When hula hoops are outlawed, only outlaws will have hula hoops

See: http://www.aolnews.com/nation/article/las-vegas-gets-wound-up-as-it-considers-hula-hoop-ban/19584057

The realities of HR2267

Here's a good explanation of why you're not likely to see anything come of HR2267:

http://www.casinocitytimes.com/news/article/top-10-hurdles-facing-u-s-online-gambling-legislation-194547

Reason magazine on HR2267

A post by Steve Chapman on Reason magazine's web site begins like this:

The other day, a citizen went before a House committee and urged its members to stop their burdensome interference with her business. "At its most basic level," said Annie Duke, "the issue before this committee is personal freedom, the right of individual Americans to do what they want in the privacy of their homes without the intrusion of government."

I know what you're expecting: At that point, the politicians all had a good laugh and told her to get lost so they could get back to meddling in people's lives.

But no. Not only did they hear out the winner of the National Heads-Up Poker Championship, they did exactly what she suggested. The committee voted to lift the federal ban on Internet poker and other online gambling, while approving a measure to tax and regulate it.

It's a well-written piece, though, I think, ultimately misguided in concluding that this bill is designed to promote "more freedom and less government," as the Mr. Chapman claims, and I submitted a comment to that effect. Still worth a read, though. I especially liked this zinger:

It's easy to forget that in the old days, opponents denounced casinos for luring bettors into dimly lit bunkers where they would fall victim to card sharps, leggy waitresses, and rivers of booze. Now the same opponents suggest that Luxor Las Vegas is far safer than that den of vice you call home.

Balkanization

I'm not sure why I'm spending so much time on the subject of HR 2267, since I'm highly dubious that it's going to get enacted into law. But sometimes I just get curious about something and have to figure it out, even if there are no real-world consequences.

I wrote earlier today about the balkanization of online poker, but only in a footnote. My friend Cardgrrl submitted a comment in which she expressed doubt that this was really a problem. That made me wonder if I'm understanding the matter correctly, so I went back to investigate it a little more, as I had previously been relying primarily on news reports summarizing the bill's provisions.

The first of two amendments that I'm focusing on is Amendment 8, offered by Campbell, and agreed to by voice vote. It adds to the requirements for obtaining a federal license this language: "Require licensees to maintain all facilities within the United States for processing of bets or wagers made or placed from the United States."

The second is Amendment 16, offered by Sherman, and agreed to by voice vote. This specifies that in order to receive a federal online gaming license, the applicant must provide "Certification that the applicant has established a corporate entity or other separate business entity in the United States, a majority of whose officers are United States persons and, if there is a board of directors, that the board is majority-controlled by directors who are United States persons." It further states that the licensing entity must "Require that a majority of all of the employees of the applicant or licensee, and of its affiliated business entities, be residents or citizens of the United States."

Let's suppose that, say, Australia passed an essentially identical law for the licensing of an online gaming company to accept bets from its citizens. Can Acme Poker USA operate in both places?

Clearly Acme Poker is going to have to have its servers and administrative offices in the U.S., using U.S. employees--at least all of those facilities that are going to be handling U.S. customers. I suppose it could set up a subsidiary corporation, something like Acme Poker Australia, and base it in Melbourne--although even there I'm a little uncertain, because of the language about "affiliated business entities."

Now can a U.S. player and an Australian player play at the same virtual cash-game table? That strikes me as problematic. Obviously the two servers have to communicate with each other continuously in order to make such a game happen. I wager $1 here, Kangaroo Ken raises me $2 more. It seems to me that the servers in Australia are necessarily "processing," in some way, the bet that I made, and, in parallel, the U.S. servers are "processing" the bet that Ken is making--in apparently violation of Amendment 8.

You might argue that the Australian servers are not part of the U.S.-licensed company. First, in my hypothetical, Acme Poker Australia is a subsidiary of Acme Poker USA, and thus is under the ultimate control of Acme Poker USA. So maybe we change that and make them, somehow, sister companies, neither one controlled by the other. Or go even further and say that they are wholly independent, but have negotiated a cooperative agreement to use compatible software and exchange real-time poker game data so that their players can freely compete against each other. (I have a hard time seeing how that could actually work, because there would be no common pool of money. But set that aside, and assume it could be figured out.)

