This past Friday, the DOJ shut down internet poker titans Full Tilt Poker, Absolute Poker, and Poker Stars for alleged violations of the UIGEA. This bizarre little act of Congress was attached as amendment to the Safe Port Act back in 2006.
The UIGEA did not actually make internet gambling illegal. Instead, it made it illegal for financial institutions to knowingly process money transfers for online gambling. Although a few poker sites left the US market at the time, and there have been various hiccups in the processing of deposits and withdrawals from player’s accounts, the UIGEA for the most part had been a non-issue. Poker sites, especially Full Tilt, always found a workaround. They had set up tons of shell entities to make it appear as though player transactions were being processed for non-gambling goods and services. So, strictly speaking, the websites are in violation of the UIGEA. We can’t dismiss that they have been breaking the law. But with billions of dollars at stake, they understandably took the risk. Since players themselves were not at legal risk, the system worked just fine. Until Friday. Then the owners of the websites were charged with a lot of violations of the UIGEA, including money laundering.
Freedom-loving individuals can thank Republicans Rep. Jim Leach, Rep. Robert Goodlatte (R-VA), Sen. Bill Frist, and Sen. John Kyl for playing nanny-staters to thousands of online gamblers. However, you can also thank 409 members of the House and every single member of the Senate for passing the bill. Then again, it was attached to the Safe Port Act – yielding yet another reason why procedure needs to change to forestall the attachment of amendments that have nothing to do with the bills they are attached to.
We usually expect Democrats to place restrictions on our freedom, yet there is this curious sect of Republicans that somehow feel they can legislate morality. But even the moral argument for the bill makes no sense. In fact, the moral hypocrisy of the bill is beyond outrageous. The authors of the bill did nothing about state lotteries – a sad, sick method of regressive taxation that has been proven to harm the poor. Yet this practice always gets a pass because of the revenue it generates for each of the states. This made the bill’s passage all the more mystifying. Why not tax gambling revenues instead and legalize the gaming?
The motivation for the bill literally makes no sense. As my old math teacher, a devotee of Lewis Carroll, once said, “Worthy of a trip down the rabbit hole!”. Then again, since when does government make sense?
Online gambling, like the lottery, is a choice. At least with gambling, one actually has a chance at winning. Winning the lottery, on the other hand, is a miracle. And with poker, the argument over whether it is a game of chance, skill or both is ongoing. Professional poker player Annie Duke insists that it’s a game of skill. Freakonomics author Stephen Dubner says otherwise.
Frankly, it doesn’t matter. The point is that engaging in any of these activities is a matter of personal choice.
Furthermore, the legality of gambling is a state issue. Why are the Feds involved? And what about these Republicans that are involved? What drove them to slap this bill in there? For Heaven’s Sake, the mere thought that Barney Frank – yes, THAT Barney Frank — has tried to strip out the UIGEA from the Safe Port Act for several years reminds us never to judge any given politician. It’s always possible that the Bizarro World Wormhole can plunge us into an alternative universe when we least expect it.