Online Poker Regulation, an Urgent Call by State Rep. Jim Kasper (long read)

Online Poker Regulation, an Urgent Call by State Representative Jim Kasper (R-Fargo): Why Not North Dakota and Why Not Now?

By: Will Gatten
Posted on May 19, 2005
© 2005 All rights reserved

Of how the Department of Justice interfered in the North Dakota legislative process to kill HB1509 and HCR 3035, the two bills that would have enacted legislation in that state to license and regulate the internet poker industry –created, promoted and sponsored by State Representative Jim Kasper from North Dakota- using misinformation and misleading quotes in an intimidation letter. Will the industry rise and call this bluff?

Atlanta, GA (PRWEB) May 19, 2005 -- Many industry experts estimate there are between 40 and 50 Million Americans currently playing poker recreationally, offline. Let’s stop right there for one second, sip on that… between 40 and 50 million people! The U.S. total population comprehends a little over 291 Million people; that tells you that a whooping 17% of the total population of the U.S. gathers round a table to play poker… what will happen when these people learn about the convenience and ease of playing poker online?

Poker is a pop culture phenomenon. It’s on Bravo, ESPN, FOX and the Travel Channel when you lounge in front of your screen on your Lazy-Boy at the end of the day; the voice on the radio talks to you about it when you’re driving to work; lifestyle magazines publish guides to playing poker online… In a society where people struggle to escape routine, they’ve found the rush of adrenaline that only a game of poker can give… and they’re seeking for it.

In a little bit less than 3 years from today, online poker is expected to have generated a total turnover of over $250 Billion and that mark might very well be pushed up to $275 Billion by 2012. How much revenue will this industry generate for the U.S. government, or any state in the U.S., in form of taxes? As of right now, Zero dollars… that’s right, Nada, Zilch! And why is that? Simply put, because as of today the online poker industry remains unregulated in the United States.

Why Should Online Poker Be Regulated?

As a family parent, how do you make sure that your teenage son or daughter, are not splurging the money in your credit card on an online poker game? What resources does a compulsive gambler have to avoid clicking away the funds that should be destined to ensure his family’s well-being?

Think about it: do you believe that simply because online poker is currently unregulated, people will stop playing poker online? If your answer is ‘yes’, you might want to reconsider that.

“Based solely on our conversion rates, we have reasons to believe that over 500 new players are joining an online poker room every day and those numbers would only include the American market” says Ryan Jacobs, Chief Operational Officer of SportsCrew.com, “these are people that had never before play a poker hand online…”

Those figures are only likely to increase from this point on. At that pace, it would seem like the most sensible thing to do in the U.S would be to regulate the online poker industry. Regulation would implement effective measures against:
- Gambling in populations under 18 years of age
- Compulsive gambling
- Lack of a taxation structure

And it would also bring:
- Revenue in form of taxes
- A significant source of employment for the American economy
- More control

And that’s precisely the powerful argument that N.D. State Representative Jim Kasper holds with the boldness and the courage that only a man of vision can have. He wants to bring the much needed regulation for online poker to North Dakota. He’s the intellectual father and prime sponsor of bills HB1509 and HCR 3035, the bills he introduced in the North Dakota legislature this year to license and regulate Internet Poker companies that would re-locate to North Dakota. HB 1509 set forth the rules to regulate, license and tax the industry and HCR 3035 was the constitutional amendment that would have allowed the people of North Dakota to vote on amending the State Constitution to make internet poker legal. “North Dakota [has set an important state precedent by introducing legislation that will protect players of this popular card game through sound and enforced regulations, and has the potential to make significant contributions to the state economy through taxes and operational presence on U.S. soil," says Representative Kasper.

So What Did Really Happen in North Dakota? What Killed the Bills?

After an enthusiastic and warm welcome in the beginning -when the House of Representatives voted 50-44 to pass both HB 1509 and HCR 3035- the legislation moved to the state Senate for hearing on March 8, 2005. In spite of compelling testimonies from various representatives of the online poker industry –who flew from around the world to Bismarck in support of Rep. Kasper’s legislation- the Senate voted to kill both bills as only three of the 47 senators voted to pass the bills. This twist of fate was caused by a letter sent to the N.D. Attorney General Wayne Stenehjem by the Department of Justice. The letter stated, among other things, that the proposed bills “could be in violation of federal laws."

