Liberty MavenIs Regulation of the Online Poker Industry the Answer?
May 6th, 2009 9:02 am | by Mike Miller | Published in Big Government, Constitution, Free Market, Individual Responsibility, Internet Regulation, Liberty, Market Regulation, Politics, Ron Paul, congress, law | 21 Responses
I adore the all-American game of poker. I’ve been playing it regularly for over a decade, and as a strong, free-market libertarian, I believe the government should have no role in it. (Certainly there’s no mention of poker in the Constitution).
But given the overreaching federal government we currently have, there have been numerous attempts to limit and/or ban the playing of the game, whether it be live or over the Internet. Often, such bills are passed by slipping them into “must-pass” bills, like when the UIGEA was snuck into the otherwise unrelated SAFE Port Act at the last minute.
In response, the Poker Players Alliance (PPA) was created. And several high-profile players, for whom I have great respect, such as Howard Lederer, Chris Ferguson, Andy Bloch, and Victor Ramdin got involved by campaigning and testifying in Congress on the subject. When the PPA was first created, I was happy to join, and I paid to become a registered member.
The main argument that the PPA should be making, from my point of view, is twofold:
- Poker is primarily a game of skill, not a game of chance. Therefore, many of the “gambling” laws (which have language specifically referring to “games of chance”) do not apply.
- The Federal Government has no Constitutional authority over games adults play, period. And prohibiting businesses of any kind on moral (or any other) grounds is blatantly unconstitutional and immoral.
The PPA does a great job arguing the first point. Even some state courts, such as Pennsynvlania and Colorado have agreed.
However, with respect to the second point, the PPA is decidedly not taking a libertarian stance. Indeed, their main strategy seems to be to cozy up to government and appeal to its instinct for control to convince it to regulate poker instead of banning it, because, heck, a lot of money can be made by doing so.
Indeed, in talking with proponents of the PPA’s approach, the general consensus is that the choice is between prohibition and regulation. But I don’t see either as a positive choice long-term. What about freedom?
In elections we often hear about voting for the “lesser of two evils”, and I always remind people that when you do that, you will get evil. Regulation and prohibition are both evil, and neither should be tolerated.
The PPA is basically saying to the government, “It really sucks that you’re sticking your fat nose into a private industry and interfering with our revered pastime. But to satisfy your hunger for power and control, we will agree to let you regulate and tax us if you agree to keep it legal here.” From my point of view, the PPA is selling out.
Some will say that that argument really boils down to the age-old libertarian “purist” vs. “pragmatic” viewpoints. My view is “purist” in that I am not willing to compromise on liberty. And some say PPA’s view is “pragmatic” because in the real world the government isn’t likely to suddenly become hands-off.
But I disagree that the PPA’s stance is pragmatic, or even smart, and here’s why. If we push for regulation (which is not a legitimate function of the Federal Government), then we are condoning government’s intrusion into private enterprise. If we allow them to tax online poker sites, it will only allow the government to become bigger. That’s the absolute last thing we need.
And everyone knows that once you open the door to regulation, it will never be closed. I cannot fathom how regulation could net anything truly positive.
I cannot help but to be turned off when I see headlines such as It’s Time to Insist on Placing Online Poker Within the Reach of U.S. Law. The federal government is not your friend. It is the enemy here. Stop inviting them in.
U.S. licensing and regulation of the online poker industry are needed to mandate age and identity verification, to require providing of services and self-exclusion lists for those with excessive gaming habits, and to provide consumer protections. Poker sites comply voluntarily now, but licensing and regulation would give U.S. laws the teeth needed for enforcement. Licensing and regulation would also provide for collection of taxes and licensing fees from sites, as well as income taxes from winning American players. Most importantly, licensing and regulation would move a significant part of the industry onshore, bringing jobs and revenue with it.
Online poker sites do not need regulation! They’ve been doing a fine job regulating themselves over the past decade or so. Besides, why would anyone think that bureaucrats would do a better job? Consumer protections? There’s no reason to believe they would “regulate” any better than they have in the financial world. If we invited them into control us, we’d end up paying through the nose for additional red tape that will have zero positive benefits in the long run. That’s how it works every time.
