Yesterday, there was a rare statement from a Congressman that didn’t have anything to do with the debt deal. Congressman Michael Grimm, a Republican representing New York in the House of Representatives, issued a press release stating his support for online poker regulation in the U.S. He also praised FairPlayUSA, a poker lobbying group.

In the press release, Congressman Grimm said that he fully supports “the efforts to create a strong regulatory framework for legal online poker and to crack down on illegal sites, many of whom have ties to organized crime.” He went on to say that there are a lot of online poker players among his constituents and that he supports their right to continue playing online poker. He wants federal regulation to be passed in order to provide adequate protection for the players.

Having a Congressman, especially a Republican – since the party tends to be more anti-gambling than Democrats – speak out in favor of online poker on such a busy political day could be a good sign that regulation is coming. Many in the industry, most recently Bodog’s Calvin Ayre, have said they believe that is the case.

Congressman Grimm also praised the efforts of FairPlayUSA to “educate policymakers and the public on the broad public policy interests raised by the current ambiguous laws in the U.S.” The group wants to amend UIGEA to clarify that constitutes “unlawful internet gambling,” getting rid of the ambiguities that the Justice Department is using to its advantage. The group also supports federal regulation of online poker, but believes that individual states and Native American tribes should be able to opt out.

When people talk about the U.S. government cracking down on online gambling – whether it’s Black Friday, UIGEA, or whatever – you hear a lot of blame go around. The blame used to be aimed squarely at Republicans, saying that social conservatives were blocking the industry because they are morally opposed to gambling. But now that the White House and half of Congress is Democratic, it’s hard to make that case. It’s harder still when you point out that Eric Holder’s Justice Department is the one going after online gambling. Holder, of course, is one of the most liberal U.S. Attorneys General in history and his iron-fisted control of the few conservatives remaining in the DOJ has been a source of controversy.

So if it’s not Republicans, what’s the problem? The problem is big government, progressivism or whatever you want to call it. It’s a problem with both major parties. Both sides want a big government to dictate how things happen in America for the “greater good.” If Republicans opposed online gambling on moral grounds, Democrats oppose it because they don’t trust an industry they aren’t regulating. They also don’t want people to pay for something that they aren’t taxing, because the government isn’t getting their cut. It’s the same reason bootlegging liquor is illegal. There’s nothing about moonshine that makes it more immoral or dangerous than Jack Daniels, but it is illegal to make and sell because it is not regulated or taxed. If you’re not paying off Uncle Sam, he doesn’t want you doing it. Don’t forget that it was during the “Progressive Era” that Prohibition was passed.

This brings us to a problem: Both parties support big government controlling your lives. They differ on how they want to run your lives and on what they want to outlaw, but in both cases, they think they know what is best and you should let them make the decision. Are the Democrats who support online gambling regulation doing so because they want you to have more freedom or because they want the tax money? Does it even matter?

Those who favor freedom to play at online casinos in the U.S. without risk of government action support one of two changes. One is to support the federal government regulating the industry. If they regulate it, you can do it without risk of your account being frozen. The other option – the one I support – is to have the government back off entirely, say the industry is legal and leave it alone.

There are few industries that have benefited from government regulation. Generally they make things more expensive, inefficient and complicated. I promise you this: If the federal government regulates online gambling, the industry won’t be the same. The casinos will make less money, due to high taxes. The customers will see smaller prize pools for tournaments and less generous bonuses. The government might even cap the rate of return, as some European governments do.

So what’s the answer? That depends on if you support Option A (government regulation) or Option B (government leaving the industry alone). If you want Option A, support Democrats like Barney Frank and big government Republicans like John Campbell who want to regulate the industry. If you favor Option B, look to libertarians and small-government Republicans (such as those with Tea Party backing). Those who favor small government oppose the feds telling you how you can and can’t spend your money, regardless of whether they agree with gambling. In either case, it is important to focus on individuals and throw those old stereotypes away.

