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Bump in the Road for Online Poker

Bump in the Road for Online Poker 0001

Senator Jon Kyl (R-Ariz.) and Rep. Spencer Bachus (R-Ala.) co-signed a letter to Treasury Secretary Timothy Geithner and Federal Reserve Chairman Ben Bernanke last week opposing calls to delay the Dec. 1 compliance date of the Unlawful Internet Gambling Enforcement Act by one year.

Having two members of Congress openly oppose poker's cause might not seem like a positive turn of events, but it's actually encouraging.

We had to figure that poker's detractors would respond to the letter initiated by Rep. Barney Frank (D-Mass.) backing the petition filed by the Poker Players Alliance, National Thoroughbred Racing Association and American Greyhound Track Operators Association.

Kyl, the Senate Minority Whip, is likely to be a familiar name to those who have followed the UIGEA saga since its beginning. He, along with former Senate Majority Leader Bill Frist, were the two people most responsible for getting this flawed legislation through Congress in the first place.

That Kyl would write this letter is encouraging to poker on two levels. First, he feels the PPA's petition will be taken seriously enough to warrant his effort in drafting a response. Second, he could only find one other member of Congress willing to sign on with him.

Nineteen Congressmen, including four Republicans, signed the letter backing the request for a delay.

Kyl and Bachus do make a strong point regarding the timing of the request coming after the financial industry presumably has spent a year putting in place ways to comply with the law.

The letter states: "If the Final Rule represented an 'unreasonable burden on regulators and the financial services industry,' as certain other Members have claimed, then the Treasury Department and the Federal Reserve could have reconsidered the regulations early in the new Administration and before the regulated industry began taking steps to comply. This did not happen, and members of the financial services industry did not petition to have the Final Rule amended."

They scoff at the notion in Frank's letter that Congress is likely to move legislation delaying compliance, writing that it is "a blatant attempt to circumvent the democratic process by influencing the Treasury Department and Federal Reserve to take action that cannot possibly be enacted by Congress."

That may be true. The Reasonable Prudence in Regulation Act, HR 2266, was introduced by Frank back in May to delay the compliance date for the UIGEA by one year. The bill has 52 co-sponsors but has not made any progress at the committee level. With many other pressing issues in Congress, it seems extremely doubtful the legislation could be expedited through with only three weeks before the compliance date.

Kyl and Bachus conclude that, rather than delaying compliance, the Treasury Department and Federal Reserve should monitor the effectiveness of the UIGEA regulations after they go into effect and consider modifications if they prove necessary.

Even if the UIGEA is implemented as planned, it is only one bad beat in a long session. Internet Poker will continue to be played by U.S. residents. The licensing and regulation of online poker would make the UIGEA meaningless, and that is the ultimate goal.

Out of the 52 co-sponsors on HR 2266, only five are Republicans. Frank's bill to license and regulate Internet gambling, HR 2267, has only four Republicans among its 62 co-sponsors.

For Internet poker to find legitimacy in the U.S., it will take bi-partisan support. That Kyl could only get one other Republican to sign on to his letter opposing the interests of online poker perhaps shows that most Republicans aren't actively against the activity. They could be on the fence, possibly not eager to jump on to a bill sponsored by Frank, the outspoken Democrat, until it reaches the serious stage of consideration.

One way to look at these competing letters is that poker has more friends on Capitol Hill right now than Kyl. That certainly could not have been said three years ago, when the UIGEA passed through Congress.

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