Reply to the NFL Anti-Internet Gaming Letter

[TheEngineer]

August 25, 2007

Senator Mitch McConnell
United States Senate
361-A Russell Senate Office Building
Washington, DC 20510

Dear Senator McConnell,

I am writing to express my opposition to the National Football League’s position regarding HR 2046, the Internet Gambling Regulation and Enforcement Act. I read their July 30, 2007 letter to Congress with incredulousness; quite frankly, the notion that our sports leagues should dictate our freedoms is a laughable notion.

First of all, the idea that American citizens should give up their freedom to “preserve the integrity of American athletics” is humorous at best, especially as the NFL opposes gaming even in areas unrelated to sports betting. Poker is of no concern of the NFL, and the fact that they act as though it should be is troubling. As for integrity, many current and former NFL athletes have recently demonstrated anything but integrity. It seems the NFL should worry about its own athletes before they worry about people playing poker in their own living rooms. And, once the NFL has control over itself, the bottom line is that football is entertainment. Since when did Congress take freedoms from citizens because entertainers desired it?

Next, the NFL’s assertions concerning the upcoming WTO sanctions are ridiculous. The WTO case is not about Internet gaming bans at all. Rather, it is about restrictions on SOME Internet gaming but not others. On that topic, the NFL itself lobbied for an exemption to the Unlawful Internet Gambling Enforcement Act of 2006 (UIGEA) for fantasy football. In fact, the U.S. would be compliant today had we banned all gaming over the Internet. However, as we did not do that, our companies are now being asked to give up billions in trade concessions and in American jobs, in what I call the Mitch McConnell Horse Racing Subsidy (i.e., trade concessions resulting from granting the horse racing industry an exemption in UIGEA) and the NFL Fantasy Football Tax. The bottom line is that the U.S. is already out of compliance with the WTO. We can get into compliance by either opening up our market or by closing it completely, but we cannot get more noncompliant.

Finally, UIGEA gave the NFL and the other leagues opt-outs. I realize the NFL has no regard for the freedoms of Americans, but Congress should. The opt-out fully addresses their concerns. Again, if they are still having problems, they should look to themselves to police their employees and athletes for integrity. They can afford it.

As for issues with Internet gaming itself, the June 8, 2007 House Financial Services Committee hearing on the subject conclusively proved that Internet gaming can be effectively taxed and regulated for fairness, age and identity verification, and control of compulsive behaviors. The rest of the democratic world permits its citizens to make their own decisions regarding playing cards on the Internet. It seems Americans should be as free as Eastern Europeans and Russians.

In closing, I urge you to disregard the NFL in this matter and to support HR 2046, HR 2140, and HR 2610 in the Senate. Americans want to play poker on the Internet, and we will not go away. Tell the NFL to use its billions to police themselves. It is time for the NFL to move into the 21st century, not for the rest of the nation to move back to the Prohibition of the early 20th.

Thank you for your consideration.

Sincerely,

TheEngineer

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July 30, 2007

Dear Member of Congress:

Sports betting is incompatible with preserving the integrity of American athletics. For many decades, we have actively enforced strong policies against sports betting. And the law on this point is consistent. Federal statutes bar sports betting, especially the 1961 Wire Act and the 1992 Professional and Amateur Sports Protection Act. Enforcement of these laws against sports betting was also a significant motive for enacting the Unlawful Internet Gambling Enforcement Act of 2006 (UIGEA).

Accordingly, we urge you to reject current proposals to legalize Internet gambling, such as H.R.2046 sponsored by Rep. Barney Frank. This legislation reverses federal policy on sports betting and would for the first time give such gambling Congressional consent. The bill sends exactly the wrong message to the public about sports gambling and threatens to undermine the integrity of American sports.

On a related point, we believe the Congress should not consider any liberalization of Internet gambling until the U.S. Trade Representative successfully resolves our trade disputes in this area. A rush to judgment on this subject could result in irreversible damage to U.S. sovereignty in the area of gambling regulation, including the capacity to prohibit sports bets.

