News and Blog

Washington Examiner Op-ed: New Internet gambling law needed now (Louis Freeh and Tom Ridge)

Admin — Fri, 17 Feb 2012 03:42:49 +0000

By Louis Freeh and Tom Ridge

Having served for the last 30 years in significant legal roles -- legislator, governor, prosecutor, judge -- we understand that fundamental elements of the rule of law include clarity and enforcement.

Opaque directives have the potential to invite violations and hinder enforcement. This is particularly true when attempting to apply old laws to new problems, and a recent vote by the District of Columbia Council demonstrates why.

The council just voted to repeal the city's first-in-the-nation Internet gambling law. Regardless of the council's intentions behind their decision to repeal, this vote brings to light a larger problem facing the country, illegal Internet gambling.

Unless Congress acts and works toward a national policy to regulate online gambling, we could be facing different laws that are designed, in theory, to operate within the borders of a state.

But, in practice, we all know that Internet gambling takes place in a borderless enterprise outside an already ambiguous policy arena that affects millions of Americans.

Americans across the country can gamble on various games on the Internet such as cards, sports and games of chance, even though various laws make those activities illegal and the operations running them are offshore, unregulated and offer no consumer protections.

There are as many as 1,700 offshore sites of these kinds taking bets with an annual market of $4 billion to $6 billion.

Unlicensed and unregulated online gambling websites may very well now proliferate more than ever, all still lacking safeguards against fraud, underage gambling and money laundering.

And unfortunately individual states simply do not possess the necessary law enforcement tools to effectively police gambling in a borderless Internet.

While this seems like a dire outlook, there is some cause for optimism. There is a growing consensus that strengthening law enforcement and consumer protection should be the focus, and ultimate goal, of the debate on Internet gambling.

Leading professional law enforcement organizations like the Fraternal Order of Police, National Association of District Attorneys and the National Association of Police Organizations have publicly stated that federal Internet gambling laws are in need of reform and that online poker should be strictly regulated.

Organizations ranging from nationally recognized Internet child and consumer protection advocates to the U.S. Chamber of Commerce are also advocating for a federal solution to the issue of Internet gambling.

To build on the chorus of calls for action by America's law enforcement community and bring greater legal clarity to this issue, federal policymakers should consider four key steps:

First, modernize and strengthen the Wire Act, as well as the Unlawful Internet Gambling Enforcement Act of 2006 to eliminate illegal Internet gambling and unambiguously define related crimes.

Provide federal law enforcement agencies with additional tools to crack down on rogue operators and empower those agencies to shut down illegal sites, working with financial institutions to stop illegal gambling.

Protect the rights of states to determine what forms of gambling are legal within their borders, by giving them the authority to accept or prohibit online poker and mandate geo-location tools to block consumers in prohibited jurisdictions.

Finally, establish a strict and uniform gambling regulatory framework for licensing and enforcement of online poker only in jurisdictions that choose to accept the activity with state-of-the-art technology and strong regulations.

These steps are critical to protect millions of Americans from shady offshore operators, especially in light of the D.C. Council's recent decision repealing the city's Internet gambling law.

Applying old laws to new problems poses significant challenges to a clear understanding of the law, but if Congress can move quickly those challenges can be addressed. We hope they will.

Heads-Up with FairPlayUSA Advisor, Former FBI Director Louis Freeh

Admin — Thu, 19 Jan 2012 00:53:18 +0000

PocketFives
January 18, 2012
By John Douglas

Pushing for the Federal regulation of online poker in the United States is FairPlayUSA. The organization features an eclectic set of advisors, among them former FBI Director Judge Louis Freeh (pictured). The fifth Director of the FBI, Freeh has also served as an Assistant United States Attorney and is now the Founder and Senior Managing Partner of Freeh, Sporkin, and Sullivan. PocketFives sat down with Freeh to get his take on the current status of online poker in the United States.

PocketFives: Why did you decide to join the Board of Advisors of FairPlayUSA?

Judge Louis Freeh: It was the law enforcement piece that interested me from the start. I have long been aware of the problems associated with illegal gambling, going back to my earliest days in the FBI when I was assigned organized crime cases in the FBI’s New York City Field Office. I saw how what seemed like a little innocuous gambling was actually generating millions for organized crime and leading to a host of other crimes along the way, including money laundering, murder, and other violent crimes.

