Loyal Gambling Review readers, if such a thing exists, have probably noticed that Ricky Bauer and I have a decidedly anti-UIGEA stance and while we’re not exactly fans of Barney Frank, we appreciate his efforts to repeal the law. Well, today I read an opposing viewpoint from an industry lawyer that I find interesting and provocative, so I thought I would share.

In a recent article, Martin Owens contends that Barney Frank’s gambling legislation is unnecessary, possibly even detrimental to the industry, and doesn’t stand a chance of passing anyway. Recently I have written that I am not optimistic of Frank’s chances, but what about the other two? Martin Owens is a California attorney who specializes in internet law and is the author of a book called Internet Gaming Law, so he’s infinitely more qualified to comment on the subject than me.

While the Unlawful Internet Gambling Enforcement Act (UIGEA) was passed in 2006, regulations for the law weren’t passed until 2008. According to Owens, while the law was written by Capitol Hill politicians, the regulations were written by professionals in the financial industry to protect themselves from UIGEA. Yes, that’s right. The regulations for UIGEA protect the financial industry from UIGEA. UIGEA basically gives the government the power to prosecute any financial institutions who transfer funds from “unlawful internet gambling.” The problem is that there is no definition in that or any federal law about what constitutes “unlawful internet gambling.” If you don’t know whether the gambling was legal or illegal, how are you supposed to know if the funds are from a restricted transaction? Currently, there are only 6 states in the Union that have laws prohibiting online gambling. According to Owens, the regulations in UIGEA provide safety for the financial service providers (FSPs) because “as long as they install proper procedures to identify and block these ‘restricted transactions,’ American FSPs will not be penalized, even if a wicked internet bet or two does slip through the cracks.” According to Owens, thanks to the new regulations, UIGEA has become “unintelligible, unenforceable and mostly unimportant. It is doubtful that any person or company could be prosecuted for anything under the UIGEA in its present state.”

A major problem with Frank’s bill is that it takes rights away from the states and gives them to the federal government. As you may be aware, Gambling Review is a big proponent of states’ rights. In Frank’s bill, the power to license online casinos lies solely in the hands of the Treasury Department. States and tribes don’t voluntarily join the federal internet licensing program. They are automatically enrolled, though they do have the option to opt out within 90 days of the passage of the bill. And if Frank’s bill is passed, guess who profits from taxing the online casinos and players? It’s the federal government, not the states.

A major issue with Frank’s bill, though, is tribal casinos. There are already legal conflicts between tribal casinos and the states in which they operate, due to loopholes and general confusion from tribal gambling laws. In Frank’s bill, a tribe’s internet gambling decisions are completely independent from the state in which the tribe is located. Owens put forth a hypothetical question, if a tribe said yes to internet gambling but the state opts out, “what about the internet connection in and out of the reservation?” He also asks “since the Indian Gaming Regulatory Act only allows Indian gambling to take place on Indian land, will the gaming tribes be able to meaningfully participate online in the first place?” It is an interesting question. Currently, it is legal for American citizens to gamble in Indian casinos because they are on sovereign tribal land, not United States soil. However, there is question about whether it would be legal to log onto a tribal online casino from US land in a state that opts out. Equally important, though, is this question: Why would anyone bother using a tribal online casino if there are plenty of non-tribal alternatives? It’s not more convenient, since all of the casinos are available on your home computer.  It seems that Frank’s bill would provide more competition for the tribal casinos without letting them get in on the new action.

All of this begs the question, if Barney Frank’s bill would not protect financial service providers more than they already are, will cut into the profits of tribal casinos, and will potentially take tax money away from individual states that are hurting in this recession, is it a good thing after all? This is just another example of whenever the federal government does something, it’s never simple and things are never as they seem.

California’s legislature is hard at work devising a way to slash costs. The state is in the midst of a crisis and face a $26 billion shortage in funds. Nothing seems safe there for the moment as legislators worked to cut spending from areas like education, prisons and local government. They have made a dent it seems, with a package comprised of $16 billion in cuts, but what of the other $10 billion?