Though Internet gambling on sports has never been legal, easy access to offshore Internet gambling websites has created the opposite impression among the general public, particularly before Congress enacted UIGEA last fall. UIGEA emerged from more than a decade of Congressional consideration, in which stand-alone legislation aimed at restricting Internet gambling passed either the Senate or the House in each of five successive Congresses, each time by overwhelming bi-partisan votes. UIGEA also enjoyed a broad array of supporters, including 49 state Attorneys General and other law enforcement associations, several major financial institutions and technology companies, dozens of religious and family organizations, and of course our sports organizations.

Enactment of UIGEA was grounded on concerns about addictive, compulsive, and underage Internet gambling, unlawful sports betting, potential criminal activity, and the wholesale evasion of federal and state laws. When it passed the House a year ago, the vote was 317-93, including majorities of both caucuses and with the affirmative votes of both party leaders.

The final product was a law that did not change the legality of any gambling activity – it simply gave law enforcement new, effective tools for enforcing existing state and federal gambling laws. UIGEA and its predecessor bills could attract such consensus because they adhered to this principle: whether you think gambling liberalization is a bad idea or a good one, the policy judgments of State legislatures and Congress must be respected, not de facto repealed by deliberate evasion of the law by offshore entities via the Internet.

By contrast, H.R. 2046 would put the Treasury Department in charge of issuing licenses to Internet gambling operators, who would then be immunized from prosecution or liability under any Federal or State law that prohibits what the Frank bill permits. The bill would tear apart the fabric of American gambling regulation. By overriding in one stroke dozens of Federal and State gambling laws, this would amount to the greatest expansion of legalized gambling ever enacted.

This legislation contains an “opt-out” that appears to permit individual leagues to prohibit gambling on their sports. But regardless of the “opt-out,” the bill breaks terrible new ground, because Congress would for the first time sanction sports betting. That is reason enough to oppose it. In addition, 2 the bill’s safeguard opt-out for sports leagues as well as the one for states may well prove illusory and ineffectual. They will be subject to legal challenge before U.S. courts and the World Trade Organization.

In addition, this legislation would dramatically complicate current trade negotiations concerning gambling. In 1994, the United States signed the General Agreement on Trade in Services, which included a commitment to free trade in “other recreational services.” In subsequent WTO proceedings, the United States has claimed this commitment never included gambling services. The United States has noted that any such “commitment” would contradict a host of federal and state laws that regulate and restrict gambling. The WTO has not accepted this argument.

Accordingly, the U.S. Trade Representative has initiated negotiations to withdraw gambling from U.S. GATS commitments. Before withdrawal can be finalized, agreement must be reached on trade concessions with interested trading partners. Few concessions should be required because there was never a legal market in Internet gambling in the U.S. If Congress creates a legal market before withdrawal is complete, the withdrawal will become much more complicated and costly. Therefore, we oppose any legislation that would imperil the withdrawal process.

Finally, we have heard the argument that Internet gambling can actually protect the integrity of sports because of the alleged capacity to monitor gambling patterns more closely in a legalized environment. This argument is generally asserted by those who would profit from legalized gambling and the same point was raised in 1992 when PASPA was enacted. Congress dismissed it then and should dismiss it now. The harms caused by government endorsement of sports betting far exceed the alleged benefits.

H.R. 2046 sets aside decades of federal precedent to legalize sports betting and exposes American gambling laws to continuing jeopardy in the WTO. We strongly urge that you oppose it. Thank you for considering our views on this matter.

Sincerely,

Rick Buchanan, Executive VP and General Counsel
National Basketball Association

Elsa Kircher Cole, General Counsel
National Collegiate Athletic Association

William Daly, Deputy Commissioner
National Hockey League

Tom Ostertag, Senior VP and General Counsel
Major League Baseball

Jeffrey Pash, Executive VP and General Counsel
National Football League