The advent of illegal online gambling is only the latest manifestation and so getting involved to try to raise awareness of this issue with the American public was actually an extension of what I had been doing for more than 30 years in criminal prosecutions.

Click to read the full interview

Pittsburgh Tribune-Review: Prospects improve for legalized online poker

Admin — Fri, 13 Jan 2012 20:19:52 +0000

January 13, 2012
By Mark Gruetze

While a recent Department of Justice ruling brings legalized online gambling in the United States closer, players won't be clicking their bets anytime soon, a noted gambling lawyer says.

"This can't possibly be done that fast if it takes action of the legislature," says Professor I. Nelson Rose, a longtime gambling-industry consultant and distinguished senior professor at Whittier Law School in Costa Mesa, Calif. He referred to the New Jersey legislature's failed attempt last week to approve an online measure before a lame-duck session ended.

Pennsylvania and other states with legalized gambling have the option to offer Internet gambling -- poker, slots and any casino games other than sports betting -- based on a U.S. Department of Justice ruling released just before Christmas.

In response to inquiries from the Illinois and New York lotteries about the legality of selling tickets online, the Justice Department says the federal Wire Act forbids only sports-related gambling in interstate and foreign commerce. Previously, the department interpreted the act as outlawing all forms of gambling.

"This ruling says the main federal statute doesn't apply to gambling that is legal under state law, except for sports-betting interstate," Rose tells Player's Advantage. "Therefore, we're going back to the way things have always been historically and traditionally -- which is, it's up to the states to decide their public policy, not the federal government to impose its public policy on the states."

Since the federal government's crackdown on offshore Internet poker sites nine months ago, gambling advocates have pushed for legalization and regulation of online poker in the United States. Proposals for federal regulation seemed to gain traction for a time; Nevada, New Jersey and other states started preparing their own versions.

Rose says he doesn't know of any move toward legalizing online gaming in Pennsylvania.

Pennsylvania Lottery spokeswoman Allison Roberts says the agency is studying the fiscal and social effects of selling tickets online, including the impact on retail outlets. Ultimately, the governor's office and Legislature would decide whether to pursue online sales.

A spokeswoman for state Rep. Curt Shroder, chairman of the Gaming Oversight committee, says his office has not had a chance to talk about online gaming since the ruling was released.

Before any state launches online gaming, Rose says, officials will have to address several issues: which games to allow, how many licenses to award, how much they will cost, how sites will be regulated, who will operate them, the tax rate and whether to allow bettors from other states -- or countries -- access.

Although the Justice Department says states may regulate online gaming, the debate appears far from over.

FairPlayUSA, which backs federal regulation and was funded by casino giants MGM Resorts and Caesar's Entertainment, released this statement from former FBI Director Louis Freeh, a member of its board of advisers:

"This (ruling) proves the need for federal legislation, because unlicensed and unregulated sites will now proliferate more than ever, without safeguards against fraud, underage gambling and money laundering. Further, we will have multiple state regimes without consistent regulatory standards for activity that takes place electronically across state lines. States do not possess the necessary law enforcement tools to enact such regulatory requirements in a border-less Internet. Only strict and comprehensive federal regulation will ensure that play is safe, secure and confined to players among jurisdictions that permit the practice."

Professional player Robert "Chip Burner" Turner, credited with introducing the game of Omaha to casinos, says he supports online poker but thinks software is not advanced enough to protect players from cheats. He questions whether states would be able to regulate gamblers or operators outside their borders.

Rose doubts that opponents of online gambling can get the ruling overturned because court precedents support the new Justice Department interpretation. "It's already decided," he says.

Online poker sites want as many players as possible, and Rose predicts on his blog, www.GamblingAndTheLaw.com, that states will allow operators to take bets from residents of other states and countries that also have legalized online gaming.

The revenue potential is huge. In California alone, online poker could generate $1 billion a year for operators, Rose says. At a 20 percent tax rate, the state could reap $2 billion or more in 10 years.

"Because there is so much money involved," he says, "(Internet gambling) will be done."

New Study Finds Online Poker Would Have No Damaging Effects on Lotteries

Admin — Tue, 06 Dec 2011 15:33:16 +0000

A new study released today by FairPlayUSA found that the federal regulation of online poker would not have deleterious effects on state lotteries because lotteries and poker are fundamentally different products, used by fundamentally different consumers.

