The State of Online Gaming: Federal Hearing Analysis and Impact

congressYesterday’s US House of Representatives subcommittee hearing on online gambling and online poker, titled “The State of Online Gaming,” offered nearly two hours of mostly entertaining political theater that quite probable will result in little really impact.  Nonetheless, it was interesting to see a relatively important lineup of testifying witnesses from both sides of the online-gaming aisle offer their views before a Congressional committee, and distinct winners and losers emerged from the day’s proceedings.

The hearing, officially scheduled in connection with US Rep. Joe Barton’s third attempt at a federal-level online poker bill, the Internet Poker Freedom Act of 2013, featured six testifying witnesses.  Those six included online poker supporters Geoff Freeman, CEO of the American Gaming Association, and PPA Executive Director John Pappas.  Freeman and Pappas were indirectly pitted against three detractors — LVSands vice president Andy Abboud, Les Bernal of Stop Predatory Gambling, and a self-styled anti-gambling researcher, U of Mass-Amherst associate professor Rachel Volberg.  The sixth witness, who was in neither camp — and was often off-topic in his testimony, was attorney Kurt Eggert, who appeared under the pretext of arguing protection for consumers.

In something of an upset, the pro-online gambling witnesses, Freeman and Pappas, emerged as moderate winners on the day, as did HR 2666 sponsor Barton, who did well in positioning his viewpoint as a rational attempt to find balance for poker’s relatively minor societal risks amid a larger free-for-all of American gambling opportunities, both live and online.

The biggest loser on the day was Abboud, the designated frontman for the new “Stop Internet Gambling” campaign recently launched by Las Vegas Sands CEO Sheldon Adelson.  The blatant hypocrisy of Adelson and Las Vegas Sands in arguing against online poker and online gambling while actually offering online gambling services in Nevada was called out by no less than three of the subcommittee’s members, most importantly by Barton, who at one point cut off Abboud’s non-answer to a pointed question, stating to Abboud, “I’m not going to let you filibuster the rest of my time.”

What was supposed to be an important kickoff for Adelson’s showy campaign to block internet-based gaming (and make his entrenched land-based LVSands properties that much stronger by default) turned into an embarrassment from the outset.  Early in the witness questioning, Abboud blurted out “Online poker is okay,” and then was forced to deny making that statement near the end of the hearing when directly questioned about the utterance.

It’s likely that in the meantime, while other witnesses were being queried, that Abboud received a chastising text to the effect that, “You’re supposed to be against online poker, dummy.”

That backtracking by Abboud came just after Barton exposed some of the most blatant Las Vegas Sands hypocrisy, by projecting images of the Venetian’s own deal with Cantor Gaming through which sportsbetting services are available via smartphone throughout all of Nevada.  No one present had forgotten that only a short while earlier, Abboud had yanked his own smartphone out, and waved it before the gathered Congressman, decrying the evil soon to be loosed if gambling was allowed to be done via that technology.

It was, admittedly, nearly an impossible task for Abboud in the face of Las Vegas Sands’ own history.  But what it showed was that the tens of millions Sheldon Adelson has threatened to spend to ban online gambling in the US may have little effect.  Money always has some effect, but Adelson and his paid supporters have now been exposed as being friendless.

On one side, Las Vegas Sands is splitting away from the rest of the AGA member casino groups.  And on the other, the conservative and anti-gambling forces whose favor Adelson wishes to curry have now shown that they don’t trust the man or his company; those people who are against gambling are usually against all forms of gambling or gambling expansion, and in Adelson, they just see a greedy profiteer manipulating a situation for his own good.

That means that whatever money is spent will be minimally effective, and meaningless political circus or not, that’s a great takeaway for online poker.

The proof of it was offered by the first of the three subcommittee Representatives to bring up the Las Vegas Sands hypocrisy, Rep. Marsha Blackburn, a highly conservative Tennessee Republican and prominent Mitt Romney supporter who questions left little doubt she was against all forms of gambling, online or not.  Blackburn, though, mindful of Adelson’s stance as a rich Republican benefactor, lobbed the “hypocrisy” word at Abboud but chose not to follow it up, instead giving one of the day’s few softball questions to Bernal and in the process allowing a couple of minutes of anti-gambling oratory.

Abboud’s hopes that the Sands/Cantor online gambling business woudn’t surface again didn’t last long; only minutes later, Barton left the LVSands veep grasping for words.

While Abboud being exposed as the frontman for LV Sands’ and Adelson’s hypocrisy was the hearing’s lede, a secondary line was that the other rabid anti-gambling witness, Bernal, was all but ignored, save the gratutious offerings from Blackburn and one or two others.  The anti-gambling viewpoint was known, but it seemed to grasp little traction.

Most of the day’s questioning by the subcommittee members, when not excoriating Abboud, went to Freeman and Pappas for technical insights, and to Eggert for some legal perspective.  Freeman and Pappas were both satisfactory in their roles, though both missed a couple of spots to hammer home points with solid anecdotal evidence from recent years.

Eggert proved knowledgeable when talking about gaming legislation, but proved out of his element when attempting to not only to explain “poker bots,” but in attempting to portray them as perhaps the most important security threat to fairness for players.  Eggert appeared to rely heavily on a single New York Times story about the alleged use of bot software, but bots don’t represent one one-hundredth the threat as such issues as multi-player collusion and data mining.  It’s true that those issues, by name, don’t have the scare factor of “bot,” and Eggert might have been playing a bit to his audience, but leaving elected officials uninformed on real threats while playing up minor stories serves no one well in the long run.

Eggert was happy enough to pitch his services, too, as was Volberg, the associate professor, author and researcher.  Volberg, whose monotonal delivery and willingness to turn every question into a sales pitch for her small research firm made her a boring witness, faded into the background as the questioning went on.  She had little to offer to the hearing and it showed soon enough.

One of the most interesting tidbits involved someone who wasn’t there.  That mild surprise came from Rep. Barton, the one-time chairman of the committee, who acknowledged that one or more additional witnesses had been invited but chose not to appear — specifically, representatives of American tribal gaming operations and some lobbying groups formed on tribal casinos’ behalf.

Those tribal invitees submitted a private statement for the record, but likely passed up the invitation upon realizing that they had little to gain in an open discussion regarding online gaming.  Traditionally, tribal casino interests have attempted to stack the metaphorical deck, preferring to coordinate hearings within the confines of the Bureau of Indian Affairs, which is necessarily friendly to tribal views, and with the prerequisite that whatever is being requested is justified by tribal societal need.  That prerequisite was not present within the context of yesterday’s hearing.

Further, in a more neutral setting such as this hearing, the extreme (but unfortunately standard) twin tribal demands of exclusivity and sovereignty could have been examined more clearly and shown to be a farce in an online marketplace.  Lacking that ability to control the message, the tribal voices likely chose the wisest course in not appearing, lest their own hypocrisy be showcased.  If only Adelson and his Las Vegas Sands operation were half as wise.

While the whole hearing may have been for show, it was at least a fun, positive show for online poker’s US hopes.  The bill itself remains rated at having only a 2% chance of passage, and even if passed, it might be irrelevant or an unconstitutional infringement on states’ rights regarding gambling.  It didn’t take away from the fact that these few members of Congress demonstrated at least a general grasp of the concepts in play, even if the details were often left wanted.  Such hearings as yesterday’s represent a slow improvement in US online poker hopes.


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