According to H2 Gambling Capital, legalized online poker in California would raise an estimated $250 million per year to start, eventually climbing to $625 million some ten years after the legislation has passed. The PVA (Poker Voters of America), a group who lobbies on behalf of online poker observes that online gaming could be one of the answers California lawmakers are looking for and many are starting to agree.

Melanie Brenner, PVA executive director, had this to say to EGRmagazine.com, “In California, you can’t pick up a newspaper and not be hit in the face with the budget issue. While in Florida, which is also considering legalising intrastate online poker, you don’t hear about it as much, but as a state, they are looking for revenue sources. That will be something we can use to our advantage.”

Brenner further believes that if California does not look to sources like online poker and other gaming, the other $10 billion in lost revenue will have to be made up by borrowing from other states and with unemployment at 12% and rising, foreclosures showing no sign of slowing online poker isn’t such a bad alternative.

However Brenner, who spent 25 years as a political consultant in Florida warns that there is no “one-size fits all” solution for every state. The makeup of every state is different and online poker faces different hurdles and employs varied advantages in each one.

“In Florida, you are not dealing with the complexities of the tribal situation you have in California. Instead, you have a state that is divided between North Florida, which is conservative and mainly Republican, and South Florida, which is more progressive, Democrat, and already has some gaming. We are dealing with a different set of political issues when we move into that state,” said Brenner.

President Obama’s campaign was built on change, but to online poker players, it seems like a lot more of the same. It’s no secret, if one were to look over my past articles, that I am no fan of the bloated, busy body federal government. And even if you only use the newspaper to wipe your rear end, you’ve surely seen a headline or two about the federal government growing like a baseball player on steroids that we’re not allowed to bet on. I never expected the government to get smaller under the leadership of someone as liberal as Obama, but I did expect his administration to be more respectful of personal freedoms. Silly me.

Sherman Bradley, gambling analyst for Online Casino Advisory has an even less rosy outlook when it comes to Obama’s change. “People who voted for change are disturbed to see the same old Bush policies, including deliberate dismissal of court interpretations of the Wire Act, disregard for due process in the bank seizures, and shady courtroom antics in the New Jersey and UIGEA cases to prevent honest justice from being accomplished.”

Liberal heavy hitters like Michael Moore were shouting in the streets when President Bush passed the Patriot Act, a gross infringement on the rights of all Americans and a, in my opinion, gross misuse of federal government power and disregard for our constitution. But for some reason, people go easier on the Obama administration when they restrict the rights of the people and states.

“The Department of Justice has seized bank accounts filled with money belonging to US consumers who legally play online poker, is fighting to preserve the UIGEA by denying the admission of recent evidence that would lose its case, is acting to deny New Jersey the right to determine its own state policy regarding sports gambling that four other states enjoy, and is pressuring Delaware to disavow its right as granted by Congress to employ sports betting,” says Bradley

Perhaps the most upsetting thing is that the UIGEA hurts Americans in two ways. First of all, it restricts the freedom of US citizens. Citizens who should be allowed to play a game if they choose and do whatever they choose to do with the money they have left after the federal government seizes its share. Secondly, Obama has been spending tax payer money like a Beverly Hills housewife to solve this economic crisis, but has done little to generate income through pursuing new ways to do so.  Ummm…regulated online gambling anyone?

“Even issues currently on the President’s plate, like health care, are affected by choices on the gambling issues. Over $3 billion in annual revenue would be available to help pay for some of Obama’s expensive programs, if he takes a stand to support Frank.” says Bradley

Obama himself is known for enjoying poker and actively campaigned to end censorship on the internet. Wouldn’t you think this would translate to online gambling, since it’s…online? As Obama himself has become a symbol of our country’s ability to change, it seems awfully hypocritical to stand behind a federal government that restricts online gambling for no other reason than that the people who don’t play poker online don’t like the idea. There was also a time when people like that didn’t like the idea of sharing the bathroom with a black man.

