Wednesday's RAWA Hearing Goes Down As Big Win for Online Gaming Proponents
Believe it or not, a U.S. House committee hearing titled "A Casino in Every Smartphone — Law Enforcement Implications" may have been the best hearing ever at the federal level related to online poker. At the very least, it was the most entertaining.
It started off like other Congressional hearings on the Restoration of America's Wire Act (RAWA) that have been called at the behest of Las Vegas Sands owner Sheldon Adelson over the past two years.
Witnesses handpicked for their opposition of online gambling issued fear-mongering generalities that apply only to the unregulated, offshore market, citing outdated studies, articles, and statistics to back up their claims. A token witness in favor of regulation over prohibition is allowed to speak. Then, usually, the nonsense testimony is allowed to stand unchecked as a committee chair under Adelson's financial influence directs the hearing as if it were one of the biased commercials produced by Adelson's Coalition to Stop Internet Gambling.
Instead, something strange and wonderful happened. Member after member of the House Oversight and Government Reform Committee took the microphone during the witness questioning portion of the hearing and picked apart three of the witnesses, revealing them as uninformed.
Rep. Bonnie Watson Coleman (D-NJ) pointed out that the testimony of Joseph Campbell, assistant director for the Criminal Investigations Division of the FBI, pertained to concerns about unregulated online gambling without noting how regulations in place in New Jersey, Nevada, and Delaware prevent these issues. She asked Campbell for any record of instances of online gaming being used for illegal activities in a regulated U.S. market. He could only respond that he didn't have any specific details.
Rep. Mick Mulvaney (R-SC) called out his own state's attorney general, witness Alan Wilson, for taking a position on this issue in favor of federal control when he's been taking a states' rights position on other issues, including gun control.
It got so bad that Committee Chairman Jason Chaffetz (R-UT) had a heated sidebar with some of his Republican colleagues, according to Poker Players Alliance (PPA) executive director John Pappas, who attended the hearing.
"It's very unusual to see the chairman of a committee lose such control over an issue that he cares about," Pappas said. "For us, that was very gratifying to see. We went into his home turf and we beat him every which way. I think our team and our side's preparation and knowledge helped educate a lot of members to ask tough questions, and it led to a hearing I don't think Mr. Chaffetz expected."
Rep. Chaffetz, Adelson's chief crony in the House who chairs the committee, didn't even try to hide that he and the hearing had been bought and paid for, taking the confrontational name from a tagline that was created by Adelson's head lobbyist Andy Abboud at a 2013 hearing and repeated every year since, as illustrated here by the PPA.
Chaffetz opened the hearing with three main points. First, that an "unnamed bureaucrat down in the bowels of the Department of Justice" reversed 50 years of the Wire Act when the DOJ Office of Legal Counsel issued its 2011 memo that reinterpreted the Wire Act as applying only to sports betting. He declared that this is not the proper way to change a law.
"The result is now anything connected to the Internet — desktops, laptops, tablets, smartphones — no matter your age, potentially becoming a casino," Chaffetz said. "I've got a problem with that. I think the country's got a problem with that, and it certainly needs vetting and discussion. And, again, if you want to make a change, come to Congress, introduce a bill, and make a change. But don't just change the law based on an OLC opinion."
Second, that geolocation can't work because the Internet doesn't have walls around it.
"For anybody to argue that the Internet can be walled off and used just in these certain boundaries, it's a joke," said Chaffetz, with a straight face. "Come on. Nobody with a straight face is going to come before the American people and say 'well, the Internet, it's just for the people of Nevada or it's just for the people of Rhode Island.' Are you kidding me? You give me a good 18-year-old and about 36 hours, and you can hack through just about anything."
Third, he claimed this bill that would trample the long standing rights of states to determine their own course in regards to gambling, was actually a states' rights bill because it would allow states that don't have or want any form of gambling — such as his Utah and Hawaii — to make that choice without regulated Internet gaming in other states crossing over their borders. At this time, he entered into the record a year-old letter signed by 16 state attorney generals supporting RAWA, conveniently ignoring that a similar letter passed around in the past month received only eight signatures.
His fellow committee members wouldn't let these faulty claims stand.