But there is still a problem, I think. The language doesn't say that the licensee has to make sure that only those facilities under its control are in the U.S.; it says that "all facilities" for processing bets by U.S. players must be located here. The implication of that is that the company cannot allow the transmission outside of the U.S. of any data required for any part of the "processing" of a bet by a U.S. player, which would seem to imply that there can be no international play. If a server in Australia is receiving the wager information from me and passing it on to Ken, surely that server is "processing" my bet, which violates Amendment 8.

I might be completely wrong about all of this. I'm giving you my admittedly amateur and rather hasty and superficial analysis. But unless somebody presents me with a persuasive argument as to why these amendments do not, in fact, have the effect I'm inferring from them, I will be of the opinion that the version of the bill passed by this committee, if enacted, is going to make it impossible for there to be legal poker played by U.S. residents that involve anybody situated outside of the United States. (It would also mean that you couldn't play on your usual site when you were traveling outside of the country, but that's a much smaller concern.)

It appears to me that if every country passes substantially similar measures, what we will be left with is a global patchwork of sites, none of which can communicate with each other--the very antithesis of what the Internet was supposed to accomplish. The artificial lines we draw on maps to delineate our territory from that of other nation-states will be adopted into online gaming, as if the Internet did not exist beyond our own shorelines.

This is "definitely...good for poker"?

A legal oddity

I was just skimming through the actual text of H.R. 2267 to tie up a few loose ends on my previous post, when I noticed something unexpected. I was looking for what I assumed would be a provision for criminal prosecution and punishment for offering online gaming without a federal license. As far as I can tell, there is none. I.e., there's nothing that lays out as a crime, with specific associated penalties, the act of providing online gaming without a license. It looks to me as if the only way the feds will have to prohibit such gaming is by going to court and obtaining an injunction--basically a cease-and-desist order, the continued violation of which would bring the offender under the provisions of contempt of court.

That strikes me as odd and unexpected, because virtually every time a licensing program of any sort is put into place by any jurisdiction it is accompanied by a provision making it a crime to engage in the activity involved without obtaining said license. Still, I'm not at all sure what, if any, significance to attach to this fact. I also don't know how it would work in actual practice. After all, if a company has its headquarters and servers entirely outside of the U.S., what can a federal court actually do it? Of course, that's true of criminal provisions, too, as long as the owners/operators don't make the mistake of deciding to celebrate a good year by going to Disneyland.

Incidentally, there is also no clause that I can find making it a crime to engage in online betting as a person prohibited from doing so under the new regulatory scheme; the responsibilities lie wholly with the licensee/operator. Similarly, nothing in this bill makes a federal crime out of placing online bets with an unlicensed operator. Interesting.

More on H.R. 2267

Yesterday I reiterated my opposition to any federal licensing scheme for online gambling on general principle.

I should have also added that an independent, sufficient reason to be opposed to the idea is that the last thing this monstrously money-addicted Congress needs is another new revenue source; we should be looking for every possible way to starve it rather than feed it. That the current bill is picking up supporters who like it purely for the fact that it gives them more of our money to spend is alarming, though misguided people and groups (such as the Poker Players Alliance) are using this as a selling point.

Here's a snippet from the New York Times demonstrating this mindset:

Supporters of legalization said fiscal considerations played a role in
their thinking. “I was looking for the money,” Representative Jim McDermott,
Democrat of Washington, said in an interview. He sponsored the companion measure
to allow taxation of Internet gambling; he wants to dedicate the money to
education.

Representative Brad Sherman, Democrat of California, said in an interview
that the money was an attractive source of financing for other programs. “We
will not pass an Internet gaming bill,” Mr. Sherman predicted. “We will pass a
bill to do something very important, funded by Internet gaming.”

He added, “Forty-two billion dollars over 10 years has an
effect.”

This is just wrong. First, any tax and licensing fees should be no more than required to operate the regulatory body. Second, at a time when Obama's budget projections show a tripling of the federal debt to more than $15 trillion by 2020, compared to 2008 levels, it is simply insane to be thinking of doing anything with new revenue other than trying to reduce that number. Using it for yet more new spending commitments is so fundamentally irresponsible from a fiscal and public policy standpoint that any member of Congress advocating it (as, e.g., Sherman and McDermott above) should be impeached and removed from office--or maybe just shot where he stands.