When I watched Israeli Prime Minister Benjamin Netanyahu’s speech before the U.S. Congress yesterday, I was inspired. I was inspired not only by a great speech by one of the few politicians I respect, but also by an unscripted moment that happened during the speech.

While Netanyahu was speaking, a Code Pink protester interrupted him to shout something about Zionists and something comparing him to Hitler or something crazy like that. In other words, it was exactly what you expect to hear from Code Pink. After she was removed from the building so Netanyahu could resume his speech, he took a moment to praise his heckler.

“I take it as a badge of honor, and so should you, that in our free societies you can have protests,” he said. “You can’t have these protests in the farcical parliaments in Tehran or in Tripoli. This is real democracy!”

It was a powerful moment. Unfortunately for Code Pink, they accidentally reaffirmed the message of Netanyahu’s speech. He’s absolutely right. I disagree with Code Pink, but it is great that in America (and Israel), you can protest and interrupt a head of state like that without fear. Voltaire famously said “I disagree with what you say, but I will defend to the death your right to say it.” Protest, petitioning the government, and free speech are staples of American society.

For that reason, I am proud of the contingent of poker players, some of them professional, that went to Washington, D.C. to protest the Black Friday crackdown on online poker. On Tuesday, the Poker Player’s Alliance held a rally outside the Capitol. Chairman of the PPA Alfonse D’Amato spoke at the rally. The former Republican senator said that poker players are “deeply concerned about losing our rights.” He said that the issue is about “rights of what you can do in your own home on your own time.”

Some have said that Black Friday wasn’t an anti-gambling move by the Department of Justice. After all, they say, most of the indictments were for bank fraud and money laundering. That’s true, but there were also indictments for operating an illegal gambling business. Attorney General Eric Holder has said that federal law bans online gambling, most likely citing UIGEA, which doesn’t actually do that.

D’Amato said that the purpose of the rally was for Washington to see the faces of those affected. Online poker players aren’t simply statistics on your spreadsheets or screen names. They are real people who are really losing their rights because of the government overstepping its authority in a quest to control the people.

The government may think they can do whatever they want and steamroll over the opposition, but they can’t. The freedom of Americans is under attack, but we can fight back at the ballot box and in the protest march. Every time protesters speak out, they remind the government that it is the voters who wield the true power in a republic. It may be frustrating when it seems like you are ignored, but speaking out is important and over time, it can bring about great changes. Yesterday’s online poker rally in Washington is a good start.

Gary Loveman (yes, that’s his real name) knows a thing or two about the poker industry. He is the CEO of Caesars Entertainment Group, which is one of the biggest casino chains in the world. It also happens to be the current home of the World Series of Poker, the biggest poker tournament in the world. As you can imagine, people take his opinion seriously regarding the poker industry. In a recent Op-Ed column on CNN Money, Loveman gave his opinion on the Black Friday online poker domain seizures and indictments.

In the column, Loveman made it clear that the U.S. government shutting down PokerStars, Absolute Poker and Full Tilt Poker to American customers would not prevent U.S. citizens from gambling online. It is still being done. Furthermore, it is still being done legally. The allegations against those sites won’t deter Americans from playing online poker, he reasoned.

Instead of trying to leverage the indictments to shut down the industry, which would be impossible, Loveman says that America should “seize the moment to legalize online poker, permit a safe and legitimate industry in the U.S., and bring these jobs and revenues home.”

Through regulation, they can ensure that poker websites are complying with the law and offering games that are safe for the players. Interestingly, PokerStars allegedly broke real laws (money laundering, bank fraud) in order to avoid being caught violating a so-called ban that doesn’t really exist (online gambling ban). Because UGIEA makes banks squeamish about accepting payments from online gambling companies, because they don’t even understand the laws, PokerStars had to lie about the source of the money.