Rep. Stacey Plaskett (D-VI) debunked Chaffetz' assertion that this was one lawyer in the DOJ overturning the Wire Act, with no input from Congress. She laid out that the DOJ opinion was informed by more than a decade of debate in Congress, including the exemption made for state-offered online gaming in the Unlawful Internet Gambling Enforcement Act (UIGEA).
Ted Lieu (D-Calif) played a video from GeoComply showing how the geolocation service used by New Jersey can capture a player's location within meters on the New York side of the border.
"Thank you Mr. Wilson and Mr. Kleine for your public service," Lieu said. "Thank you for your testimony today, and I have no doubt that you believe in your testimony. But I do have to point out that parts of your testimony were simply wrong when it comes to technology. Mr. Kleine, you had testified such as that any smartphone can be used for online gambling and it's virtually impossible to pinpoint location and, Mr. Wilson, you said that any smartphone can be used as a virtual casino. The notion that you can't pinpoint location is simply incorrect. Just look at your GPS next time on your smartphone, it will tell you where you are relatively accurately."
Donald Kleine, a Douglas County Attorney in Nebraska, was another Chaffetz witness who focused his testimony on the challenges of local law enforcement protecting its citizens from online gambling sites, ignoring that regulation would help in those efforts.
"Certainly two of the witnesses — Kleine and Wilson — had no clue what they were talking about," Pappas said. "At the end of the hearing, they conceded that intrastate online gambling is not a problem. They had no business being there. Clearly, they were paid hacks of Sheldon Adelson and that's how they were there. Their lack of preparation and knowledge was really evident."
The one witness against RAWA was Nevada State Senator Mark Lipparelli, former chairman of the state's Nevada Gaming Control Board, who provided a voice of reason during his testimony and answers to questions.
"As you continue to review iGaming and the related role in law enforcement, I can tell you confidently that your committee is now in a position to benefit from a significant amount of deliberation and contribution from many well-informed and experienced operators, regulators, technologists and industry experts," Lipparelli said. "Unlike 2009, we are no longer in greenfield. We have learned a great deal in the past six years. The creation of enabling law and regulation in three states and a large number of informed studies and debates, as well as — and perhaps most importantly — the creation, testing and deployment of many iGaming systems throughout the world has created concrete knowledge that does now and should replace speculation."
Hint, hint for the next hearing.
Rep. Dina Titus (D-Nev.), though not in the committee was yielded time by Rep. Stephen Lynch (D-Mass). She came out aggressively to defend her state's right to offer online poker.
"As I've heard the testimony, I've been pretty astounded that Mr. Campbell could come representing the FBI to talk about the problems of regulated Internet gaming and not be able to cite a single case in which it's been the problem, or give us any statistics that indicate it is a problem," Titus said. "And Attorney General [Wilson], how you can use a 10th Amendment argument to say that federal regulation gives you more states' rights is kind of jabberwocky to me. And I wonder if you're so concerned about someone in South Carolina gambling on a site that's located and regulated by and limited to Nevada, what you're doing to protect those teenagers with a cell phone in South Carolina from gambling illegally overseas."
The number of committee members in attendance ready to ask informed questions, which was by far more than any other online gaming hearing on Capitol Hill, showed that the efforts of the PPA and poker players in contacting legislators are making an impact. Pappas explained that the PPA has been focusing on educating members on this committee specifically for the past several months, anticipating this hearing.
However, the PPA made a similar effort in March when rhetoric ran wild at a previous House committee hearing. Pappas indicated that the difference this time was a more coalesced gaming industry that has developed to oppose RAWA, including casinos, online operators, lotteries and manufacturers.
"Without the PPA, I don't think this hearing goes nearly as well as it did," Pappas said. "But there's a lot to be said for a broader coalition that has been engaged over the past year that has helped. All of us working together can be a pretty powerful force."
Of course, for all the progress seemingly made at this hearing, Chaffetz in his concluding remarks repeated that it was "naive at best to think we can put up a wall on the Internet and think we're not going to be able to penetrate this."
Some lawmakers will never learn.
*Image courtesy of mpasquini/FreeImages.com.