Frank makes his case for UIGEA repeal in Congressional hearing

3 December 2009

Rep. Barney Frank (D-Mass.) made his case today for repealing the UIGEA and creating regulated online gambling environment in a House Financial Services Committee hearing in Washington, D.C.

"The notion that this Congress should tell millions of adult Americans that we know better than they what they should with their own money on their own time on their own computer seems to me to be a very grave error," said Frank, who chairs the committee.

"It is true if things are the Internet, there is the possibility that underage people can get at them," Frank said in his opening remarks. "There are a whole range of things on the Internet that we would not like underage people to use... The notion that because some people will abuse something, you prevent everybody from doing it, is as great a threat to the liberty of the individual as any philosophy I have seen."

Frank also criticized Republican opposition to repealing the UIGEA, saying it was incompatible with conservative philosophy.

"I am struck by frankly what seems to be a inconsistency on the part of some of my conservative colleagues who bemoan the nanny state, who talk about limited government, who urge the government to stay out of people's lives, who also argue that the Internet ought to be a free of restrictions, but who then single out the Internet for restrictions on personal choices to be made by individuals," Frank said.

As expected, Rep. Spencer Bachus disagreed with Frank, and chastised the committee chairman for delaying the implementation of the UIGEA.

"These regulations should have been finalized and implemented two years ago," said the Republican from Alabama. "It's time to stop delaying the will of the great majority of this Congress and the American people. Quit the foot dragging and enforce this law."

Bachus also took a new tack in his arguments and attacked the integrity of online gambling itself through a letter from Shawn Henry, the assistant director of the FBI's cyber division.

"Technology exists to manipulate online poker games," wrote Henry. "Technically, the online poker vendors could detect this activity and put in place safeguards to discourage cheating, although it is unclear what the incentive would be for the vendor."

In a "rapid response" memo posted after today's testimony, the Poker Player's Alliance noted the fallacy in Henry's argument.

"The largest poker sites all use software to detect collusion," the PPA said in its response. "If a site is subjected to allegation that players are cheating, few players will play on that site."

"The letter misconstrues much about the current state of online poker, but it does so in a way that clearly makes the case for why federal oversight is necessary," added PPA Executive Director John Pappas.

WiredSaftey, a non profit organization dedicated to improving digital safety and privacy, echoed Pappas' thoughts and said regulation provides the best opportunity to protect consumers.

"The status quo offers no meaningful assurances that consumers will be protected," WiredSafety Executive Director Parry Aftab said in testimony before the committee. "[T]here are a number of technologies routinely used in other industries that were easily adaptable to online gambling sites. They are real, proven and in use today. They are also improving by the minute."

Aftab, along with Harvard professor Malcolm Sparrow, also released the results of a new study that looked into the potential impact of regulating online gambling. The study, conducted by Sparrow and commissioned by WiredSafety, found regulation is the best tool to mitigate the social harms of gambling.

"The establishment of a well-regulated industry under U.S. jurisdiction would offer far better protection against online gambling's potential social harms than outright prohibition," Sparrow said in his testimony. "Combining a thoughtful regulatory scheme with education, technology tools, and support appears to be the most effective means of handling the realities and risks of online gambling in the United States...In the end, consumers in the United States would be better protected than they are now."

A markup session for H.R. 2267, which would repeal the UIGEA, has not been scheduled.

Vin Narayanan

Articles by Vin Narayanan is the former managing editor at Casino City and has been involved in the gaming industry for over a decade Vin is currently based in Hong Kong, where he runs his own consultant group and works as head of gaming and public relations for Mega Digital Entertainment Group.

Before joining Casino City, Vin covered (not all at the same time) sports, politics and elections, wars, technology, celebrities and the Census for, USA WEEKEND and CNN.