Saturday, November 28, 2009

The other side of the coin

Yesterday it seemed that everybody who pays attention to the politics of poker was atwitter about the announcement of a six-month delay in the implementation of the regulations that financial institutions will have to follow under the UIGEA. See, for example, this bit of barely contained excitement, as reported by PokerNews:

The extension is an important victory for Internet poker and the Poker Players Alliance, which submitted the petition for delay. The ruling affords six months for Congress to revise the act, clarifying the definition of "unlawful Internet gambling" in a way that distinguishes the game of poker.

"The PPA is extremely pleased with the decision by the Federal Reserve and Treasury to grant the six month extension," PPA chairman and former Senator Alfonse D'Amato said in a statement. "This is a great victory for poker, but an even greater victory for advocates of good and fair public policy. These additional months are critical to provide legislators time to clarify UIGEA and pass legislation to license and regulate poker early next year."

John Pappas, executive director of the PPA, said he thinks the extension of six months rather than the requested year could actually help poker's cause by providing a sense of urgency to those in Congress who support the licensing and regulation of the Internet poker industry.

"I think it will it will force Congress to act quickly on this rather than drag their heals thinking they can deal with this later because they have a year," Pappas said. "Hopefully we'll have some movement in the House and Senate. If there's good progress being shown, we're hopeful we would be granted another delay."

Any number of poker pros were similarly excited, juding from Twitter messages. Howard Lederer and Andy Bloch, for example, both forwarded this from the PPA: "6 month UIGEA extension! Release coming shortly."

All I can do is shake my head at how pathetic and wrong this is.

What has happened is a six-month delay in enforcement of a law that is woefully misguided, expensive, ineffective, and should never have been passed in the first place. Sure, it's better than nothing, but getting so giddy about it is rather like celetrating when you're chained to a wall in a Cambodian prison and you learn that they're going to skip your flogging today. Of course no flogging is better than flogging, but cause for breaking out the champagne? Hardly.

This is precisely the kind of thing that happens when you accept as an inevitable reality governance by an incompetent, corrupt, overbearing, and overreaching federal government. I, for one, do not welcome our new insect overlords.*

The PPA and its like-minded supporters seem to have no idea of the trouble they're inviting, though this episode should be enough to clue them in. Once you accept that the federal government should be and will be licensing and regulating online poker, you are reduced to begging for table scraps. You scratch and fight and lobby (spending big bucks in the process), hoping for some marginal improvement in how things work, perhaps a little less paperwork to be filed here, or a tiny reduction in the confiscatory tax rate there. More often, though, you're fighting just to maintain the status quo, trying to prevent another round of ratcheting up the percentage Uncle Sam claims, or preventing implementation of another step up in the complexity of the hoops an online poker site has to jump through to verify that a potential new customer is of age.

I am warning you all once again: federal licensure and regulation of gaming will eventually choke the life out of online poker. I wrote in some detail my reasons for concluding this back in May, here, with pointers to some earlier shorter screeds. I won't cover the same ground again. I just wanted to take this opportunity to point out how the PPA is already pathetically groveling, hoping to be tossed a tiny crumb from the table of the feds.

Online poker is not a legitimate concern of the federal government, which has neither constitutional authority nor any reason to be involved in the field at all. It is inconceivable to me that, e.g., PokerStars will run any better or more securely after it spends a bajillion dollars to get a federal license, and another bajillion to be sure that they are following the several thousands pages of regulatory minutiae that will assuredly follow. All that will happen is that their overhead will increase, taxes will be taken out of winnings before they get to you, and the whole enterprise will become less profitable for sites and players alike. Mark my words.

Online poker should be free from state and/or federal governmental interference, taxation, regulation, control, and oversight. It can work perfectly well for all of us if just left the hell alone. As a political goal, we should settle for nothing less than that.

*For some interesting and amusing bits of history of this great meme, see here and here and here.


Erik said...

"Online poker is not a legitimate concern of the federal government, which has neither constitutional authority nor any reason to be involved in the field at all."

That's patently absurd. We can argue the wisdom of government regulation of this particular industry, but you can't just pretend the Constitution doesn't exist or wish away relevant clauses. Have you read article 1, section 8?

The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States; ...

