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Politics and Poker: Fed Crackdown an Ominous Sign?

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Two weeks ago I visited with attorneys and staff of the House Banking and Financial Services Committee (where the real legislative drafting work is done) during a week-long trip to Washington from the UK . While no one wanted to speak on the record, key staffers “felt confident Blue Dog Democrats would come around and support Chairman Barney Frank’s two bills to repeal The Unlawful Internet Gaming Enforcement Act” or (UIGEA) and regulate online gaming.

The two bills are slowly working their way through Congress as Mr. Frank lines up co-sponsors on both sides of the aisle, relying on the bipartisan support of Rep. Ron Paul (R-TX), in that important first step in this battle. Hearings will likely begin after the summer break, provided nothing else goes wrong in the financial world. While Monday’s seizure of poker player funds serve to “highlight the issue and produce cable news interviews for Chairman Frank, they will unlikely change the hearing schedule.”

Staff members privately worried about the crush of financial problems the Obama Administration and Congress now face daily. The Treasury Department and this overworked House Committee also have the added responsibility of managing the auto industry bailout (and fallout from the bankruptcies of GM and Chrysler), the mortgage and credit-card reform process, added Monday the Wall Street executive pay to their load, and then, as one staffer said, “There is the ultimate 900-pound gorilla in the room that needs to be resolved this calendar year – re-regulating the financial services industry to ensure safety and transparency for all.”

Their biggest privately expressed fear for the two gambling bills was made manifest this week when Department of Justice officials froze the bank accounts of the biggest payment processing organisation: Allied Systems Inc., held by Wells Fargo, Citibank, Goldwater Bank and Alliance Bank of Arizona . That move froze some $34 million of winnings by US players and bounced several entry checks into WSOP events.

A committee staffer said, “I worry Bush Administration holdovers ensconced at the Fed(eral Reserve), Justice and Treasury (Departments) will use the cover of much more pressing issues to step up enforcement action before either of the Frank bills can work their way through Congress.”

Congress is currently overwhelmed with issues and normally moves at a glacial pace. They also suffer from terminal attention deficit disorder, as members whip back and forth on key public opinion matters. Since we are beginning to see already early primary contests for 2010 midterm elections and special elections, members need to be seen on television and radio back home doing as much as they can for their constituents. As a White House staffer said, “A handful of inconvenienced online poker players are not going to get a member’s attention as much as a defense contract, plant closing, state budget crisis or something else.”

Members salivate at the chance to weigh in on the talk shows about white hot sexy battles such as: Is Supreme Court nominee Judge Sonia Sotamayor a “racist Latina” judge? Or is the Obama healthcare plan, socialised medicine or a real solution? UIEGA is not even on those radar screens.

The problem is, the poker world’s attention is a bit addled as well. With the focus now on Las Vegas and the annual World Series of Poker, the Feds, never known neither for subtlety nor missing a camera-filled opportunity to grab headlines, seized the day by seizing the accounts of several thousand players, including some those who qualified online for and are competing in the Main Event and other tourneys at the WSOP.

In another classic government example of overreach, attacking the symptom rather than the disease, the seizures angered players and sent a “fear” message that the Feds will harm everyone from the US engaged in the online business. As was said by a staffer, “They do what they do in every area where it is impossible to honestly stop an activity. They can’t stop you from playing poker online but without an ability to cash in your winnings, why bother?”

The former head of Britain’s MI6 service complained recently on UK television that we’ve gone “snoop crazy” with more than 150,000 CCTV security cameras monitoring downtown London. Similarly, federal agencies can now use sophisticated terrorist-tracking cybertools to follow a gambler’s activity directly to his or her desktops and individual bank account. The DoJ plan here remains to manipulate via fear. In fact, neither the 1961 Wire Act nor the UIGEA were mentioned in regard to the seizures, which were instead done under vague references and private memos mentioning “money laundering” and “illegal gambling activities” –- without specifying exactly what law was being violated.

So let the poker-playing buyer beware. Make sure you have the funds in hand before boarding the plane to Las Vegas for the Main Event.

Editor's note: Contributing columnist Denis Campbell brings an independent and experienced eye to poker's political scene. Campbell has worked closely in the past with former Cabinet Secretaries in the Carter and Clinton administrations, Ambassadors and members of Congress. He offers commentary on US and UK politics for the BBC and Huffington Post. Here, Denis offers his insights on matters affecting poker. Denis' views do not necessarily reflect those of PokerNews.

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