The National Gambling Impact Study Commission held meetings in Washington, D.C. March 18 and 19th. The meeting on the 18th held some interesting developments for the Commission in general and for internet gaming in particular.
Jay Hickey of the American Horse Council injected himself squarely into the internet debate. In oral testimony, he called for a respect of states' rights, as least with regard to technologically enhanced pari-mutuel betting. He specifically asked for a carve-out for horse racing on the net. This enraged Commissioner Leo McCarthy (who at the Regent University hearing, called for a total ban on internet gaming -- with no exceptions).
In yet another effort to look at verification models for players, Hickey also talked about using social security numbers as a reference point for eligibility to gamble. Specifically, he said that social security numbers could be the basis for determining residency, and that access to gaming products could be granted only to those whose social security numbers corresponded with states where such gaming is legal. (How that would be done in the event of relocation was not clear.)
The Internet Service Providers (ISPs) were also heard from. Ralph Simms of the Computer Internet Exchange (CIX), which is the trade association for the smaller ISPs, made the case very clearly that it is technologically difficult (if not impossible) to use the ISPs as a filter for American consumers. While the CIX representatives said they would block illegal materials, the easy change of URLs limits the effectiveness of such a tactic. Even if blocking could do the trick, CIX people said they were concerned that nongaming sites could be blocked unintentionally. After all of the testimony from CIX, Internet Subcommittee Chairman Bill Bible appeared to
finally understand just how difficult an ISP-enforced ban would be.
Unfortunately, the realization that the ISPs are not the ideal solution for the internet gaming conundrum has changed the course of debate. A specific concern is the fact that the commission now opened a discussion of the credit card industry. There was talk of recommending that legislation be developed which would statutorily limit the ability of internet operators to use wire services and credit cards for payment. Valerie Rice, the commission's internet
research actually discussed restricting wire transfers sent to offshore banks, as well as known gaming sites. The commission, however, did not come to a final conclusion on this specific issue.
The Commission then turned to the representative from the National Governors Association (NGA), Mr. Ray Scheppach. Mr. Scheppach stated in response to a question that the NGA opposed internet gaming, whereupon Commissioner Losure posed the following to him (paraphrased): "It's my impression that the governors oppose internet gaming and internet commerce in general because they haven't yet figured out a way to tax and regulate it, but when you do figure that out you will embrace and endorse internet commerce and that will apply to internet entertainment
including gaming?"
Scheppach began to respond by answering that a governors' working group was already trying to formulate a uniform state taxation system for internet commerce, and that when their work was complete the NGA would request congressional legislation to implement it. As he was about to turn to the second part of the question (in regulation of net gaming), he was interrupted
by another commissioner who led him to an unrelated subject. Unfortunately, Scheppach never addressed whether with regulation and taxation systems in place, the governors would embrace internet gaming.
On Friday, March 19, the NGISC is set to debate the scope of prohibition, i.e., total or broad with carve outs for pari-mutuel, fantasy sports, state lotteries, etc.
If you're also following some of the other debates raging in the Commission, you might be interested in this one. The NGISC heard the results of a report it commissioned on the issue of problem and pathological gambling (at a cost of $1.2 million). The report stated that 'by and large, problem gambling is not at the level previously thought.' Specifically, the commission found that the problem gaming rate was approximately 2.4%. Equally important, the report said that problem gaming among minors was virtually nonexistent.
This report put the commission into a frenzy. The results were not what many had hoped (in validating claims that a problem gambling epidemic is ongoing). As such, the commissioners were put into a box: either they have to accept the findings and lose a rhetorical wedge issue or admit that the study is flawed and was a waste of federal resources.
By and large, the commission took to the later position. What occurred was truly surreal. Many of the commissioners, lead by Dr. Dobson, began attacking their own report. Dobson actually said that he could not support whatever report is to be issued if it incorporates the findings of the problem gaming survey. (That is because he has stated in one of his missives that problem gambling, particularly among kids, is already at epidemic proportions.) As such, expect Rev. Dobson to write a minority/dissenting opinion as part of the final NGISC report.
The American Gaming Association, the trade association for land-based casinos, has issued a press release reiterating the numbers reported to the commission, and thus, claiming that problem gambling is being successfully addressed by the casinos. We hear made that the AGA's use of the numbers to polish its own image made NGISC Chairman Kay Cole James actually curse in public. (we think she said "gosh darn it".)
Stay tuned for more emanating from DC in the next week.