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88–167 2015

THE STATE OF ONLINE GAMING 

HEARING 

BEFORE THE

SUBCOMMITTEE ON COMMERCE, MANUFACTURING, 

AND TRADE 

OF THE

COMMITTEE ON ENERGY AND 

COMMERCE 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED THIRTEENTH CONGRESS 

FIRST SESSION 

DECEMBER 10, 2013 

Serial No. 113–107 

( 

Printed for the use of the Committee on Energy and Commerce 

energycommerce.house.gov 

(II) 

COMMITTEE ON ENERGY AND COMMERCE 

FRED UPTON, Michigan 

Chairman 

RALPH M. HALL, Texas 

JOE BARTON, Texas 

Chairman Emeritus 

ED WHITFIELD, Kentucky 

JOHN SHIMKUS, Illinois 

JOSEPH R. PITTS, Pennsylvania 

GREG WALDEN, Oregon 

LEE TERRY, Nebraska 

MIKE ROGERS, Michigan 

TIM MURPHY, Pennsylvania 

MICHAEL C. BURGESS, Texas 

MARSHA BLACKBURN, Tennessee 

Vice Chairman 

PHIL GINGREY, Georgia 

STEVE SCALISE, Louisiana 

ROBERT E. LATTA, Ohio 

CATHY MCMORRIS RODGERS, Washington 

GREGG HARPER, Mississippi 

LEONARD LANCE, New Jersey 

BILL CASSIDY, Louisiana 

BRETT GUTHRIE, Kentucky 

PETE OLSON, Texas 

DAVID B. MCKINLEY, West Virginia 

CORY GARDNER, Colorado 

MIKE POMPEO, Kansas 

ADAM KINZINGER, Illinois 

H. MORGAN GRIFFITH, Virginia 

GUS M. BILIRAKIS, Florida 

BILL JOHNSON, Missouri 

BILLY LONG, Missouri 

RENEE L. ELLMERS, North Carolina 

HENRY A. WAXMAN, California 

Ranking Member 

JOHN D. DINGELL, Michigan 

Chairman Emeritus 

FRANK PALLONE, JR., New Jersey 

BOBBY L. RUSH, Illinois 

ANNA G. ESHOO, California 

ELIOT L. ENGEL, New York 

GENE GREEN, Texas 

DIANA DEGETTE, Colorado 

LOIS CAPPS, California 

MICHAEL F. DOYLE, Pennsylvania 

JANICE D. SCHAKOWSKY, Illinois 

JIM MATHESON, Utah 

G.K. BUTTERFIELD, North Carolina 

JOHN BARROW, Georgia 

DORIS O. MATSUI, California 

DONNA M. CHRISTENSEN, Virgin Islands 

KATHY CASTOR, Florida 

JOHN P. SARBANES, Maryland 

JERRY MCNERNEY, California 

BRUCE L. BRALEY, Iowa 

PETER WELCH, Vermont 

BEN RAY LUJAN, New Mexico 

PAUL TONKO, New York 

JOHN A. YARMUTH, Kentucky 

SUBCOMMITTEE ON COMMERCE, MANUFACTURING, AND TRADE

LEE TERRY, Nebraska 

Chairman 

LEONARD LANCE, New Jersey 

Vice Chairman 

MARSHA BLACKBURN, Tennessee 

GREGG HARPER, Mississippi 

BRETT GUTHRIE, Kentucky 

PETE OLSON, Texas 

DAVID B. MCKINLEY, West Virginia 

MIKE POMPEO, Kansas 

ADAM KINZINGER, Illinois 

GUS M. BILIRAKIS, Florida 

BILL JOHNSON, Missouri 

BILLY LONG, Missouri 

JOE BARTON, Texas 

FRED UPTON, Michigan, ex officio 

JANICE D. SCHAKOWSKY, Illinois 

Ranking Member 

JOHN P. SARBANES, Maryland 

JERRY MCNERNEY, California 

PETER WELCH, Vermont 

JOHN D. DINGELL, Michigan 

BOBBY L. RUSH, Illinois 

JIM MATHESON, Utah 

JOHN BARROW, Georgia 

DONNA M. CHRISTENSEN, Virgin Islands 

HENRY A. WAXMAN, California, ex officio 

(III) 

C O N T E N T S 

Page 

Hon. Lee Terry, a Representative in Congress from the State of Nebraska, 

opening statement ................................................................................................ 1 

Prepared statement .......................................................................................... 2 

Hon. Janice D. Schakowsky, a Representative in Congress from the State 

of Illinois, opening statement .............................................................................. 4 

