The Poker Players Alliance has petitioned the Treasury Department and Federal Reserve Board to clarify Unlawful Internet Gambling Enforcement Act regulations to note that unlawful Internet gambling does not include peer-to-peer games such as poker before confirming the compliance date for implementing the Act on June 1.
In a petition sent in April to Treasury Secretary Timothy Geithner and Federal Reserve Chairman Ben Bernanke, the PPA asks for a subparagraph amending the regulation to state that the term "bet or wager" does not include a bet or wager on "certain peer-to-peer games where the outcome is determined predominantly by the skill of the players, such as poker, chess, bridge, mah-jong, and backgammon." The petition also asks for clarification that pari-mutuel animal racing that is lawful under the Interstate Horseracing Act is not affected by the UIGEA.
Twenty-two members of Congress sent a letter to Geithner and Bernanke, dated May 5, supporting the PPA's petition.
"The PPA is grateful for the support of the 22 members of Congress who wrote Secretary Geithner and Chairman Bernanke in support of our petition to exempt peer-to-peer gaming from the UIGEA regulations," PPA executive director John Pappas said. "We are still strongly supporting legislative efforts to license and regulate online poker and provide the consumer protections that the UIGEA will not, and are hopeful of the passage of bills like (Barney) Frank's HR 2267, but believe our petition is the best bet to address the short-term issues facing online poker."
Conspicuously absent from the signatures on the letter is Barney Frank, who has led the movement for Internet gambling licensing and regulation in Congress and signed the letter last year asking for a delay of the UIGEA compliance date.
That six-month delay was granted, but no progress has been made on Frank's legislation so far this year. The current PPA petition specifically states that no extension of the June 1 compliance date is requested. Frank told PokerNews in March, and it was later confirmed by The Washington Post, that Geithner had made an agreement with Sen. Jon Kyl (R-Ariz.) not to further delay UIGEA regulations in exchange for Kyl not delaying Treasury nominees.
Frank indicated to PokerNews in March that he thought the UIGEA going into full effect would show how flawed the law is and create a backlash that could lead to it being repealed, though it's unclear whether that played a part in Frank not offering his support to the petition.
The UIGEA is meant to cut off the funding for "unlawful Internet gambling" by applying penalties for banks that process transactions sending money to such sites.
This PPA petition focuses on the UIGEA's failure to define the phrase "unlawful Internet gambling," instead leaving it to the financial institutions to determine. The legality of Internet poker in the U.S. is a gray area. There is no federal law and very few state laws specifically outlawing the playing of Internet poker.
The PPA letter, signed by Pappas, reads that: "Given a choice between subjecting themselves to liability under the Act for processing transactions involving unlawful Internet gambling and subjecting themselves to no liability for overblocking, regulated institutions have indicated to our members that they intend to 'overblock' even though such over-blocking is prohibited by UIGEA. PPA believes that providing these institutions with additional guidance on what constitutes unlawful Internet gambling will better enable these institutions to develop policies and procedures that do not result in 'overblocking.'"
Peer-to-peer gaming is described in the petition as an activity where "the fee obtained by the owner, operator or organizer of the game or site is not dependent on the outcome of the game or activity, and the owner, operator or organizer does not participate as a player, participant or wagerer in the game or activity."
While grouping poker with other peer-to-peer skill games such as chess and asking for the exemption for bets on animal races, both the PPA's petition and Congressional letter name sports betting and casino games as activities to fall under the UIGEA.
The Congressional letter reads: "There is settled federal law that Internet sports betting placed by individuals in the U.S. violates the Wire Act. There also seems to be some consensus that accepting bets on house-banked games of chance (such as roulette, blackjack, and virtual slot machines) from the U.S. violates state law."
"We believe the best way to clarify the regulation is to have the regulation apply only to those two forms of gambling, about which there is some consensus, and to exempt from the scope of the regulation peer-to-peer and pari-mutuel wagering."
The Congressional letter is signed by Steve Cohen (D-Tenn.), Dan Maffei (D-N.Y.), Linda Sanchez (D-Calif.), Paul Hodes (D-N.H.), Tom Perriello (D-Va.), Jim Moran (D-Va.), Ciro Rodriguez (D-Tex.), Jerrold Nadler (D-N.Y.), Steve Israel (D-N.Y.), Phil Hare (D-Ill.), John Larson (D-Conn.), John Yarmuth (D-Ky.), Joe Courtney (D-Conn.), Shelley Berkley (D-Nev.), Jim Himes (D-Conn.), Bill Delahunt (D-Mass.), Ron Klein (D-Fla.), John Conyers (D-Mich.), Dina Titus (D-Nev.), Peter Welch (D-Vt.), Ed Perlmutter (D-Colo.) and Bobby Scott (D-Va.).
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