their regular fearmongering. “OMG DID YOU SEE THAT? THE FBI SAYS TERRORISTS WILL LAUNDER MONEY WITH INTERNET GAMBLING!”

Wrong, says Pappas. The FBI letter, he points out, only addresses hypotheticals that could maybe, possibly happen with unregulated internet gambling, not legal, regulated gambling with laws and rules and such. The FBI even says that money laundering “could be detected and thwarted by a prudent online casino.” Pappas also adds that the technology implemented by online gaming sites goes a long way to preventing money laundering. Sites can track the movement of every penny at their tables and if players are engaging in odd betting patterns, they can be flagged and investigations can ensue.

“The best argument against the so-called Wire Act fix is this: the Wire Act isn’t broken,” Pappas concludes. “There are several federal laws – the Illegal Gambling Business Act, the Travel Act, and UIGEA – that make it a federal crime to use the Internet to violate state gambling laws. If enacted, RAWA would take a law aimed at stopping criminals, and turn it into a law that would criminalize states. Congress should soundly reject it.”


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