Proponents of the PPAs strategy will argue that if we don’t encourage the Feds to regulate, they will move forward with an outright ban. But then they often say things like:
Even if prohibition were attempted, it would be guaranteed to fail. There are too many motivated poker players who would find ways to play.
Regulators, legislators and financial institutions are all warning that UIGEA is unenforceable.
Indeed, when the UIGEA attempted to make it difficult to fund online poker accounts, motivated players found ways to make it happen. If a ban would be doomed to failure, why push so hard for the Feds to come in and impose rules and collect taxes?
Here are a few more bullets from proponents of the PPA’s stance:
Only through meaningful regulation, not prohibition, can we ensure fairness of the game, provide protections for children, and provide services for problem gamblers. And if taxed, significant revenue could be raised for federal and state governments without increasing taxes on citizens.
Are we really so worried about the “fairness” of the game right now? Sure there have been scandals on lesser-known poker sites, but the main sites such as Full Tilt Poker, PokerStars, and others are all audited by third-party services such as BMM International. And as previously mentioned, the government certainly doesn’t have a very good track record of providing “consumer protection” (nor should it be in the business of doing so).
U.S. licensing and regulation will mandate verification of the ages of the participants. Sites comply voluntarily now, but regulation will give U.S. laws the teeth needed for enforcement. It will also provide protections for those with excessive gaming habits, including mandated use of self-exclusion lists.
Do we really need the nanny state to watch over those who may have a gambling problem? No, this is just more more of what the government should have no role in.
Licensing and regulation will provide for consumer protections while stimulating the American economy and generating tax revenue and licensing fees.
Stimulating the American economy? There’s certainly not enough room in this article to point out the Keynesian fallacies of stimulating the economy through government action. Quite simply, it doesn’t work.
U.S. licensing and regulation of online poker will allow American companies to participate in the world’s Internet gaming market, bringing needed business and jobs to America. All a prohibition can do is send U.S. jobs and money abroad.
I agree that prohibition has sent business overseas, and that’s a bad thing. So we should argue against this travesty, not inviting more government control. Two wrongs do not make a right.
Here are a few more items from a FAQ by a strong PPA proponent who calls himself TheEngineer:
2. If online poker is regulated, won’t the government just tax us too much?
The way to get taxed too much is to NOT stand up for our rights. After all, U.S. based B&M casinos aren’t going to just watch offshore competition compete against them. Surely they will push for entry into the market, and their typical way in is via promises of tax revenue.
PPA promises revenue too, but that revenue stream is primarily driven by increased business in the U.S. plus improved tax compliance, and is a byproduct of giving us our rights.
First of all, we’re already taxed too much. How is begging to be regulated standing up for our rights? What about our right not to be regulated, to be free of government interference? To “promise tax revenue” is to get involved in dirty politics. It’s disgusting.
3. Aren’t we better off without government involvement? Shouldn’t we just stay quiet?
When we followed that strategy, we lost votes in Congress by 317-93 (HR 4411, the bill that became UIGEA) and 90-10 (an earlier Senate vote). Congressmen acted like no one in America supported the right to play. It’s likely that they heard from only a few Americans who did. Many poker players feared clear legalization and stayed quiet, hoping things would remain as they were then, IMO.
I have bad news. Things cannot stay as they are today. If they could, sites wouldn’t be funding and lobbying for clear legalization. There is absolutely no way our government will continue to permit offshore sites to offer services in America while barring U.S. based ones from doing the same. Something will give. If offshore sites continue to serve Americans and poker players remain quiet on purpose, IMO either an effective prohibition will be passed or U.S. based interests will be allowed access. The status quo is simply unstable.
The reason we can access these sites today is not due to people staying quiet, hoping things will stay the same. Rather, the status quo exists because a bunch of people stood up for their rights, stopping the banners in their tracks.
I recommend we keep telling Congress that we want our rights. Fighting back has let Congress know that many Americans want their freedom. It has also resulted in greatly improved media coverage.
Again, I’m all about telling Congress that we demand our rights. But playing politics and begging to be controlled in lieu of having a complete ban passed is not the path to freedom.
4. I like things the way they are now. Why change?
Again, the status quo is unstable. The U.S. simply has no incentive to allow offshore sites to offer online poker while prohibiting onshore sites. Something will have to give. Hopefully it will give in our direction.