Clause 3: To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes;

Clearly constitutional.

Rakewell said...


Glad constitutional law comes so effortlessly to you. You should get appointed to the Supreme Court.

Did you click the link to read my earlier post where I addressed this? I'm guessing not.

Have you done any reading into the history of what the words "regulate" and "commerce" meant to the writers of the Constitution? I'm guessing not.

Erik said...


"First is the general principle. We should be free to play poker (or blackjack or anything else) with our own money from the privacy of our own homes. Period."

I don't know where this "should be" comes from. The whole thing seems reminiscent of the Napster argument a few years back. I don't see much of an justification beyond a) it's cool and b) it benefits me personally. I guess that pretending financial transactions between players and online casinos is not commerce is a necessary prerequisite for buying into your unconstitutional argument. Are you really banking your argument on the notion that the writers of the Constitution could not have envisioned the Internet? If the document cannot be applied to new technology and new social dilemmas then the whole thing is of no use.

Though I not convinced you're really interested in discussing the issue. Starting by quoting the Bible and declaring "I am the voice of one crying in the wilderness" suggests that readers just back the hell off and let you suffer under your burden of wisdom.

Conan776 said...

The beatings will continue until morale improves.... to quote the Gary Larson cartoon.

Yeah, I agree wholeheartedly with what you are saying: "federal licensure and regulation of gaming will eventually choke the life out of online poker"; in fact, my insistence that the PPA had essentially thrown poker players under the bus by condoning a 20% "sin tax" on all deposits off the top ultimately got me banned from 2+2 (after the PPA lackey/admin cordoned my posts off in their own thread, of course) -- and I wasn't exactly running fly by night account either (Internet is serious bizness, lol). But, oh well, the powers that be....

Conan776 said...

Oops, well I guess I meant 10%. Revise my remarks if you could Rakewell? It'll be 20% a few years down the road, of course...

Conan776 said...

Erik, so by your logic, what's to stop the Feds from tacking on an extra X% tax on software engineers, or roofers, or plumbers. Maybe every time I need to fix my roof, Uncle Sam has the right to tax off 10% right away based on the estimate? That's the current understanding vis a vis poker per the current bills floating around Congress -- poker players are sinful, immoral people, so Congress must skim off the top to discourage such horrid immoral behavior. And the so-called "Poker Player's Alliance", et al., are happy to go along with such a farce. Meh!

NerveEnding said...

This link may be just what you are looking for:

Erik said...


Democracy. If we don't like our government's priorities we should look in the mirror. Because we're responsible.

I agree with you that we need to take a good look at how the proposed legislation would affect the industry should it become law. My point is that this examination must begin with a recognition of the powers granted to Congress in the Constitution.

I mean we could still be answering to the British Monarchy. All of us could have had the misfortune of being born in a land ruled by a military junta. We weren't. We were born in the oldest democracy on the planet where we have the good fortune of being responsible for our own governance.

So denying the laws of the land as a starting point for your argument- I don't get it. What you're facing here is the fact that other people don't share your priorities. Their livelihoods are taxed and they're wondering why this industry- online poker, your livelihood, is exempt. It's a question of priorities that the people, through their representation in Congress, need to answer. It's not a Constitutional question.

unaha-closp said...

This is precisely the kind of thing that happens when you accept as an inevitable reality governance by an incompetent, corrupt, overbearing, and overreaching federal government.

A lot of people see existant reality and choose to accept reality.

Once you accept that the federal government should be and will be licensing and regulating online poker...

Your acceptance is neither here nor there on the matter. The operative cause is when the government decides it should take an interest. It has.

Conan776 said...

@ Erik

Income derived from playing online poker isn't exempt from federal taxation, and I pay my taxes on my net take each year (although the IRS code isn't exactly crystal clear, I feel I'm doing my due diligence). What I object to is the proposals for an additional tax on deposits, or some other additional tax in whatever form, in exchange for Congress deigning to bless the legality of our enterprise. Once Congress gets their fingers in that pie, their appetite will be insatiable.

Im Just Saying said...

@Conan - that tax on professional services (lawyers, doctors, etc) is exactly what's being floated around the Washington State Legislature to close a budget gap. The posibility of the fed doing the same isn't outside the realm of posibility.