Senate Subcommittee Discusses Online Gambling, Opponents Blast Industry

congressThe United States Senate’s Commerce, Science and Transportation Subcommittee conducted a two-hour hearing on the topic of internet gambling on Wednesday.

The hearing, the second time the committee has looked at the topic, appeared to have been placed on the agenda at the behest of Sen. Dean Heller (R-NV), the committee’s minority leader.  The topic was introduced in connection with the proposed Cybersecurity and American Cyber Competitiveness Act of 2013, which is being discussed in various aspects by several Senate committees.

FlushDraw tuned in for live coverage of this hearing, which quickly devolved from the subcommittee’s stated purpose of cyber security and competitiveness into general attacks on Internet gambling, and repeated partisan attacks on Attorney General Eric Holder’s late-2011 Department of Justice opinion that the 1961 Wire Act applies only to sportsbetting.

Subcommittee chairwoman Claire McCaskill (D-MO), introduced the hearing as being necessary because internet gambling is “inherently an interstate matter.” In so stating, McCaskill disabused the concept of traditional states rights concerning gambling matters, as well as demonstrating a basic non-understanding of geolocation capabilities.  McCaskill, in fact, left the hearing part way through to attend another hearing, turning the running of the proceedings over to Sen. Heller.

McCaskill also introduced the four “experts” who appeared before the subcommittee to provide testimony on the topic.  Each of the four also provided separate written statements in addition to answering the questions posed by the subcommittee’s members.  In order:

  • Chuck Canterbury, national president, Fraternal Order of Police
  • Matt Smith, president, Catholic Advocate
  • Jack Blum, a Washington, DC-area attorney and self-described “money laundering expert”
  • Thomas Grissen, CEO of DAON

With the exception of Grissen, whose Virginia company markets high-end, biometrics-based ID systems, the hearing’s experts skewed far right, and actually had little to do with the subcommittee’s stated purpose.  Catholic Advocate’s Smith touched all the expected scare buttons, with emphasis on children, though FOP prez Canterbury emerged as the hearing’s resident nutcase.  Canterbury, a retired cop from South Carolina and a Bush Administration appointee to a government post, also claims to serve on the Homeland Security Council, though in actuality he is just an advisor to the HSC, rather than being a council member.

If you’re under the impression that the hearing was more advocacy against online gambling in general than it was about creating modern laws and incorporating sound technological solutions, you’ve nailed it.

Heller himself, after receiving the floor from McCaskill, launched the first attack on AG Holder, describing Holder’s Wire Act reversal as the act of one man overturning 50 years of established law, from the 1961 Wire Act through 2006’s UIGEA.

Heller made the point to delineate online poker as needing to be separated from other forms of online gambling, though in the context, that was done as much to promote Nevada’s current poker-only online system, in contrast to other state’s online offerings in other areas.  With that tiny nod to Nevada’s poker allowances, Heller then launched his attacks on both Attorney General Holder and the concept of states regulating online gambling in general.

Heller declared the onset of state-level regulation as being a “race to the bottom,” stating that the “floodgates are now open” for a “patchwork of state regulations.”  Heller then declared the current state of affairs, referring again to Holder’s decision, as meaning that the “Internet has effectively turned into the Wild West of online gambling.”

It didn’t get any better, when the experts began answering questions.

Canterbury, echoing Heller’s complaints about the supposed inadequacy of state-level regulations and the apparent ineffectiveness of geoblocking, declared that Holder’s 2011 opinion made money-laundering investigations considerably more difficult.  Canterbury wasted no time in thus tying online gambling to all sorts of other unwanted behaviors, at one point stating that there were “indications” that “terrorists in Afghanistan” have been laundering money through online gaming sites.  Canterbury also linked online gambling to drug and human trafficking and other horrible activity.

Canterbury also focused on Costa Rica as a focal point for money-laundering, and countered Heller’s own point regarding poker by noting that four of the eleven “Black Friday” individuals indicted were Costa Rica residents.

Smith, from Catholic Advocate, played the more traditional social-ills card.  Smith was an ardent supporter of the 2006 UIGEA and trashed Holder’s 2011 opinion, at one point describing it as “a Christmas present from the [Obama] administration” to the Illinois and New York state lotteries who requested the clarification.

Smith focused on the spectre of children gambling on the Internet, citing the need to “protect the vulnerable from illegal predatory online gambling interests.”  The “vulnerable,” according to Smith, are the “younger players and other vulnerable populations, like seniors, who are most at risk.”

Heller himself jumped on the youth-of-America-gambling-online theme as well, at one point making this statement: “Some parent’s going to see their 14-year-old child on an iPad, and they’re going to be gambling.”

That’s how the hearing went.  Blum, an elderly Maryland attorney and a senior adviser for the conservative-leaning, international Tax Justice Network, then gave a brief history of gambling and crime, invoking Al Capone, Meyey Lansky, and Cuba’s pre-1959 Bautista-approved casinos.

Blum declared that he “can’t fathom” how states are going to be able to properly oversee online gambling and money-laundering concerns, again apparently oblivious to geolocation capabilities.  Blum also cited Bitcoins as a danger, and a usurping of America’s traditional banking system.  Blum also demanded penalties for players — perhaps criminal, though that was left unspecified — who chose to gamble on offshore sites.

Grissen, the Daon CEO, gave a brief demonstration of his firm’s biometrics technology, though he admitted that the company had been largely unable to place the technology with firms due to cost.  McCaskill, just before departing the meeting, suggested that the invasive nature of Daon’s voice- and fingerprint-verification technology would make it a privacy concern for possible players.

After a round of questioning from several subcommittee members, the hearing adjourned, having accomplished nothing besides a lot of hang-wringing and a general declaration by the attendees that something had to be done.  But no actual steps were discussed.


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