Kerr,+Matt

Please find my Individual Research Assignment with proper formatting above, and a copy/pasted version below.

Matt Kerr – matt.kerr@utoronto.ca Professors Michael Jones and Gail Benick CCT 205 - Digital Innovation and Cultural Transformation Individual Research Assignment (Topic: Online Poker Legislation – A Government Restriction of Personal Freedoms) Submitted: February 5, 2009

Online Poker Legislation – A Government Restriction of Personal Freedoms The Bush government has left a lasting impression around the world, and the decisions made during his presidency will be scrutinized for years to come. While issues such as the ‘war on terror’ have been and will remain at the forefront of the discussion surrounding the former president, one of the most underhanded yet overlooked actions of his government was the passing of the Unlawful Internet Gambling Enforcement Act (or UIGEA). While the act itself is important to discuss, the more prevalent issue is the ability of a government to enact legislation in the manner that was done with the UIGEA.


 * “…in the dark of night, Congress passed legislation which seeks to keep you from playing poker over the Internet.” (Poker Players Alliance)**

Minutes before congress was to adjourn for the 2006 elections, the SAFE Port Act (an act of congress dealing with port security issues) was signed into law by then President George W. Bush. Literally ‘jammed’ into the end of the Act was a recently devised anti-gambling bill, deemed the ‘UIGEA’, which (in essence) was designed to “prohibit the transfer of funds from a financial institution to an Internet gambling site” (Safe Port Act). Although this was the official enactment of the SAFE Port Act, no previous versions of the Act, neither the one passed by the House on May 4th nor that which was passed on September 14th by the United States Senate, had included any stipulations that the UIGEA was now covering. Months ago, there had been a entirely separate ‘anti-gambling’ bill, which had been debated and passed by the House of Representatives while receiving harsh criticism and rebuttal in the online community, but it was generally assumed to be absurd and ‘unpassable’ and still was nowhere near as encompassing as the UIGEA. According to Sen. Frank R. Lautenberg (D-NJ), “no one on the Senate-House Conference Committee had even seen the final language of the UIGEA” (Rose). The UIGEA offered little justification as to ‘why’ it was necessary to have been thrust into legislation, other than a recommendation from the ‘National Gambling Impact Study Commission’ (who have since been defunct and discredited) who incorrectly stated that online gambling was a “growing problem for banks and credit card companies” (Rose). In actuality, with the inception of the UIGEA banks and credit card companies problems have skyrocketed as they are unaware of how to deal with transactions. For instance, the UIGEA actually “allows the federal regulators to exempt transactions where it would be impractical to require identifying and blocking.” An example of this would clearly be paper checks, as “banks have no way of reading who the payee is on paper checks and cannot be expected to go into that business.” As a result of these factors, banks tried to overturn this bill, “not because they cared about patrons’ privacy, but because they knew that it would cost them billions of dollars to set up systems to read paper checks” (Rose). Due to the confusing provisions within the UIGEA attempting to outline what is legal gambling and what is not, many scholars, including Professor Nelson Rose of Whittier Law School, have analyzed the bill extensively and concluded that a

“Bet or wager includes risking something of value on the outcome of a contest, sports event ‘or a game subject to chance.’ The Act otherwise allows contestants to risk money on themselves. The ‘game subject to chance’ restriction is designed to eliminate Internet poker. The Act then confuses the issue of skill by stating that betting includes purchasing an ‘opportunity’ to win a lottery, which must be predominantly subject to chance. Someone will figure out a way to create an opportunity to win, where the opportunity is subject to some chance. But the Act expressly prohibits lotteries based on sports events.”

Various scholars and poker players alike have successfully argued that poker should be deemed a game of skill before that of chance which nullifies the wording within the UIGEA entirely. Matt Matros, the author of ‘Game Theory and Poker: An Introduction’, discusses how decision making in poker requires a definite skill set, as “decisions are made based on how your opponent will react from previous observed behaviours, meaning each decision will put you in a position to make the most money possible off of your opponent for any given hand” (Matros).

The combination of how the UIGEA was passed and its bewildering and meritless claims caused an immediate uproar within the online poker community from online poker players, online poker companies who had heavily invested in a United States player market, and a small portion of the ‘general public’ who became aware that a completely unrelated bill covering port security could essentially cripple an industry overnight.