“This study will be an important tool in FairPlayUSA’s ongoing efforts to educate and create public momentum for effective law enforcement, consumer protections and regulation surrounding the legalization of online poker,” said Tom Ridge, former governor of Pennsylvania and advisor of FairPlayUSA.

The report, “An Evaluation of the Effects of Online poker on State Lotteries” was created by Christiansen Capital Advisors (CAA) for FairPlayUSA and analyzed demographic and economic data in addition to a recent report by Public Gaming Research Institute (PGRI). “Americans who want to play poker online deserve a strictly regulated, safe industry here in the United States,” said Marisa McNee, executive director of FairPlayUSA.

“This study uses empirical data to refute any claim that the federal regulation of online poker would adversely impact U.S. lottery sales or state lottery revenues.” The study explains that online poker wouldn’t affect lottery sales for several additional reasons:

Internet gambling games of all kind are already available today and, if any substitution effect exists, it has already been experienced by state lotteries.
Proposed federal legislation would regulate online poker and establish new methods and tools to enforce laws against casino-style games and Internet sports wagering.
Proposed federal legislation would allow states to “opt-out” of regulated online poker which means any state that fears impacts on their lottery can simply opt out.
If substitution has already occurred, lotteries would benefit from the new federal legislation that would remove the illegal sites that are currently in the U.S. marketplace.

To view the full report please visit http://www.fairplayusa.com/sites/default/files/FairPlayStateLotteriesRep...

National Association of Police Organizations Commends Efforts to Give U.S. Law Enforcement Tools to Crack Down on Illegal Gambling, Protect Consumers

Admin — Thu, 17 Nov 2011 22:23:31 +0000

The National Association of Police Organizations (NAPO) recently commended the efforts of FairPlayUSA to give U.S. law enforcement agencies the resources needed to crack down on illegal gambling operations and to protect children and American consumers who choose to play Internet poker.

“Americans who want to play poker online deserve a strictly regulated, safe industry here in the United States,” said Marisa McNee, executive director of FairPlayUSA. “It's time to modernize the Wire Act of 1961 and the law enforcement tools necessary to put the illegal, offshore sites out of business and protect children and consumers. We appreciate NAPO joining the discussion and supporting our efforts. Their support demonstrates the growing consensus about the need to act on this important issue. We look forward to working with NAPO and other advocates as we continue to inform people about the problems associated with offshore Internet gambling.”

The statement, referenced above, from William J. Johnson, executive director of NAPO is listed, in full, below:

"The National Association of Police Organizations (NAPO) commends the efforts of the FairPlayUSA coalition to give U.S. law enforcement agencies the resources needed to crack down on illegal gambling operations and to protect children and American consumers who choose to play Internet poker.

"Notwithstanding legislation passed in 2006 that was intended to stop Internet gambling in the U.S., millions of Americans continue to bet billions of dollars every year on foreign websites, many based in jurisdictions with little or no regulatory oversight.

"Recent actions by the U.S. Department of Justice to crack down on certain rogue gambling operations are laudable. However, as we have seen in the past, when companies that flaunt American law are put out of business, they are inevitably replaced by operators who may be even more unscrupulous.

''NAPO believes that the most realistic solution to this problem is by implementing effective licensing and regulatory procedures, coupled with vigorous law enforcement actions against illegal gambling operations. NAPO believes that this is the most practical means by which to thwart illegal gambling sites, protect American consumers and children, address problem gambling and crack down on money laundering and other criminal activity.

"We applaud FairPlayUSA and encourage other law enforcement organizations to join this growing coalition."

About NAPO:
The National Association of Police Organizations is a coalition of police unions and associations from across the United States that serves to advance the interests of America's law enforcement officers through legislative and legal advocacy, political action and education.

Founded in 1978, NAPO is now the strongest unified voice supporting law enforcement officers in the United States. NAPO represents more than 1,000 police units and associations, 241,000 sworn law enforcement officers, and more than 100,000 citizens who share a common dedication to fair and effective crime control and law enforcement.

Highly-decorated Former FBI Agent Joins FairPlayUSA Advisory Board

Admin — Tue, 15 Nov 2011 16:50:45 +0000

FairPlayUSA announced today that Jack Garcia, a highly-decorated former FBI agent with more than 25 years of investigations experience, has joined the coalition as a member of the Advisory Board. He joins a group that includes former federal judge and FBI Director Louis Freeh, former governor and first Secretary of Homeland Security Tom Ridge and child advocate and cyberlaw expert Parry Aftab.