There’s really no way U.S. gaming interests will wish for the status quo to continue. They’ll want either a piece of the pie or a real prohibition to stop the competition. If they have to get clear legalization without our help, they may use their tried-and-true model of buying in with excessive taxation. With the grassroots efforts of poker players, we can all fight for this on the basis of Internet freedom, and have tax revenue act as an additional benefit only.
Dirty, disgusting politics. I, for one, will not fight for regulation, for more government control. We should be fighting for our rights, yes — for our rights to be free from government meddling. Internet freedom doesn’t include any form of government regulation.
Regulated, legal online poker beats no (or very limited) online poker, which is what the 317-93 HR 4411 vote told us was coming if we didn’t come up with an alternative. Otherwise, why would a libertarian like Ron Paul cosponsor these bills?
Ron Paul expressed it best when he said regulation is preferable to prohibition. Like Dr. Paul, I prefer no government interference to regulation on general principle, but that’s not the world in which we live.
Ron Paul is about as close to a libertarian as you can get in an elected representative. But he’s still a politician. And I vehemently disagree with Dr. Paul’s stance on this. Supporting government regulation is not a libertarian stance, period. Even if it’s a more palatable outcome than prohibition, the PPA’s stance is playing with fire. We should not be condoning government interference, and enabling government’s growth through additional taxation.
So what should the Poker Player Alliance be doing? It should be standing up for our right to be free from unconstitutional and immoral taxation and interference by the Federal Government.
There’s no provision in the Constitution that allows the Federal Government to be the Moral Police, or control private business in any way. The PPA should campaign the federal government on these grounds to completely repeal the UIGEA (and replace it with nothing). To encourage federal regulation would only be reinforcing the fallacy the Feds have the right to do so.
Since some states may choose to regulate, ban, or prosecute poker players, the PPA should then focus its resources on combating these immoral acts, and work to overturn bad laws using the “poker is a game of skill” argument.
I have seen the PPA put up excellent fights against ridiculous state laws and come to the aid of those who have been caught up in raids on home games, and for this I’m quite appreciative. But I’m quite disheartedned when I see them get ensnared in the federal government quagmire and push for government intervention into private business as a “solution”.
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May 7th, 2009 at 4:49 am (#)
Once they tax online poker that will open up the door for other online taxation.
Non-poker players should be concerned about this as well.
May 7th, 2009 at 5:12 am (#)
Thank you for your comment and your support.
July 12th, 2009 at 1:30 am (#)
the only way to insure a fair deal is federal oversight and I dont mind paying taxes on winnings so bring it onand soon
July 12th, 2009 at 1:47 am (#)
Hopefully you're in the minority with that kind of shortsighted and socialistic thinking.
August 15th, 2009 at 9:15 pm (#)
Very good article. I have long viewed the PPA as a scam, designed to milk money out of poker players and set themselves up as a permanent lobby. They don't want UIGEA to be totally repealed, because they would mean the PPA is no longer needed. Instead, they'd rather drag online poker into a regulatory maze, which they would then offer to help poker players navigate — for a price, of course. Typical Beltway con artists masquerading as "grassroots activists".
August 30th, 2009 at 12:47 pm (#)
Mike,
First of all, sorry, but I'm disappointed that you didn't send me a message on this article and ask for an opinion or at least give me a heads-up to comment. I do think you cherry-picked what I had to say. Anyone who wants can read it for themselves at http://poker.townhall.com .
Secondly, LOL at poker players having to be the sacrificial lambs for an all-or-nothing approach. We've been losing our liberties one at a time, and that's how we'll win them back. We lost the 2006 vote 317-93. 317-93! Now you suggest we fight a losing fight while the DoJ seizes our funds and states continue to go after our right to play???
August 30th, 2009 at 12:58 pm (#)
Ianga,
Wow, you guys really think Congress will just say "sure, let's get rid of UIGEA????" We'll they won't do that. Also, unfortunately our opponents will never go away, so PPA has no concerns that they'll be around IF the game is clearly legal.
We're not going to be anyone's sacrificial lamb.
August 30th, 2009 at 1:03 pm (#)
Meant to write: …so PPA has no concerns that they'll be around IF the game is made clearly legal via Congressional action.