Hon. Joe Barton, a Representative in Congress from the State of Texas, 

prepared statement .............................................................................................. 5 

WITNESSES

Geoff Freeman, President and CEO, American Gaming Association .................. 7 

Prepared statement .......................................................................................... 9 

Andrew Abboud, Vice President, Government Relations and Community Development, Las Vegas Sands Corporation .......................................................... 19 

Prepared statement .......................................................................................... 21 

John Pappas, Executive Director, Poker Players Alliance ................................... 25 

Prepared statement .......................................................................................... 27 

Les Bernal, National Director, Stop Predatory Gambling ................................... 39 

Prepared statement .......................................................................................... 41 

Rachel Volberg, Ph.D., Associate Professor, School of Public Health and 

Health Services, University of Massachusetts Amherst ................................... 56 

Prepared statement .......................................................................................... 58 

Kurt Eggert, Professor of Law, Dale E. Fowler School of Law, Chapman 

University ............................................................................................................. 78 

Prepared statement .......................................................................................... 80 

SUBMITTED MATERIAL

Statement of the National Indian Gaming Association, submitted by Mr. 

Terry ...................................................................................................................... 124

Statement of the National Association of Convenience Stores, submitted by 

Mr. Terry .............................................................................................................. 130 

Statement of Jim Thackston, independent software engineer, submitted by 

Mr. Terry .............................................................................................................. 153 

Correspondence between the late Honorable C.W. Bill Young of Florida and 

the FBI .................................................................................................................. 167 

(1) 

THE STATE OF ONLINE GAMING 

TUESDAY, DECEMBER 10, 2013 

HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON COMMERCE, MANUFACTURING, AND

TRADE, COMMITTEE ON ENERGY AND COMMERCE, Washington, DC. 

The subcommittee met, pursuant to call, at 12:36 p.m., in room 

2123 of the Rayburn House Office Building, Hon. Lee Terry (chairman of the subcommittee) presiding. 

Members present: Representatives Terry, Lance, Blackburn, 

Harper, McKinley, Bilirakis, Johnson, Barton, Schakowsky, 

McNerney, Welch, and Barrow. 

Staff present: Charlotte Baker, Press Secretary; Kirby Howard, 

Legislative Clerk; Nick Magallanes, Policy Coordinator, Commerce, 

Manufacturing, and Trade; Gib Mullan, Chief Counsel, Commerce, 

Manufacturing, and Trade; Shannon Weinberg Taylor, Counsel, 

Commerce, Manufacturing, and Trade; Michelle Ash, Democratic 

Chief Consumer Protection Counsel; and Will Wallace, Democratic 

Professional Staff Member. 

OPENING STATEMENT OF HON. LEE TERRY, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF NEBRASKA 

Mr. TERRY. Jan is on her way. I am sorry, Ranking Member 

Schakowsky is on her way and said it was all right to go ahead and 

start. Before I start my opening statement I want to introduce and 

thank our witnesses for being here, and so I will go down the list 

of our witnesses. Mr. Freeman, Geoff Freeman, is President and 

Chief Executive Officer, American Gaming Association. Then Mr. 

Andrew Abboud, Vice President of Government Affairs and Community Development at Las Vegas Sands Corporation; John 

Pappas, Executive Director of Poker Players Alliance; Les Bernal, 

National Director, Stop Predatory Gambling; Kurt Eggert, Professor of Law, Dale Fowler School of Law, Chapman University; 

and then Rachel Volberg, Ph.D., I got you two switched, Associate 

Professor, School of Public Health and Health Sciences at the University of Massachusetts Amherst. And I appreciate you all being 

here today. In Nebraska, we wouldn’t even consider cancelling a 

hearing for this little, brief flurry that they have here in D.C., or 

Chicago. So we are forging ahead, and I appreciate the fact that 

all of our witnesses stayed true. And of course, you guys probably 

got here before all the panic ensued anyway. But we appreciate you 

sticking tight with us. 

2 

So we will start. Good morning, and welcome all the people here 

in attendance today. We will be reviewing H.R. 2666, the Internet 

Poker Freedom Act sponsored by my colleague on the committee, 

Mr. Joe Barton. This legislation addresses a timely issue, the legality of online gaming, specifically pertaining to Internet poker. 

Today’s hearing title aptly describes why we are here, and I am 

very interested in the state of online gaming in the United States 

and think the issue is ripe for Congress to conduct oversight of this 

matter. Several different factors have led to an environment in the 

United States where the status of online gaming is murky, at best. 