Though I’ve said this before, I’ll say it again. Most people misunderstand UIGEA. It does not make any form of online gambling illegal. It simply makes it illegal for banks to process payments related to illegal online gambling. So what forms of gambling are illegal? Those that are banned by law. Since UIGEA doesn’t do that, you have to look for other laws that do. The only federal law that bans gambling is the Wire Act, which only bans sports betting. Other than that, some states, counties or cities have gambling bans. Unless you live in a jurisdiction that bans online gambling, it’s perfectly legal for you to do it and for the bank the process the transaction. Because that is so misunderstood, though, the banks get confused and try to block everything. It’s out of self-preservation, because the Justice Department is either also confused or – more likely – is purposely misinterpreting the law.

All of that means that PokerStars would be guilty of nothing if the U.S. government had clear and reasonable laws and regulation. Because the gambling laws are so murky, they allegedly committed crimes in order to continue their legitimate business. That’s why Loveman says that “only federal legislation can clear up the current ambiguities in U.S. law.”

Because the laws are so ridiculous, and the Justice Department’s enforcement even more so (which is standard for Eric Holder’s agency), companies will continue to engage in shady practices, not even knowing for sure what is allowed and what is not. The best way to protect American players is to clearly regulate the industry. The recent Black Friday events make that clearer than ever.

Yesterday Republican Senator Jon Kyl announced that he would not run for re-election in 2012. This came as a surprise to many, because Kyl was considered a sure thing to be re-elected and would be one of the few Republican incumbents to not face a challenge from a Tea Party type of candidate. Kyl’s decision could have a big impact on online gambling legislation and American politics as a whole. The announcement is a win for the online gambling community, but not necessarily as big of a win as many think.

Though I disagree with his stance on gambling, Kyl is a man I respect (which is rare for a congressman). Kyl is a fiscal conservative who has a history of voting to cut taxes and spending, opposed ObamaCare, has a 100% pro-life rating from the National Right to Life Committee and never lost a single election in his entire life. Before serving three terms in the U.S. Senate, he served four in the House of Representatives.

Despite having strong opinions on some controversial topics, Kyl was one of the most respected Senators on Capitol Hill. In 2006, TIME Magazine voted him one of “America’s 10 Best Senators,” which says a lot considering the strong liberal bias of TIME. In 2010, TIME included him on a list of the world’s 100 most-influential people. He was considered such a threat to hard left liberals that he was targeted for “Google bombing” in 2006, when search results were manipulated to favor any articles critical of Kyl. He is a man of principal who you could never imagine sending topless photos to women when trolling Craigslist.

Of course, Kyl also has a bad side and to the gambling community, that side is a pretty big deal. Kyl is opposed to online gambling and was one of the main architects of the Unlawful Internet Gambling Enforcement Act, which was added to the already-passed SAFE Port Act in a Conference Report. In recent years, Kyl was one of the top congressmen standing in the way of attempts to repeal UIGEA and replace it with regulatory framework. For his anti-gambling stance, he is a foe of the gambling community and indeed one of the top foes.

My hope is that Kyl will be replaced by a senator who shares his views on most issues, but not on gambling. Representative Jeff Flake seems to be the frontrunner for his seat at this moment. Flake is a Republican with more of a Libertarian ideology. Though his stance on online gambling is unclear, he did vote against a bill that would have banned using a credit card to gamble on the Internet.

The other two candidates that are being widely discussed as contenders for Kyl’s seat are Homeland Security Secretary Janet Napolitano and Representative Gabrielle Giffords. Napolitano has absolutely no chance of being voted into office by the people of Arizona. She is being discussed because she is a former governor of the state, but her actions and statements as Homeland Security Secretary have put her at odds with most in Arizona.

Gabrielle Giffords is an interesting choice and if she is healthy enough, she is a serious contender for Kyl’s seat. Giffords, a Blue Dog Democrat, is another one of those few politicians I respect. Though a liberal on many issues, she legislates based on her conscience rather than party allegiance. She was already well-liked in Arizona and after being shot in Tuscon earlier this year, she would clearly have public sympathy on her side. If she is healthy enough to run for the Senate and chooses to do so, she would probably win. At this time, her stance on online gambling is unknown. The only gambling-related issue I could find in her past was a “yes” vote to provide land to the Bay Mills Indian Community for a casino.