August 31st, 2009 at 6:34 am (#)
Under the PPA's proposal, instead of having your funds seized by the DOJ, you'd have them seized by the IRS. Where do you think those billions of dollars (that you so proudly boast will be added to the government's coffers) will end up coming from? The pockets of the players, that's where. You talk about not wanting to fight a losing battle, but that's exactly what you're destined to do when you start compromising with the government.
Instead of arguing that people have the right to spend their money any way they please (assuming they don't harm anyone else), the PPA just accepts the idea that all the money really belongs to the government and then begs for the right to spend it on poker, because it's a "game of skill", as opposed to those evil games of chance, which must, of course, be forbidden. The PPA treats the right to play poker as if it's nothing more than a privilege granted to us by our overlords in DC.
Finally, LOL at saying that this legislation is designed to protect the consumer. Protect them from what? Themselves? The Big Bad Free Market?
Government regulation never protected anybody, except politicians and interest group lobbyists, like the bloodsucking parasites who run the PPA. What makes you think poker would be any different?
August 31st, 2009 at 11:37 pm (#)
Ianga,
You make it sound like the PPA wants to get taxed and regulated. That's not the case. We'd prefer Congress to leave us alone. They won't.
Sorry, but Congress has been after us for years, and regularly votes by margins of 4:1 or more to ban us. I've been to DC four times on my own dime to explain this to my Congressman and others with whom I could meet on why they should respect our liberties, but Congress isn't listening. Now the DoJ is after us, having seized $40 million in players' funds. LOL at the suggestion that we're not standing up for liberty.
The bottom line is that PPA protects the rights of players to play, and that's what we're doing. Pleas to be left alone have fallen on deaf ears, but a bill with some taxation is getting attention. I prefer reasonable taxation to prohibition. If you disagree, I have to ask if you're demanding prohibition of alcohol in your state. After all, that's taxed.
August 31st, 2009 at 11:39 pm (#)
That's ridiculous. We're screaming at Congress to repeal UIGEA. It passed the House 317-93. You really think something that passed by such a wide margin is easy to repeal?
September 2nd, 2009 at 3:04 am (#)
Huh? I thought I emailed you back in May, orginally, and told you I was writing the article. I didn't ask you for comment because I'd already seen comments from you (and now additional ones here) where you don't refute the claims made here but simply repeat the same points you've made many times. I simply don't agree that the PPA's route, of agreeing to regulation and taxation, is the pragmatic one. I did cherry pick what you said. I didn't want to quote all of your words. If any of your words indicated something other than what I said they do, please tell me which ones they are.
Your intentions seem to be different than mine. Yours seems to be "get something done to save some of our rights, even if it means losing others in the process". Mine is "demand all of our rights". You say my approach will be a losing battle. Probably, but at least we fought for the right things. We will have LOST if we invite the govt in where it doesn't belong, period. There is no middle ground. No reasonable compromise. Not when it comes to liberty. It is not pragmatic, in my eyes, to agree to play their game, to agree to give up liberties, in order to save some. That's simply idiotic.
September 2nd, 2009 at 3:17 am (#)
I didn't receive any email. It's too bad….we would have been a good discussion here.
We do have different goals. I don't dispute that. It's no slam-dunk either way. Ron Paul and other are with me; Rand Paul and others are with you.
Here's the letter I wrote to Dr. Rand Paul (for whom I'll definitely vote, of course):
Dear Dr. Paul,
As a Kentuckian, a liberty lover, and a proud supporter of Rep. Ron Paul, I am writing regarding your August 19th interview with Liberty Maven (http://libertymaven.com/2009/08/19/rand-paul-talk... Specifically, I am writing to ask you to reconsider your statement of opposition to legislation that licenses and regulates online poker pending in the Congress. After all, regulation is preferable – and more libertarian – than potential prohibition, which is why Rep. Ron Paul is cosponsoring it.
While I would personally love for the federal government and the Commonwealth to leave us alone and let us play, the fact is that Congress has consistently opposed this. The House has continually voted against unregulated, untaxed online poker and gaming by wide margins. This most recently happened in 2006, when we lost the HR 4411 vote 317-93. The Department of Justice has even started targeting our funds. At the state level, the Commonwealth is attempting to seize the domain names of 140 online poker and gaming sites.