Along the same lines, states that don't opt out of the federal plan will be able to tack on their own taxes, which causes the same problems for both the profitability of the game and for overstretched state budgets as I have outlined at the federal level.

But what I really wanted to address in this post is this offhand remark from a Wicked Chops Poker post of earlier today: "The bill, which ... definitely falls under the 'Good for PokerTM' category, would effectively undo the UIGEA and make all online gambling, except sports betting, legal at the federal level."

Good for poker? "Definitely"? Let's consider that.

Now there is no state or federal tax taken out of cash pots or tournament payouts that I win. Under H.R. 2267 there will be. (OK, technically the taxation part will be under a separate bill that is still in committee. But it is unthinkable that 2267 would pass without that part coming along for the ride. Also, having not read that companion bill, I suppose it's possible that the taxes will come out of deposits rather than individual bets or pots. Same difference.)

Now online poker sites do not report one's winnings or losses to the IRS. Under H.R. 2267 they will.

Now I can play on Full Tilt Poker, PokerStars, Ultimate Bet, Bodog, Cake network, etc. Under H.R. 2267 those sites would not be available.*

Now I can bet on sports through any number of online sites. Under 2267 that will not be possible.

Now I can fund at least some online poker accounts via credit card. Under 2267 that option will be taken away.

Now I can play online even if I'm behind in child support payments. Under 2267 that will become illegal.**(As a matter of general principle, you tell me how the status of my child support payments is any business of either the federal government or Party Poker.)

Now I can easily transfer to or receive from friends funds from my online poker accounts. Under 2267, that freedom will almost certainly be eliminated, due to the anti-money-laundering requirements.

So, Wicked Chops Entities, can you explain to me how any of these things makes my life as an online poker player better, i.e., how these provisions are "definitely...Good for Poker"?



*PokerStars seems oddly confident that it will be able to become a licensee under this bill. Similarly, the blogger for Doyle's Room is calling this bill "a great success for legalized poker in the U.S." I don't know what they are seeing or thinking that escapes me, because it sure looks to me like they would be excluded. Even if they somehow were to get past being able to prove that they had never violated any state or federal law with respect to online gaming (itself a dubious proposition, given the Justice Department's interpretation of current federal law and several state laws that are pretty unambiguous), I simply can't believe that they would be willing to move their entire operation to the United States, as would be required for licensure. By the way, this is another problem with the whole idea of licensure: Every jurisdiction wants the businesses it regulates to be physically within its borders. FTP and Stars simply cannot simultaneously be wholly located within the borders of the U.S. AND France AND England AND Italy AND every other nation that wants to regulate and tax them. This trend will inevitably lead to the unnecessary balkanization of the online poker world.

**My friend Shamus reads this provision as saying only that one cannot obtain a license to operate an online gaming site if one is behind in child support payments. Though the wording of the amendment is clumsy, I think that's pretty clearly wrong. It doesn't say that the licensee must not be behind in child support payments; it says that the licensee is required not to take bets from any person who is behind on child support payments.

Poker gems, #355

Chris "Fox" Wallace, in Poker Pro magazine column, April, 2010, p. 64.


A $5-$10 spread-limit game has been running regularly at my local cardroom (Running Aces Harness Park in Minnesota), and I've been heading out there more often lately.... Minnesota state law limits the maximum bet size to $60, so it's not possible to make the kind of money I make online, but it helps fight the cabin fever. Don't even get me started about a state that advertises its lottery all over billboards and allows a drunk to buy a thousand dollars worth of pull-tabs in most of the bars in town but has set a $60 cap on poker games. Ridiculous.

Quads and laws

Once again a post from my buddy Shamus provides today's inspiration, on two unrelated fronts.

1.

While playing at a Florida card club recently, he flopped quads for the first time ever. That made me reflect a bit on how many times that has happened to me. Offhand I can remember flopping quad deuces at the Palms, fives at Planet Hollywood. There was another set at the Orleans--in 2007, I think--that I'm pretty sure was also fives; I remember the incident because I had raised before the flop, which back then wasn't my usual practice with small pairs, then got rewarded with the quads. I thought I had written about that hand, but now can't find it in my archives.