As Jon Kyl’s tenure comes to a close over the next 22 months, it’s hard to be either disappointed or excited. Kyl, for me, was an infuriating enigma – so incredibly wrong on gambling yet so right about almost everything else. As a proponent of online gambling, it was always difficult to listen to a man I respect be so wrong on the issue. Now that he is leaving office, my hopes is that Arizona voters will replace what is bad about Jon Kyl and keep what is good.

In November, Republicans swept through Congress in a historic thrashing with the promise of righting the wrongs, getting government out of the way, and getting America back on track to being successful and productive. The Republicans that won seats in the House and Senate did so by promising to cut down on government regulation and spending that is strangling businesses and stifling financial growth. Now it’s time to live up to that bill.

Republicans have already gone to work at repealing Obama’s health care law. A repeal bill passed the House but isn’t expected to pass the Senate. Darrell Issa, the new Chairman of the House Committee on Oversight and Government Reform, has asked businesses to submit their opinions on what laws and regulations are hindering business and job growth.

As you might expect, someone in the gambling industry was quick to bring up the Unlawful Internet Gambling Enforcement Act (UIGEA). The Safe and Secure Gambling Initiative sent a letter to Issa stating that UIGEA has done nothing to reduce online gambling in the United States, while it has placed an unfair burden on the financial industry. According to Michael Waxman, Executive Director of the Safe and Secure Gambling Initiative, UIGEA has resulted in a loss of tens of thousands of U.S. jobs. Replacing UIGEA with a regulatory framework for online gambling would help the financial institutions, create jobs and prompt economic growth.

The idea that creating regulation would create jobs is usually ludicrous and an idea that Issa would laugh off. In this case, though, it would be replacing one form of regulation (UIGEA) with a different one (some federal gaming control board). UIGEA is undoubtedly hurting the financial industry, and considering that they’re already in bad shape and that Obama’s financial reform law will make things worse, they can use all the help they can get. Let’s hope Issa listens to Waxman’s letter. Chairman Issa has not yet given an opinion on the repeal of UIGEA.

The rumors that Ladbrokes will acquire competitor 888 now have more credibility. 888 has confirmed that they are currently engaging in talks with Ladbrokes about a possible takeover. Since that remark, shares in 888 have risen by 24%.

Though sources say that the talks are at an early stage, the Sunday Telegraph reported that Ladbrokes was proposing purchasing 888 for a bid of 70 pence per share, a value of approximately £240 million. Ladbrokes is the largest bookmaker in the United Kingdom and has a strong presence online and in physical betting shops. By purchasing the online casino 888.com, Ladbrokes would strengthen their company by offering two big parts of the online gambling market. The two companies combined would have a yearly revenue of approximately £350 million.

Though shareholders are excited by this news, it’s far from a done deal. Four years ago, Ladbrokes considered buying 888, but the deal fell through. One of the reasons given for the takeover never happening was concern that the U.S. Department of Justice could prosecute 888 for accepting American online gamblers prior to the passage of the UIGEA in 2006.

Though accepting U.S. customers before 2006 was certainly not a crime, that hasn’t stopped the Justice Department from shaking down offenders of this imaginary crime. To avoid possible prosecution, PartyGaming and Sportingbet both reached deals with the DOJ where they paid millions to achieve immunity from prosecution (ironically, despite shaking down those companies, the DOJ claims to be the maintainer of law and order who goes after organized crime and corruption). Since 888 hasn’t paid off the feds, some still worry about whether fear of prosecution will once again nix the deal.

Harry Reid has failed those who wanted to see the federal government regulate online gambling. He first attempted to insert an online poker bill into the tax cuts legislation, but then decided against it as the legislation became too polarized and contentious. It became clear that attaching another controversial bill to it would doom the bill.

After that, the thought was that Reid would attach the online poker bill to the omnibus spending bill, a $1.1 trillion spending bill full of earmarks that basically would have been like another failed “stimulus” bill. Luckily, Republicans were able to block passage of that bill and all of its wasteful spending. In the process, though, it looks like Reid’s online poker bill has nowhere to go. Reid and proponents of the bill have now all but admitted that it has zero chance of passing. So now what?