“Jack further expands the exceptional group of law enforcement and advocacy experts advising FairPlayUSA about how to best address the growing problem of illegal Internet gambling and the need to pair enhanced law enforcement tools with a strict, transparent regulatory structure for online poker,” said Marisa McNee, Executive Director of FairPlayUSA. “We look forward to having him actively engaged in our education efforts.”

Garcia worked as an undercover FBI Agent in more than 100 operations, including infiltrating the Gambino crime family in New York for nearly three years – an investigation that resulted in the arrest and conviction of 39 mobsters, including top members of the family. His work also included investigations into political and law enforcement corruption, drug cartels, terrorism and national security cases. Jack currently serves as a guest speaker and lecturer at the FBI Academy.

“I’ve seen up close the role that illegal gambling plays in funding a whole host of other criminal activities and the power of the internet has given the problem global reach,” said Garcia. “I am very pleased to have the opportunity to relate my experiences and contribute to efforts to update the law to address the specific challenges law enforcement faces from illegal Internet gambling operations based offshore.”

Video: Consumer and family cybersafety issues expert Parry Aftab's testimony before Congress

Admin — Wed, 26 Oct 2011 18:11:49 +0000

Watch FairPlayUSA Advisory Board Member and consumer and family cybersafety issues expert Parry Aftab's testimony before Congress. Then click the "Tweet" or "Like" button to spread the word to your friends: Urge them to stand with us and sign the FairPlayUSA online petition!

Click here to watch the full video of the hearing on the C-SPAN website

Testimony from Former FBI Director Louis Freeh submitted to Subcommittee Hearing: Internet Gaming: Is there a safe bet?

Admin — Tue, 25 Oct 2011 16:12:15 +0000

The issue of illegal gambling and its impact on individuals, businesses and our country has been ubiquitous throughout the many different roles I have played in my career: working law school student, FBI agent, prosecutor, Federal judge, FBI Director and now private practice attorney. My perspective into the issue has differed throughout those forty years with each new role, but the main lesson I learned has not: without clear laws, strong regulation and adequate tools for law enforcement, illegal gambling – and today that increasingly means illegal internet gambling – can very easily put consumers at risk and support broader criminal enterprises that undermine a safe and secure society.

While my first exposure to gambling was as a law school student watching my coworkers play games on a Teamsters platform in Jersey City, it was when I was a young FBI agent that I first began to understand that true impact of illegal gambling. I was assigned early in my career to an organized crime squad focused, in large part, on enforcing illegal gambling statutes. Raiding wire rooms and taking numbers operations down seemed small time to me and other less experienced agents. But, the more experienced agents explained to us how the small bets we were trying to disrupt ultimately funded a huge criminal enterprise that included racketeering, organized murder and narcotics trafficking on a global scale.

I took the lessons about illegal gambling I learned as a FBI agent into the prosecutor’s office, where we focused extensively on using illegal gambling statutes to support Racketeer Influenced and Corrupt Organization Act (RICO) prosecutions against organized crime. It was in this role that I learned the corollary lesson about illegal gambling: if the illegal gambling statutes are not clear and do not provide effective tools for law enforcement, successful prosecutions become very difficult and the criminal enterprise can continue uninterrupted.

While illegal gambling has largely changed venues from the backroom to the internet since the decades I learned these lessons, the threats and ultimate impact is still the same. Today illegal internet gambling has ballooned into an industry on which Americans spend an estimated $4 to 6 billion annually. These billions of dollars flow almost exclusively to an estimated 1700 websites run by shady offshore operators, often outside the effective reach of U.S. law enforcement. This environment is rife with opportunity to defraud players and launder money for much more dangerous operations.

Consumers – and often minors – are most immediately at risk. As a father of six, I know how difficult it can be to monitor children’s activities and this problem has only gotten worse with the rise of wireless access to the internet. That statistic demonstrates that a large and growing number of children are gambling online. A recent Washington Post story found that “16 percent of college-age males — 1.7 million young men — gambled on the internet at least once a month.” The same story cited a 2008 study that found college students were twice as likely to gamble as older adults.” These statistics are reported alongside alarming stories about instances of massive fraud on some illegal gambling sites.