Addressed to North Dakota Attorney General Wayne Stenehjem, and signed by U.S. Deputy Assistant Attorney General Laura Parsky, the letter by the Department of Justice was clearly a resource of intimidation. “That letter was full of misinformation and misleads,” says Representative Kasper, “it was nothing more than an intimidation technique by the Department of Justice, which claimed that bills HB1509 and HCR 3035 COULD be deemed illegal under the Wire Act… but that failed to substantiate that argument in a legal way”. And in spite of three separate legal opinions from renowned and respected attorneys from around the U.S. refuting the DOJ’s letter, the North Dakota Senate could not be moved to support the bills.

Attorney General Stenehjem’s Position

In a conversation with Rep. Jim Kasper, Attorney General Stenehjem stated that he did not initiate the phone call to the DOJ, they called him. He stated they gave him the same positions and arguments on the phone that they had given the state of Nevada and The Virgin Islands, in prior years on this subject. A.G. Stenehjem said to Rep. Kasper that he told the DOJ he was not going to relay any phone discussion to anyone and if they had concerns about what was going on in North Dakota, they should put their concerns in writing. That is what generated the DOJ letter. He then was asked by the press if there had been any correspondence with the DOJ and his office and that is when he had to release the letter. He said he would not have done so, unless he had been asked.

Rep. Kasper approached AG Stenehjem and asked him which –in his opinion- were the venues to be followed to implement the law, if the Senate had passed HB1509 and HCR 3035 and if the people of North Dakota would approve the Constitutional Amendment in June of 2006. “I would move to Federal Court to resolve the issue on the position the DOJ has taken regarding the legality of the Licensing and Regulation of Internet Poker in North Dakota once and for all” said AG Stenehjem to Rep. Kasper, “this is the step that any state will have to take, if and when a state passes a law like the ones we had in HB 1509 and HCR 3035”. A.G. Stenehjem further stated he is not fearful or against taking this step, he simply believes this is the proper step to take.

Representative Jim Kasper firmly believes he wouldn’t do anything to scuttle the rules and regulations, if the people of North Dakota approve the Constitutional Amendment. “Once the people speak, by approving the Constitutional Amendment, we as elected officials are bound to implement their wishes” said Rep. Kasper.

North Dakota, A Unique Opportunity


It is the firm conviction of Rep. Kasper that the online poker industry has the opportunity –right now- to win this issue by the vote of the people in North Dakota, simply by supporting an initiated measure in North Dakota. Under this approach, about 26,000 signatures of N.D. voters would be required to bring the question to the 2006 ballot in North Dakota. An initiated measure would allow a change in the North Dakota Constitution, in order to finally license, regulate and tax the online poker industry in that state. If the industry gives up on the process in North Dakota, it would have to start from scratch in some other state - if it ever wishes to have access to the US market in a regulated environment. Where would this industry find a Legislator who knows these issues better than State Representative Jim Kasper? Who’d be willing to engage in the battle in some other state?

Rep. Kasper is raising his voice out loud, he’s willing to put up the fight and persist in his purpose, even in the face of the current obstacles. But he also believes it’s crucial for the online poker industry to step to the plate and get involved right now. “Public corporations generally have long range plans in effect that are designed to increase market share and profitability. I can't think of any better place on earth to be investing in -than here in North Dakota- to increase sales and profitability for the long term. Prudent business practices would seem to point to the same conclusion,” said Rep. Kasper.

The Bottom Line


Despite what he has called the loss of a battle in the N.D. Senate, Representative Jim Kasper believes fervently the online poker industry can still win this war, even taking in consideration the intimidation techniques of the DOJ. The initiative is continually gaining momentum in North Dakota; the people are genuinely interested in it.

However, “without the support of the internet poker industry, I will not move forward” says Rep. Kasper. If the main online poker companies will have the courage to engage in North Dakota with the full sponsorship of a man who is willing to share his vision with anybody who's legitimately keen on doing business the right way... above board, Rep. Kasper is firmly convinced that real, tangible regulation within the U.S. jurisdiction has never been this close to fruition in the past; it is his hope that the main figures behind the most powerful online poker rooms will decide to support this initiative in North Dakota and endure the initial storm.

“I am puzzled by the seemingly lack of interest that has suddenly developed… It's like the faucet has shut off. [The industry operators should realize the tremendous amount of interest and excitement this issue has brought to the people of North Dakota,” says Rep. Kasper, “keep in mind that there are only 47 Senators and only 44 of them didn't get it. We have 650,000 people in ND and wherever I go -as well as wherever many of my legislative colleagues go in North Dakota- the people are stopping us and congratulating us on the bill and want to know how they can help to get this law passed…”

The question really is, and this is a big question: Is there really a desire by the internet poker industry to get this DOJ threat eliminated and to be able to do business in a state within the United States---North Dakota; or is what has been accomplish so far, as far the industry is willing to go?

