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Little Risk, Big Rewards

Six measures that take the risks out of online poker

During the past several months, I have used this column to call attention to the pressing need for establishment of federal guidelines and state licensing and regulation of online poker. The fact is, there are still millions of Americans playing online poker and hundreds of companies breaking U.S. law by taking their bets. Another fact that hasn’t changed is the increasing number of online poker sites that operate in jurisdictions with little, and in some cases, no oversight. There is a solution to this problem, and to do nothing is simply unacceptable.

I feel compelled to reiterate this message because the number of online poker companies flaunting U.S. law continues to grow, and Congress alone has the power to stop that growth.

Americans have proven time and again that they will continue to play online poker, even if their government tells them not to. The Justice Department has done a laudable job enforcing existing statutes and prosecuting operators that have broken the law. Yet, despite its recent crackdown, more than 1,000 real-money websites operated by some 300 offshore companies still target the U.S. market.

In short, enforcement is not enough.

Americans need to understand that an effective, U.S.-mandated-and-controlled regulatory system will protect American consumers, provide law enforcement with consistent guidelines to prosecute illegal operators and create thousands of jobs in the United States. The American Gaming Association believes the best approach is to implement strong federal guidelines that preserve the right of states to allow the licensing and regulation of online poker within their borders. This will ensure a consistent national regulatory and legal framework. To that end, the AGA has released a Code of Conduct for online poker companies.

The code outlines measures the AGA thinks are necessary to ensure that American consumers are playing online poker in a fair and secure environment provided by responsible operators. It was developed with the idea that online operators should follow the same thorough regulations the commercial gaming industry has followed for years. The AGA believes the code’s six principles will establish the type of online poker environment that Americans deserve:

First, as has been the case for decades in the traditional gaming industry, extensive background checks should be required to keep criminals out of the gaming business. This has been extremely effective at deterring illegal activity in bricks-and-mortar casinos and will be equally effective in curbing crime among online operators.

Second, operators must properly identify individual players. Not only is this mandatory to eliminate cheating and keep games fair, it will also assist operators in preventing (among other things) minors and individuals from states where online poker is illegal from gambling on their sites.

Third, regulators must regularly test and audit operators’ software to ensure fair and honest games. These tests and audits will keep online companies honest by independently verifying the integrity of the systems governing their games.

Fourth, every company wishing to obtain a license must have a rigorous player-exclusion process that will prevent play by minors, those from jurisdictions where online poker is illegal, players who have self-excluded, and players who have cheated or otherwise violated the law. 

Fifth, while studies have convincingly shown that online poker does not increase gambling problems any more than other forms of gambling, it is essential that online poker operators provide gamblers with easy-to-understand tools that can help them control and monitor their gambling and educate them about responsible play. Some of the functions necessary to make certain that players can help themselves include self-exclusion opportunities, setting time and dollar limits for play and immediate access to problem gambling help lines.

Finally, operators must undertake stringent anti-money-laundering procedures. By eliminating the ability of criminals to use online poker as a tool to “clean” money, operators will help government agencies in their law enforcement efforts. This can be done through sophisticated reporting, monitoring and barring of person-to-person transfers.

The technology that would allow operators to adhere to these principles already exists and is used in jurisdictions such as England, France and Italy where online gambling is legal, and by non-gaming organizations such as Major League Baseball, CBS and Apple, Inc. Such “real-world” application provides the gaming industry a level of certainty on the efficacy of the technological safeguards to be used in securing online poker.  

Licensing and regulating online poker will not just make American consumers safer; it will create jobs and revenue at a time when Americans need them most. Online poker is a multibillion-dollar industry, and the infrastructure surrounding it will create an estimated 10,000 American jobs. Moreover, once a well-designed system is in place in the U.S., regulated online poker will generate an estimated $2 billion in taxes every year. This is revenue that can help Americans everywhere.

However, it will take an act of Congress to ensure that the jobs and revenues associated with it are realized here in the United States. In this time of economic uncertainty, Congress must not miss this opportunity.

The AGA and its member companies firmly believe the Congress of the United States should strengthen the Unlawful Internet Gambling Enforcement Act, and that companies that intend to operate online poker sites in this country should adopt the Code of Conduct detailed above. The American gaming industry stands ready to work with Congress and the states to create a well-regulated and safe online poker environment for Americans. It is time now for Congress to pass legislation that allows us to do just that.

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