 * "The government is supposed to be protecting our rights, not taking them away!" (Brunson)**

It is to be assumed by most rational people that if you purchase a bike, and own property where you can ride it, you can go ahead and ride that bike. It would be absurd to think a law could be passed eliminating that freedom, bike riding, from you. However, that is exactly what happened with online poker; millions of Americans can no longer deposit their hard-earned money to engage in an activity they enjoy. There is no difference between bike riding and poker; it is a freedom that was directly infringed upon and taken away without merit. Arguments can be made that people can develop gambling addictions through playing online, and underage players are more rampant through the Internet than in casinos, but if those are the real problems attempting to be addressed the UIGEA did little to solve them. The UIGEA only banned banks and credit card companies from depositing, which a true addict can easily find a way around through a multitude of third-party online payment programs, such as ‘Moneybookers’, which allows for direct payments from a bank account or credit card to a Moneybookers account, and then into an online poker account. As a result of a lack of understanding as to why the UIGEA came to be, many poker players simply feel the government is upset that they missed an opportunity to profit from online poker, as many companies took advantage of the exploding poker industry in the early millennium and made a fortune providing games through the Internet. Todd Brunson, professional poker player and son of legendary player Doyle Brunson, made an interesting and accurate comparison between poker and prohibition, saying

“When will the government learn they can't push their morality onto the general public? It didn't work with Prohibition in the last century and it won't work with banning Internet poker today. The government is supposed to be protecting our rights, not taking them away! Legalize it, regulate it, tax it.”

Many of the online poker providers that were flourishing pre-UIGEA have all but closed their doors, directly due to the US market (which previously provided a “significant portion of the Internet gaming market”) being closed to the average player. To illustrate the catastrophic effect the UIGEA on the online poker business, the once industry leader and most popular poker site Party Poker had its publicly-traded stock drop almost 60% within 24 hours of the UIGEA being enacted. Furthermore, they were forced to “suspend all real money gaming business with US customers”, which included immediately pulling all advertisements, online or offline, abruptly ending any sponsorship deals and generally ensuring that, in the United States, Party Poker didn’t exist. This was after the United States government threatened to pursue severe legal action to ‘make an example’ out of the largest company in the industry if they continued to target players from the US.


 * “If you aren’t outraged, you aren’t paying attention.” (Dalla)**

Nolan Dalla, the former Media Director for the World Series of Poker and Director of Communications for PokerStars.com (positions he had to resign upon the UIGEA enactment), accurately summed up the thoughts of millions in the United States directly affected by the bill in a blog posted hours after the UIGEA passed:

“Finally, there were some here and elsewhere who said not to worry, that the law would never pass, and so forth. Now, we see what happens when we remain complacent and passive. Aside from this being an outrageous violation of personal freedoms and privacy in this country, I view this issue as largely symbolic of the decline of civil liberties in recent years, and an eerie warning of what is to come.”

__Works Cited__ Dalla, Nolan. "Nolan Dalla on the Internet Gambling Prohibition Act." __Poker Player Newspaper - News, Tournaments, Card Rooms and Poker Strategy Articles__. Sept. & oct. 2006. 05 Feb. 2009 

FRIEDMAN, MICHAEL. "Pro Poker Players Speak Out About Gambling Act." __CardPlayer.com__. Sept. & oct. 2006. 05 Feb. 2009 .

House of Representatives. "Safe Port Act." __Committee on Rules__. Sept. & oct. 2006. 05 Feb. 2009 . = = = = Matros, Matt. "Game Theory and Poker: An Introduction by Matt Matros." __CardPlayer.com__. Aug. & sept. 2005. 05 Feb. 2009 . = =

Morse, E. A. "The Internet gambling conundrum: Extraterritorial impacts of U.S. laws on Internet businesses." __Computer Law & Security Report__ 23 (2007): 529-36. The Institution of Engineering and Technology. http://search1.scholarsportal.info.myaccess.library.utoronto.ca/ids70/view_record.php?id=4&recnum=0&log=from_res&SID=2c95ba0cc488e0eb5e0bfa045a2675ec&mark_id=search%3A4%3A6%2C0%2C2

Rose, Nelson I. "Gambling and the Law: The Unlawful Internet Gambling Enforcement Act of 2006 Analyzed." __Gambling and the Law__. 2006. Whittier Law School. 05 Feb. 2009 .

"Mission Statement | Poker Players Alliance." __Poker Players Alliance__. 05 Feb. 2009 .

"SAFE Port Act." __Wikipedia, the free encyclopedia__. 05 Feb. 2009 .