This is an urgent call by Representative Kasper for the online poker industry to get actively involved in North Dakota; on one hand the industry counts with the prime sponsorship of a visionary legislator, the genuine support of the people of the State of North Dakota and a historic precedent, on the other hand you have an intimidation letter with no tangible legal background. The time to regulate and to take this online business model to new unexplored heights is now; let the online poker industry make a stand… one that will be decisive. Let your voice be heard! Contact and support State Representative Jim Kasper Today!

In the bold words of this man of vision and courage –State Representative Jim Kasper- “I'm sure you didn't think this would be easy. If it were, it would have been done already. To use a poker term, I sure hope you don't fold'em too soon. This intimidation letter by the DOJ is nothing more than a bluff and we NEED to call it; we’re holding the nuts.”

About State Representative Jim Kasper: for a comprehensive bio on Rep. Kasper, please visit the following website: http://www.state.nd.us/lr/assembly/58-2003/house/representatives/bios/jimkasper.html. Contact him on:
Rep. Jim Kasper
1128 Westrac Drive
Fargo, ND 58103
Phone: 701-232-6250
Fax: 701-232-0796
E-mail: jmkasper@amg-nd.com

As a family parent, how do you make sure that your teenage son or daughter, are not splurging the money in your credit card on an online poker game?

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Gee, I dunno, maybe the same methods you employ to keep your kid from buying porn with your Visa?

Think about it: do you believe that simply because online poker is currently unregulated, people will stop playing poker online? If your answer is ‘yes’, you might want to reconsider that.

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Think about it: do you beleive that regulating online poker will stop people from playing poker online? That it might stop kids from clicking 'yes' next to 'I'm 18' when they're not, from using mummy and daddy's CCs to fund their entertainment?

Those figures are only likely to increase from this point on. At that pace, it would seem like the most sensible thing to do in the U.S would be to regulate the online poker industry. Regulation would implement effective measures against:
- Gambling in populations under 18 years of age
- Compulsive gambling
- Lack of a taxation structure

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Let's call a spade a spade. Nobody gives a crap if the gamblers are 14 or 24. Nobody gives a crap if someone spends grocery money on poker tables. What they DO give a crap about is legit businesses making money without giving any to Uncle Sam. That we are seeing YET ANOTHER example of how the internet - and e-marketing specifically - are eroding the power of gov't to oversee our lives.

Maybe these politicians should spend their appently vaccuous time playing online poker themselves, rather than wasting everyone else's time trying to control it.

In 1996, the 104th Congress created the National Gambling Impact and Policy Commission (Public Law 104-169), whose purpose was to conduct a comprehensive study of the social and economic impacts of gambling in the United States. In 1999, the Commission recommended that Congress pass legislation and develop enforcement strategies affecting Internet Service Providers. Again, if such prohibitions were already in place, such legislation would be superfluous.

It has erroneously been suggested that there are three federal laws that prohibit online poker.

Federal Code section 18 USCS § 1955 (2003) prohibits illegal gambling where such gambling is a violation of law in the state where it is operating. By the words of this statute, there is no federal violation as long as the state sanctions online poker.

Similar to the Anti-Gambling Act, a violation of Rico requires a crime “chargeable under State law and punishable by imprisonment for more than one year.” This would have no application in North Dakota once legislation was passed.

Years ago I predicted that the 1961 Wire Act would not be found to speak to online poker. The reason is simple. There is a recognized, time worn format for analyzing a statute. First, we look to see if the words in the statute are clear and unambiguous. If the words are not clear, we move on to the legislative history, then we look at past construction of the statute, case law on point and finally, proposed amendments to the statute. What we find with regard to the Wire Act is as follows:

WIRE ACT TEXT: Title 18 USCS section 1084 (The Wire Act) speaks to the transmission of wagering information. Congress enacted this section as part of a series of legislation supporting a federal policy against organized racketeering.

Subsection (a) of section 1084 states in relevant part:

"(w)hoever being engaged in the business of betting or wagering knowingly uses a wire communication facility for the transmission in interstate or foreign commerce of bets or wagers or information assisting in the pacing of bets or wagers on any SPORTING EVENT OR CONTEST, or for the transmission of a wire communication which entitles the recipient to receive money or credit as a result of bets or wagers, or for information assisting in the pacing of bets or wagers, shall be fined under this title or imprisoned not more than two years, or both."

