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A Look Back at Online Poker's Political Battles of 2009

A Look Back at Online Poker's Political Battles of 2009 0001

Online poker spent most of 2009 just like the previous three years, facing wave after wave of attacks from U.S. and state governments. However, the year concluded with the two most positive events for the industry since Congress passed the Unlawful Internet Gambling Enforcement Act late in 2006. Let's take a look back at the key political moments for 2009, the year that could go down in history as the turning point for poker on the political scene.

Kentucky continues court battle — Toward the latter part of 2008, Kentucky Gov. Steve Beshear began a crusade to try to seize 141 domain names by using a law that allows the state to seize devices that are used for illegal gambling. The long list of sites included poker giants and If Kentucky could take control of the domain names, officials could block the state's residents from accessing sites on the list. The move initially was approved in a Kentucky court in October 2008, and the issue continue into 2009.

The Kentucky Court of Appeals overturned the ruling in January, stating that Kentucky does not have the jurisdiction to seize domains located outside its borders. Kentucky refused to give up, pushing the issue to the Supreme Court. Attorneys from the Interactive Media Entertainment and Gaming Association handled the defense. Oral arguments from from both sides were heard in October, and a decision is expected early next year.

SDNY seizes payments — The U.S. Attorney's office for the Southern District of New York seized $34 million in transit from poker sites to American citizens in June. The funds were being delivered by payment processing companies run by Douglas Rennick.

The Poker Players Alliance, up in arms about money being taken from the pockets of poker players, immediately announced it had assembled a legal team to combat the action. It appeared to be the opportunity the PPA was looking for to challenge in a U.S. court that poker is a game of skill and its online play is not prohibited by any law.

After a lot of early excitement, nothing came of the matter. The poker sites ate the losses and refunde the players' money. Rennick was charged with bank fraud conspiracy for misrepresenting to banks the sort of payments he was processing. This did nt allow for a debate on the legal status of Internet poker. Rennick, a Canadian citizen, has avoided court by staying out of the U.S., so the Department of Justice was able to fatten its coffers by $34 million without a fight.

Legislation introduced to license and regulate poker industry — In May, Rep. Barney Frank (D-Mass) introduced HR 2267, the Internet Gambling Regulation, Consumer Protection, and Enforcement Act. In August, Sen. Robert Menendez (D-NJ) followed in the Senate with S 1597, the Internet Poker and Game of Skill Regulation, Consumer Protection and Enforcement Act. In a year dominated by issues related to the economy and health care, nothing much came of the bills after their introduction. The Menendez bill never got off the starting line. Frank's bill sat dormant for six months before he found time to hold a committee hearing for it in December. It finished with 63 co-sponsors. Even if little was done with them, it's better to have bills introduced to legitimize rather than prohibit the industry.

iMEGA challenges UIGEA in court — The Interactive Media Entertainment and Gaming Association challenged the Unlawful Internet Gambling Enforcement Act in the U.S. 3rd Circuit Court of Appeals. Just to get the case recognized as legitimate enough to be heard by the Philadelphia court in July was a small victory. The court upheld the law, throwing out iMEGA's arguments that it should be void for vagueness. However, the ruling didn't set poker's cause back any and did offer some encouraging passages in the written ruling. In its current form letter for members to send to their congressman, the PPA cites the ruling as affirming that the UIGEA does not make Internet gaming unlawful.

Petition granted to delay UIGEA — On Nov. 30, just a few days before the UIGEA was to go into full effect, the Treasury Department and Federal Reserve Board granted a six-month extension of the compliance date to June 1, 2010. The delay gave the PPA and Frank six months to show significant progress in pushing forward legislation to license and regulate the industry, which would make the UIGEA obsolete. The PPA petition, filed jointly in September with the National Thoroughbred Racing Association and American Greyhound Track Operators Association, seemed like a last-ditch effort at first. With a letter of support from 19 congressmen, led by Frank, and a second letter from the six congressmen in Kentucky who were concerned with the UIGEA's impact on horse racing, the petition gained steam and proved to be the PPA's most important single victory to date.

Hearing in Financial Services Committee — Following the UIGEA extension, Frank showed he was serious about getting legislation moving by holding a hearing Dec. 3 in the committee he chairs. The results were encouraging, as most of the witnesses spoke in favor of licensing and regulating the industry. The only congressman in attendance to speak strongly against the legislation was Rep. Spencer Bachus (R-Ala), and the two witnesses he called turned out to be neutral to ineffective. Frank concluded the hearing by indicating that the committee would return to the subject in 2010.

Next week, I'll look forward to what is in store for online poker on Capitol Hill in 2010. Have a happy New Year.

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