The Pros Speak: Chris Ferguson

Posted by The Captain | Filed under The Pros Speak

Following the recent UIGEA hearings in Washington D.C., there’s been more positive coverage (a bit of light at the end of the tunnel?!) of the state of affairs for online poker. In brief, it’s been clearly established that there isn’t an effective method in place for blocking transactions that fund something called “illegal wagering,” banks can’t and won’t effectively police this, and no one has been able to identify exactly what unlawful Internet gambling is. On the whole, it’s extremely vague and incredibly ineffective at achieving any positive end.

Chris Ferguson was in D.C. for the proceedings, and he definitely has some thoughts on what took place. We were able to sit down with Chris and a tape recorder a couple of days after the Senate hearing, and get his take on the current state of affairs for online poker. Here’s his opinion – in his own words:

Everything considered, these regulations are bad – the law is just bad and it doesn’t work. The fact that the UIGEA is so ambiguous has really complicated things. One of the recent big issues has been the involvement of financial institutions in enforcing current regulations. What they’re asking the banks to do is to look at every single state and determine whether their laws against online gaming apply to poker. This is a huge problem.

Some states specifically mention “games of chance.” Is poker a game of chance? Define game of chance. Other states look at whether a game is “subject to chance.” Well, poker is clearly subject to chance. And of course, some state laws state that playing poker online is illegal. For example, the state of Washington identifies poker specifically, and a couple of other states are pretty clear as well. Whether these laws are valid or not is yet another question. But in most states, playing Internet poker is clearly legal.

This is what’s causing an amazing amount of work and problems for the banks. At first, people thought “okay, this makes a lot of sense, let’s try to implement this law.” Then they realized that it couldn’t be implemented. It’s not only that the banks don’t want to do it – and of course they don’t want to – but that they’re right not to do it. And the government understands that the banks are right not to do it. They had several people testify that this was clearly an undue burden. I mean, why are we asking the general counsel of every financial institution to look at the laws of every single state and determine which transactions are legal and which transactions are illegal? That’s asking way too much. The banks clearly need assistance in determining which transactions should be blocked and which shouldn’t. Even that was talked about – it’s very difficult.

One point that was brought up and put to the people that were writing the regulations was whether or not they could just put together a list of people or sites – like sports betting sites – that you can’t do business with or can’t send money to. The answer was clearly no. Basically, the way the law was written, it was intended to prevent transactions meant for illegal wagering.

Say that there’s a site out there that has both legal and illegal wagering, and maybe sell t-shirts at the same time. If this site was blacklisted because it offered illegal wagering, there would be no transactions allowed at all. The problem is that we don’t know if a customer wants to deposit money for illegal wagering or just wants to buy a t-shirt. Since the law doesn’t say “don’t do business with companies that offer illegal wagering,” they can’t legally blacklist a company that does. What the current law clearly says is that it’s illegal to allow transfers that will be used for illegal wagering. Obviously, it gets more complicated from there. Under the current law, there is no solution that’s not going to continue to overcomplicate this and cause even more problems.

Basically, the law got taken apart in every possible way. The bill – the UIGEA – got lambasted. As far as we’re concerned, we’d love it if poker were understood as a game of skill and therefore was not identified under the UIGEA as illegal. In my opinion, it shouldn’t be. In fact, when I was in Washington just over a year ago at one of the hearings, they had someone from the justice department who actually had to admit that there is no federal law against playing poker online.

What we need is a carve-out specifically for poker. As a best case, we’re hoping that the law is repealed. Barney Frank’s bill would repeal the law and then tax and regulate Internet poker, which is really what we’re looking for.

This will still probably take a little bit over a year – maybe even a year-and-a-half or something like that. Hopefully, we don’t get any surprises in the meantime. Things don’t work fast enough, and it may take time to undo, but I think it’s going to happen. In the end, it will be good for everybody.

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