WORDS: The operative words of the statute are "SPORTING EVENT OR CONTEST". When we consider what activity the statute prohibits by its clear language, the plain words state that it prohibits certain activities relating to a SPORTING EVENT OR CONTEST.

When the plain language of the statute and case law interpreting the statute are clear, there is no need to go to the second step, which is to look to the legislative history of the Act. (In re Abbott Laboratories, 51 F.3d 524, 528 (5th Cir. 1995).

LEGISLATIVE HISTORY: If we look to the legislative INTENT and UNDERSTANDING at the time the Wire Act was enacted, the House Judiciary Committed Chairman explained, "This particular bill involves the transmission of wagers or bets and layoffs on horse racing and other sporting events." See 107 Cong. Rec. 16533 (Aug. 21, 1961).

GENERAL CASE LAW: Next, courts have already construed the statute as requiring a sports event. See United States v. Kaczowski 114 F. Supp. 2d 143, 153(W.D. N.Y. 2000) (Wire Act "prohibits … placing of bets or wagers on any sporting event or contest"); U.S. v. Marder 474 F.2d 1192, 1194 (5th Cir. 1973) (first element of statute satisfied when government proves wagering information "relative to sporting events").

CASE ON POINT: Finally, there has been a judicial determination regarding the precise question addressed herein. In the case of In Re Mastercard International, decided on February 23, 2001, the Honorable Judge Stanwood R. Duval, Jr. was faced with whether the Wire Act applied to online poker. The suit was brought by deadbeats who didn't want to pay their gambling debts so they brought suit against credit card companies alleging the credit card companies violated the Wire Act by allowing them to use the credit card to put money online at a poker site.

The judge analyzed the statute precisely as I have here and he concluded that the Wire Act only prohibited wagering on SPORTS EVENTS. "Comparing the face of the Wire Act and the history surrounding its enactment with the recently proposed legislation, it becomes more certain that the Wire Act's prohibition of gambling activities is restricted to the types of events enumerated in the statute, sporting events or contests." (Id. 132 F. Supp.2d 468, 482.) In 2002, the U.S. Circuit Court of Appeals in Louisiana affirmed the lower court’s ruling.

PROPOSED AMENDMENTS: Sine 1995, federal legislators have introduced amendments to the Wire Act in order to include poker. No such amendments would be contemplated if the Wire Act applied to online poker.

In sum, The Wire Act does not regulate on line poker playing because the WORDS of the statute specifically prohibit only sports betting, the LEGISLATIVE HISTORY indicates the statute was aimed at organized crime (specifically in the area of sports betting), CASE LAW construes the statute as applying to sports betting, the only CASE ON POINT to address the issue specifically found that the Wire Act does not apply to online gambling, and PROPOSED AMENDMENTS to the Wire Act demonstrate that legislators do not believe that the statute prohibits online poker.

“The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.” Laws relating to the health and welfare of its citizens usually fall within the purview of state law. Almost every state has some form of legal gambling, be it a casino, lottery, video, lottery terminal, horse wagering, bingo, or some other form of gambling. Traditionally, the federal government has stayed out of the gambling arena and left its regulation to the states. A respected Congressional Leader, House Majority Whip Tom Delay announced his opposition to proposed legislation regarding Internet gaming for fear that the legislation would diminish state’s rights.

There is no doubt that both the Clinton and the Bush administrations take the position that online poker is illegal. They allude to the Wire Act and other federal laws, but upon careful analysis not one legal expert agrees. Remember, since 1995 when the first online casino began operating, there has not been one single judicial ruling that online poker playing violates any federal law whatsoever; quite the contrary. The only judicial ruling available clearly holds that the Wire Act clearly speaks to sports betting, and NOT poker playing.

good read and well written Will....thanks for sharing it

"To use a poker term, I sure hope you don't fold'em too soon. This intimidation letter by the DOJ is nothing more than a bluff and we NEED to call it; we’re holding the nuts.”

There is no doubt that both the Clinton and the Bush administrations take the position that online poker is illegal. They allude to the Wire Act and other federal laws, but upon careful analysis not one legal expert agrees. Remember, since 1995 when the first online casino began operating, there has not been one single judicial ruling that online poker playing violates any federal law whatsoever; quite the contrary. The only judicial ruling available clearly holds that the Wire Act clearly speaks to sports betting, and NOT poker playing.

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Thanks.

Daaaaantez; whats upz kidz? Hope you're well and healthy, you and yours.

D2bets, thanks for stopping by. Never heard back from you, my man... hope you're having fun with those NBA totals.