First of all, as I have been saying, if you are relying on Harry Reid to save you, you are going to be really disappointed. Many now believe that Reid, who once publicly opposed all forms of online gambling, was simply bluffing about his online poker bill. He used it to get the support of special interest groups who got him reelected, but never really planned to pass it. I don’t know if that’s true, but I know that I can’t think of a good bill that Reid has ever sponsored and passed.

A lot of online poker players are now down about Reid’s failure, but they shouldn’t be. The interesting thing about all of this is that, even though the government won’t regulate online poker, it is still perfectly legal to play poker online in the United States. In fact, it always has been.

The federal government has used the Unlawful Internet Gambling Enforcement Act (UIGEA) of 2006 as a de facto ban on online gambling, but if you actually read the law, you’ll find that it does no such thing. Courts have ruled that UIGEA does not ban any activity. All it does is allow the government to prosecute and seize funds from financial institutions involved in “illegal” online gambling, though the law does not specify what forms of online gambling are illegal.

UIGEA doesn’t specify what forms of internet gambling are illegal, but the Interstate Wire Act of 1961 does. The Wire Act is the only law that bans any form of electronic gambling at a federal level. That law, passed before the first online casino or online poker room launched, states that it is illegal to use a “wire communication facility for the transmission in interstate or foreign commerce of bets or wagers…on any sporting event or contest.”

Some in the government have tried to make the argument that the Wire Act bans online poker and online casino games. They lost that argument. The Supreme Court has never ruled on that subject, but the U.S. Fifth Circuit Court of Appeals has, and the highest court to rule on the subject stated that the Wire Act only pertains to sports betting. Therefore, the Wire Act doesn’t ban online poker or online casino games.

So what does ban those games? Nothing, at least at the federal level. Some states, such as Washington, have laws specifically regarding online gambling, but most do not. In most states, it is completely legal now to visit an online casino or online poker room. Not only that, but in many states, such as Pennsylvania, the courts have ruled that poker isn’t gambling at all, since it is a game of skill and that state defines gambling as wagering on a game of chance.

So what does all of this mean? It means that regardless of the repeated failures of the likes of Harry Reid and Barney Frank, depending on where in the U.S. you live, online poker rooms and online casinos are most likely already legal.

Last week, I commented on the reports that Harry Reid had been secretly conducting back-room deals to regulate online gambling at a federal level. The idea is to attach the gambling legislation onto a must-pass bill, such as the tax cuts.

New Jersey is well on their way to passing a law to legalize and regulate intrastate online gambling within its borders. California is considering following that same path. Reid, long in the pocket of the Las Vegas casinos, has always been opposed to online gambling because of the thought that it would hurt the gambling industry on the Vegas Strip. However, recently Reid seems to have taken the position of if you can’t beat them, join them. Of course, if you join them, make sure you also beat them.

There isn’t a whole lot of information on Harry Reid’s proposed online gambling regulation, partly because the bill is so secretive and, despite Obama’s promises of transparency, most people (including members of Congress) don’t find out what’s in a bill until after it passes. One thing that is said to be in the bill, though, would give Vegas casinos an advantage in the online gambling market.

It is being reported that Reid’s bill would make online gambling legal in all 50 states. However, it comes with the stipulation that for casinos to offer online counterparts, they must have been in operation for at least five years. That would give the casinos in Las Vegas and Atlantic City an advantage over casinos that have recently opened in other states.

The problem, and the question about whether or not Reid’s bill would be unconstitutional, has to do with states’ sovereignty. Most U.S. states don’t have any laws specifically regarding online gambling, but a few states, such as Washington, specifically ban the action. It seems that Reid’s bill would attempt to override Washington’s ban, though from a constitutional standpoint Washington’s state law trumps federal law. Because it doesn’t involve interstate activity, the federal government has no jurisdiction. That problem could be solved if Reid’s bill has an opt-out clause, though, where individual states can opt out of legalizing online gambling.