Addressing a growing threat that can mutate as rapidly as illegal internet-based gambling operated outside of the country is challenging in-and-of-itself for Federal law enforcement. But the challenge is even greater at present because the principal law covering illegal internet gambling – the Unlawful Internet Gambling Enforcement Act of 2006 (UIGEA) – while well-intentioned only goes so far in defining what is prohibited and assigns banks and financial institutions with enforcement responsibilities instead of law enforcement agencies.

The good news is that UIGEA offers a good platform that enhancements can make into a very effective law. The first such enhancement is to very clearly define what constitutes illegal internet gambling. This clarity can make UIGEA consistent with other statutes defining illegal gambling, as well as demarcate the difference between illegal internet gambling on games of chance and legal internet gambling on games of skill like online poker.

Online poker stands apart because it’s a game that millions of Americans play at home with friends and family, or even at charity fundraisers. Unlike most games, it’s played against other players rather than against the house and relies on set of practiced skills. Unlike most other games, it is also not defined as illegal in other statutes.

Clarifying which online games are illegal also creates an opportunity to establish a strict and transparent regulatory regime for online poker that allows adult consumers to play safely and securely, while ensuring accountability to tax and law enforcement authorities.

Finally, there is a need to reprioritize enforcement to move away from banks and financial institutions to appropriate federal, state and local authorities with strengthened authorities. When I left government service, I served as the general counsel for a very large bank. We spent lots of ineffective time trying to assist the government in enforcing criminal prosecutions and investigations of illegal internet gambling. Based on my experience there, and prior to it as FBI Director, I know very well that bankers are not the best suited for those purposes.

The amazing changes that have taken place in both the internet and the global financial transactions system since UIGEA was passed in 2006 offer incredible challenges, but also important opportunities to combat illegal internet gambling and regulate online poker. But, to take advantage of those opportunities the law must be updated to incorporate some fundamental changes that provide vital clarity and rational legal authorities.

This Hearing represents an excellent way to begin the consideration necessary to pursue those changes. I look forward to continuing to be a part of this dialogue going forward.

Statement By The National District Attorneys Association on Combating Illegal Internet Gambling, Creating a Strong Regulatory Framework for Legal Online Poker

Admin — Mon, 24 Oct 2011 17:18:11 +0000

"The National District Attorneys Association is encouraged by the efforts of Former Governor Tom Ridge, Judge Louis Freeh and FairPlayUSA to combat illegal internet gambling and create a strong regulatory framework for legal online poker.

"In the current environment, law enforcement officials and prosecutors lack the tools necessary to put the illegal offshore sites out of business and protect consumers and children from the operators who engage in illegal activity. As the oldest and largest professional organization representing criminal prosecutors in the world, we are pleased to see a group like FairPlayUSA dedicated to protecting the public and calling on Congress to provide the tools necessary for law enforcement—not financial institutions—to crack down on illegal Internet gambling."

About the NDAA:
The National District Attorneys Association is the oldest and largest professional organization representing criminal prosecutors in the world. Its members come from the offices of district attorneys, state's attorneys, attorneys general, and county and city prosecutors with responsibility for prosecuting criminal violations in every state and territory of the United States.
http://www.ndaa.org/

National Journal Tech Daily Dose: Energy And Commerce Panel To Examine Net Gambling

Admin — Wed, 19 Oct 2011 12:45:05 +0000

By Juliana Gruenwald
National Journal
October 19, 2011

It looks like supporters of fully legalizing online poker may get a chance to make their case before Congress.

The House Energy and Commerce Subcommittee on Commerce, Manufacturing and Trade has scheduled a hearing for next Tuesday on Internet gambling. While the hearing is not specifically focused on online poker, the panel will likely discuss legislation introduced this summer by Reps. Joe Barton, R-Texas, and Barney Frank, D-Mass. The measure has been referred to the subcommittee.

Barton's bill would authorize online betting on poker and direct the Commerce Department to set up a licensing and consumer protection regime. While playing poker online is not illegal, it is unlawful to bet, according to Barton.

Supporters argue that millions of Americans already play poker online but often do so on offshore sites that offer few consumer protections. The American Gaming Association has pointed to the lawsuit the Justice Department filed last month against Full Tilt Poker, which was accused of cheating its members out of millions of dollars, as an example of why Congress should legalize and regulate online poker.

Congress enacted a law in 2006 banning payments for online gambling and requiring payment processors to block payments for online bets. The Financial Services Committee in the last Congress approved legislation offered by Frank, who was chairman of the panel at the time, that would have essentially unraveled that law.