Yesterday I wrote an article about how several states are seeking to legalize gambling primarily due to the profits they stand to gain. It turns out that having a rumbly tummy for lots of cash works both ways. With National Poker Week in full swing, supporters of legalized online poker are making their voices heard in Washington, but there are some in the gambling industry who are against online poker!

Most notable of all these enemies of freedom is casino mogul Steve Wynn, owner of Encore Las Vegas Resorts and Wynn Las Vegas. Wynn “believes” that online gaming is very risky and may cause embarrassment to the land based casinos if it does not succeed. He also feels that online gaming can’t be properly regulated and will lead to disaster. Translation: If online gaming succeeds, Steve Wynn is afraid he will make less money.

Poker pro and UltimateBet.com representative Annie Duke is in Washington making her rounds in support of online poker. She has a harsh opinion of Wynn and a strong message to fans of online poker. “Steve Wynn keeps coming up as the only major casino owner still against online poker. Consider that when deciding where to gamble in Vegas.”

It’s funny how Steve Wynn is afraid of land-based casinos being “embarassed.” This from a man long-rumored to lure big spenders to Vegas with prostitutes and illegal drugs. He’s kind of like the Superman of Las Vegas, only he fights off embarassment with prostitutes and class instead of super strength and heat vision.

“The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.”

Ah, the ninth amendment. That vague “rule” written by the framers of the Constitution oh so many years ago. The ninth amendment is significant because it limits the size of the federal government. Unfortunately, over the past hundred years or so, the size of the federal government has increased and the significance of the words in our Constitution slowly chipped away for some. To the point where the federal government tells the people what games they can and cannot play. Still, our great country allows for the reversal of laws both silly and significant.

Today marks the start of National Poker Week 2009 and it’s not only a great time to get together with friends, drink a Shasta and toss some chips at your friends, it’s a great time to speak your mind. The goal of National Poker Week is to send a message to the President and the US Government as a whole that online poker and poker in general should be legal and licensed. The Poker Players Alliance has been working hard to raise awareness of the effort to do away with the UIGEA.

“We all have a right to play poker and taking away that right sets a dangerous precedent that no American should stand for,” stated Annie Duke, WSOP bracelet winner and UltimateBet consultant. “There’s a lot of work to do to ensure that poker players and the game get the respect they deserve but we’re getting there.”

This year is particularly important as Barney Franks online gaming legislation gains heat in the press and September approaches. A planned “fly in,” where pokers best and brightest plan to meet with delegates in Washington to promote the repealing of the UIGEA, is in full swing this week. Also, an online petition set to be delivered to President Obama is up to over 352,000 signatures with a goal of 500,000 signatures.

Joke: The United States government is so bloated and regulation happy.  Audience Response: How bloated and regulation happy is it?  Punchline:It’s so regulation happy that Europeans are saying that the United States government is bloated and regulation happy. So much so that the European Union is threatening to file a case with the World Trade Organization over the US government’s ban on online gambling.

The European Commission released the “Trade Barrier Regulation Report”, detailing the negative effects the US online gambling ban has had on European gambling firms. The EU’s announcement of intentions to bring a case to the WTO (which could result in billions of dollars in compensation to the EU) immediately prompted a face to face. EU Trade Commissioner Catherine Ashton met with US Trade Representative Ron Kirk met to discuss various trade issues, among them, the US stance on online gambling. “Today was not a day to resolve any problems, but rather to set out the approach we are going to take, who would do what, and to agree to keep in touch,” said Ashton

Both the US and EU are planning further talks in September, each aiming for a “creative solution.” The US is eager to avoid further WTO disputes as a previous hearing resulted in a $21 million payment to Antigua. One issue that will likely have a profound on discussions is Congressman Barney Frank’s legislation aimed at undoing the UIGEA bill.