But the best one was when I flopped quad aces in a hand against Phyllis at the Hilton. Phyllis was one of the most likeable characters from my Hilton days. She was Rocky "The Rock" McRockerson when she played most of the time. But on the days that she chose to drink, she would usually have too many, and then she actually became a dangerous player, because she played much more loosely and mixed a large number of bluffs in with her strong hands. It was on one such day that I had the button, the pocket aces, plus the other two of them on the flop. Phyllis bet into me. I called. On the turn she bet bigger. I called again. On the river she bet yet again. By now the board had two pairs plus a king. I raised all in. She responded, "I call. I'm playing the board." I smiled and said, "I'm not," and showed her the quads. She laughed. (That was another thing about Phyllis--she hated to lose when she was sober, not so much when she was drunk.)

There may have been one or two other flopped quads that I'm no longer remembering, but there have been at least those four sets of them.


2.

The second thing from Shamus's post that I wanted to comment on was the statutory situation in Florida:

I spoke with Scott Long of Ante Up! (who co-hosts the show with Chris
Cosenza) just to make sure I was clear on what the current laws were. Indeed,
the $100 max-buy in remains in place for NL games, as does the $5 limit on bets
in limit games. The maximum buy-in for tourneys is $800 or thereabouts (Long
says some places have managed to find a way to finagle up to $1,000 buy-ins
somehow). Long shared with me the comparison he and Cosenza often make when
highlighting the present absurdity of the poker-gambling situation in
Florida.

“I can go down to the Kennel Club and bet $50,000 on a dog running around
the track, but can’t buy in for more than $100 to play poker,” explained Long.
He added how the motorcycle-riding thrill-seeker Evel Knievel, who lived his
latter years in Florida prior to his death a couple of years ago, apparently
used to go place $10,000 bets on the greyhounds from time to time, screwing up
the odds considerably when he did.

It does sound as though the law to remove caps and betting limits has a
good chance of going through this summer, though, and so perhaps the situation
will be different in Florida soon.

One of the things that most reliably gets my dander up is stupid laws, especially stupid laws passed by legislators who are trying to protect people from themselves. The more I know about a subject, the more obvious it is to me that the people writing the laws about it have no idea what they're doing. Firearms laws is one such example, though today I'll spare you a rant about how ill-conceived most gun laws are. I'll stick to poker instead.

The Florida case is a good example of legislative idiocy, but Minnesota is at least its equal. Maybe ten years ago the state first made it legal for horse racing tracks (of which there was only one at the time) to have card clubs, too. But because the bleeding-heart lawmakers didn't want people to lose too much money playing poker, they put in place a maximum of $60 per bet. What that means in real terms is that Minnesota poker rooms can offer $30-$60 limit games, but not a game such as $1-2 no-limit hold'em--the most popular form of poker in the country these days.

Most of my readers play a lot of poker, obviously. So you tell me: in which game is a bad player likely to lose more money, $30-60 LHE, or $1-2 NLHE? For the few readers who don't play enough to make the answer apparent, I'll just tell you that I wouldn't go near a $30-$60 LHE game, for fear that one unlucky session would wipe out my bankroll. It's a much bigger game than the standard capped buy-in no-limit game, despite the potentially misleading labels of one being "limit" and the other "no-limit." I might lose $300 in one hand of poker once a month or so, certainly not more frequently than that on average. But if one played $30-$60 limit, losing $300 in a hand would be expected to happen more than once in every session.

No rational legislator who understood poker could possibly set up the laws the way they did with the goal of protecting players from losing too much money. It's insane. (Of course, I could also point to the UIGEA as an example of a law passed by a bunch of legislators who had little or no idea how idiotic and vague and overbroad and philosophically inconsistent it was. But you all already know about that, whereas you're less likely to know about Minnesota statutes.)

Unfortunately, that's the system we have: laws are made by people who, for the most part, have only the barest understanding of the subjects they are trying to govern, and who care more about scoring points with favored interest groups than passing laws that are actually rational. The last thing that would ever occur to them is that maybe the citizens are capable of making their own decisions about how to live their lives and spend their money, without Big Brother putting stupid, arbitrary restrictions in place. I will never understand why so many people--legislators being only the example du jour--have such strong desires to restrict and control what others do. Power-hungry madness for the most part, I think.

Stepping off soapbox in three, two, one--now.

The immutable laws of poker, #1

It always takes longer to climb out of a hole than to dig into one.