It seems there is a less than 1% chance for federal and state recognition of unregulated, untaxed online poker, but perhaps a 50% chance of getting licensed and regulated online poker done. I realize some would expect Kentucky's poker players simply to give up on online poker, but I do not believe that would do anything to further the cause of liberty. In fact, a successful prohibition would be seen as a victory of statism over liberty, and would do nothing to preserve Internet freedom.
What's important to me is your support for my rights. Please respond to this letter and let me know if you will support my freedoms. I will be watching your actions on this issue closely. I hope that I, along with my over one million fellow Poker Players Alliance — including over 13,000 in Kentucky — can count on your support.
Thank you for your consideration.
In liberty,
Rich Muny
PPA Board Member & KY State Director
http://poker.townhall.com
September 2nd, 2009 at 3:24 am (#)
>
> You make it sound like the PPA wants to get taxed and regulated. That's not
> the case. We'd prefer Congress to leave us alone. They won't.
And since they won't, you agree to be taxed and regulated. You ask for it, and trumpet it as a good idea, in fact. I find that disgusting.
> I prefer reasonable taxation to prohibition.
I don't believe there's any such thing as "reasonable taxation". All taxation is theft, plain and simple.
> If you disagree, I have to ask if you're demanding prohibition of alcohol in
> your state. After all, that's taxed.
That makes absolutely no sense whatsoever.
If something is taxed, then I should demand be banned instead?
That's going exactly the wrong way.
I demand that the government lift all taxes.
My demands fall on deaf ears, yes. But I cannot abide by any unethical behavior, whether it be taxation or prohibition.
September 2nd, 2009 at 3:36 am (#)
As you said, we have different approaches.
> That makes absolutely no sense whatsoever.
> If something is taxed, then I should demand be banned instead?
That's the choice for online poker. The choice is ultimately between taxation and prohibition.
September 2nd, 2009 at 3:43 am (#)
That's the choice the tyrannical government has given us. One you've accepted. I do not accept it. People need to wake up, stand up for our rights to be free from government intrusion at all levels. Do I see this happening tomorrow? No, but it's still the right fight. Just because it isn't likely the government will suddenly relent, and it isn't likely the ignorant populace will suddenly understand what true liberty means, it doesn't mean that agreeing to, accepting, and asking for taxation and regulation is the answer. It's not the answer for me, or for anyone who values true freedom. The first time we agree to (ask for, demand) unethical behavior from our government, it sets the standard, the baseline, for future negotiations (as thought liberty is negotiable). And we're all fucked.
September 2nd, 2009 at 3:46 am (#)
>And since they won't, you agree to be taxed and regulated. You ask for it, and
> trumpet it as a good idea, in fact. I find that disgusting.
I didn't say it's a "good" idea. I said it's preferable to prohibition.
September 2nd, 2009 at 3:54 am (#)
>
> I didn't say it's a "good" idea. I said it's preferable to prohibition.
>
We're mincing words here.
The bill the PPA, Ron Paul, and others is pushing set up regulation. You say this bill is a good idea. Hence……..
Yes, from an absolute standpoint regulation isn't as evil as prohibition. But they're both evil, and both should be fought against.
Your argument is akin to saying "John McCain is less evil than Barack Obama, so vote for McCain". If you vote for evil, you get evil….
In your letter to Rand Paul, you wrote: "regulation is preferable – and more libertarian – than potential prohibition". You're using a word here where it doesn't belong. There's *nothing* libertarian about regulation. Again, it may be slightly less "evil" than all-out prohibition, but I do not want either, at all costs.
September 2nd, 2009 at 4:05 am (#)
That's a good fight to fight, but I don't think America's poker players wish to be pawns (participants, perhaps, but not pawns) in this struggle. After all, the issues you mention are far broader than poker.
September 2nd, 2009 at 4:35 am (#)
Excuse me, I am a poker player. (I play in a home game and online regularly). And I do not agree with your views and I do not support the bill in question. Yes, the issues I mention are broad, and they apply to poker as well as every other aspect of our lives.
September 2nd, 2009 at 5:13 am (#)
These aren't "my views." Rather, these are views articulated in the PPA mission statement. The mission statement is located at http://theppa.org/about/mission .