The other problem is the five-year rule. That rule is for the blatant purpose of putting some states at a disadvantage for the benefit of other states. For example, Pennsylvania, who only recently allowed full casinos, would be ineligible for online gambling. If Pennsylvania wanted their casinos to offer gambling websites where U.S. citizens in any state can play, the federal government would have jurisdiction, because it would fall under the interstate commerce clause of the Constitution. However, if Pennsylvania aims to simply allow intrastate online gambling, the federal government has no say in what they do. Therefore, if Reid’s bill attempts to restrict the state from that activity, the bill is unconstitutional.

None of this comes as a surprise. It certainly wouldn’t be the first time that Harry Reid has pushed for and passed a law that flagrantly violates the Constitution. You can always give Reid the benefit of the doubt and assume that he doesn’t know what the Constitution says. After all, a lot of his actions, such as accidentally voting against his own bills, suggest that he is senile. If Reid’s bill does pass, it will be interesting to see if other states fight back.

There has been a lot of talk in the online gambling industry lately about the U.S. Congress passing gambling legislation during the lame duck session. To be honest, I’ve never paid much attention to it because I thought there was no way it would happen.

Congress usually doesn’t pass anything major or anything controversial during the lame duck session. In addition, there are much bigger concerns for Congress right now, such as avoiding a January tax hike and funding the government. Yes, that’s right. Congress has not yet gotten around to passing a bill providing funding to the government. Without a stopgap funding bill, there would be no appropriations for the government – not that that’s important! With unemployment at almost 10% and underemployment at almost 18%, there are much bigger things for Congress to do by the end of the session than worry about online gambling.

I should have known, though, that this Congress doesn’t care about what is important; they have their own priorities (that’s why so many lost their jobs). So instead of worrying about keeping taxes at their current level (or better yet, lowering them), they are more concerned with passing an amnesty bill for illegal immigrants, repealing Don’t Ask Don’t Tell, passing a weak START treaty and more. So it shouldn’t come as a surprise if they consider online gambling a priority, too.

I’m now paying attention to this scenario because it’s now being reported by legitimate sources. Yesterday, Bloomberg reported that Democrat Senators are being accused of a secretive deal attempting to pass online gambling legislation in the lame duck session. Three Republicans in the U.S. House are calling the process “closed-door” and “undemocratic.”

Those representatives are Spencer Bachus (who will be chairman of the Financial Services Committee), Dave Camp (who will be chairman of the Ways and Means Committee) and Lamar Smith (who will be chairman of the Judiciary Committee). All three committees would oversee online gambling legislation if conducted through a normal open Congress.

The three representatives believe that some Democrats plan to attach online gambling legislation to “must-pass” legislation, such as tax cuts, and have asked Senate Majority Leader Harry Reid to abandon the secretive deals and conduct business out in the open.

In the letter they said that creating a new industry and “imposing an unprecedented new tax regime on such activity requires careful deliberation, not back-room deals.” They have a right to be angry, and this Democrat-controlled Congress has been one of the worst at history in terms of crooked back-room deals. Still, to be fair, UIGEA was passed as a sneaky add-on to a bill in 2006.

Many in the gambling industry applaud this move to pass online gambling legislation as an add-on, but is it a good idea? I want online gambling legalized in the United States, but can the Democrats who have ruined every industry they have gotten their hands on be trusted to regulate the industry in an efficient way? (The answer is no). Can they be trusted to tax the gambling industry in a fair and appropriate rate? (The answer is no).

I am 100% opposed to the tactic of conducting secretive back-room deals to push legislation through, but I support legalizing online gambling. Does the ends justify the means? To me, the answer is no, especially when I don’t trust the Democrats to regulate the industry in a way that allows the industry to thrive. However, passing gambling legislation would not be a priority for the next Congress and if they were to pass it at all, it would probably be a while. Maybe we should hope that the legislation passes now and that wise fiscal conservatives can amend the law later to make it more sensible. What do you think?