Since a potential multi-billion dollar judgement is composed of our hard-earned tax dollars, perhaps the federal government should worry less about protecting Americans from gambling problems they might develop and worry more about the over-regulation problem that it actually has?  Just a thought.

Bob Seger once said, “Knowledge is what you get when you read the fine print. Experience is what you get when you don’t.” Such a thought can be applied to the many online casinos and poker websites that closed their doors to U.S. Citizens when the UIGEA (Unlawful Internet Gambling Enforcement Act) was passed. However, USA Online Gambling maintains that the UIGEA does not outlaw online gambling, but merely restricts the ways transactions took place between online casinos and players. Such a thing seems like a logical choice given Fedzilla’s insatiable appetite for seizing the funds of online gambling businesses. Still, many top online gambling sites have found a way to circumvent the giant lumbering federal government and continue their transactions.

USA Online Gambling, (usa-online-gambling.com), is a website dedicated to educating online casino providers and players alike on how to “read the fine print.” Founder of USA Online Gambling, Tracy Carter, states, “There is a long list of sites that have overcome the UIGEA regulations and an even longer list of supporters, which aim to get the act overturned. The list of 30+ supporters of online gambling includes prominent politicians and entertainment companies such as Congressmen Barney Frank and Ron Paul, Harrah’s Entertainment, The Interactive Media Entertainment & Gaming Association and the World Trade Organization.”

The website provides a detailed analysis of what the UIGEA says and does not say. While the ultimate goal is to eventually overturn the act, but until that happens, the goal of the site is to let other know what the law “really says.”

“The fact that the government has attempted to make online gamling illegal is more than just an infringement on the rights of casinos to offer a service with massive entertainment value, but it is an infringement of the rights of players who want to enjoy online gambling from the comfort of their home. Overturning UIGEA would allow many casinos that left the U.S. Market to return, as well as increasing the number of payment and withdrawal methods. It is estimated that overturning the UIGEA and providing sites with a method of taxing sales would infuse the U.S. With over $50 billion in tax revenue within the next ten years. A number that would surely grow as online casinos were permitted to expand.” says Carter.

If there’s one thing that the United States Government is good at that isn’t war, it’s seizing money by force. Whether you call it “federal income tax” or “highway robbery,” there is nothing tastier to Fedzilla than money. Recently, over 30 million in assets was stolen frozen by the federal government.

Account Services Corp. of San Diego has requested that the federal government return $14 million that the firm says was illegally seized from online poker player accounts.

The Poker Players Alliance confirmed that the money is part of over $30 million in assets recently frozen by the federal government. The group told the Associated Press on Monday that it plans to file a motion with a court as well. “Any action contesting the government’s seizure of players’ funds will help protect the rights of U.S. Internet poker players and we will explore every legal avenue to ensure that out members’ voices are heard and their rights are protected,” said John Pappas, executive director of the alliance.

The filing by Account Services states that federal prosecutors seized $13.3 million from a Wells Fargo Bank account in Escondino California and an additional $1 million from a Union Bank in San Diego. Account services says that the Wells Fargo money seizure was accompanied by a warrant, the Union Bank funds were not. The warrant for Union Bank was issued two weeks later by U.S. Magistrate Judge Henry Pitman in New York City.

Account Services has said that if the money is not returned, it will most likely have to shut down. Such a thing would be ironic for the federal government, considering all of the money it has seized from taxpayers to keep failing banks and businesses from doing just that.

The Justice Department continues to maintain that online gambling is illegal, but Account Services disagrees. Jeff Ifrah, who represents the Interactive Gaming Council. “Poker players have been damaged significantly,” said Ifrah. “Some of the players face civil liability for bounced checks, some have had bank accounts closed.”

Estimates show that at least half of the $16 billion online gambling industry, though mostly hosted overseas, is funded by players in the United States.