One, a recent DOJ opinion that reinterpreted the Wire Act opened 

the door for online gaming, except for sports betting, to be hosted 

on an intrastate basis. This has led to a patchwork of state laws 

with seven states moving to outlaw online gaming while others 

have authorized it in different forms, the most expansive being so 

far New Jersey, which has authorized multiple forms of Internet 

gambling, and of course, Nevada is moving in that same direction. 

In addition to the patchwork of state laws, a multi-national 

patchwork exists as well. According to a white paper by the American Gaming Association, over 85 countries have chosen to legalize 

Internet gaming to some extent. While the United States has not 

explicitly legalized it, our citizens still account for about 15 percent 

of the global revenues to the roughly 2,700 Web sites which host 

online gaming. This means that Americans are patronizing these 

offshore Web sites to the tune of over a billion dollars a year, and 

as if that is not confusing enough, as we will hear today, the American gaming industry also does not seem to be in agreement on a 

clear path forward for the future of online gaming domestically. 

The issues are very concerning to me. While unfettered online 

gaming here in the United States is surely not the ideal, absent a 

clear mandate from Congress, we risk exposing our constituents to 

an environment of a race to the bottom, which could present itself. 

It is my hope that hearings such as this one will shed light on what 

logical steps Congress can take to address this growing dilemma. 

While I understand and agree that Congress should not trample on 

the rights of states, I believe it is critical that we gain an understanding for the integrity of the different state standards, how this 

affects the citizens of other states and what the role of the Federal 

Government should be in the future of domestic online gaming. 

I am pleased to say that we will be hearing from a balanced 

panel of experts today, and I stress balanced because in planning 

this hearing I want to make sure that we heard from as many 

sides of this debate in all of its nuances as possible. 

And I would like to again thank all of our witnesses for being 

here and yield the last 2 minutes to Mr. Lance. 

[The prepared statement of Mr. Terry follows:] 

PREPARED STATEMENT OF HON. LEE TERRY

Welcome to today’s hearing—the last hearing of 2013 for the Commerce, Manufacturing, and Trade Subcommittee. We have had a tremendously productive year on 

the subcommittee having held hearings investigating and learning about diverse 

areas such as: 

•The nation’s manufacturing sector; 

• Issues affecting global trade, such as the EU–US trade deal (TTIP) and global 

intellectual property challenges; 

3 

•The Federal Trade Commission on the eve of its 100th anniversary; and 

• Several pieces of legislation, ranging from bills dealing with foreign direct investment, to others that address race horse doping and today—online gaming. 

Today, we will be reviewing H.R. 2666—The Internet Poker Freedom Act, sponsored by my colleague on the committee, Mr. Joe Barton. This legislation addresses 

a timely issue—the legality of online gaming, specifically pertaining to Internet 

poker. 

Today’s hearing title aptly describes why we are here. I am very interested in the 

state of online gaming in the United States and think the issue is ripe for Congress 

to conduct oversight of the matter. Several different factors have led to an environment in the U.S. where the status of online gaming is murky, at best: 

• A recent DOJ opinion that reinterpreted the Wire Act opened the door for online 

gaming (except sports betting) to be hosted on an intrastate basis. This has led to 

a patchwork of state laws—with seven states moving to outlaw online gaming while 

others have authorized it in different forms—the most expansive so far being New 

Jersey, which has authorized multiple forms of Internet gaming. 

• In addition to a patchwork of state laws, a multi-national patchwork exists as 

well. According to a white paper by the American Gaming Association, over 85 countries have chosen to legalize Internet gaming to some extent. While the U.S. has 

not explicitly legalized it, our citizens still accounted for around 15 percent of the 

global revenues to the roughly 2,700 Web sites which host online gaming. This 

means that Americans are patronizing these offshore Web sites to the tune of over 

a billion dollars every year, and in many ways putting themselves at grave risk. 

• And as if that was not confusing enough, as we will hear today, the American 

gaming industry also does not seem to be in agreement on a clear path forward for 

the future of online gaming domestically. 

These issues are very concerning to me. While unfettered online gaming here in 

the U.S. is surely not the ideal, absent a clear mandate from Congress, we risk exposing our constituents to an environment where a ‘‘race to the bottom’’ could 

present itself. It is my hope that hearings such as this one will shed light on what 

logical steps Congress can take to address this growing dilemma. While I understand and agree that Congress should not trample on the rights of the states, I believe it is critical that we gain an understanding for the integrity of the different 

state standards; how this affects the citizens of other states; and what the role of 

the federal government should be in the future of domestic online gaming. 

I am pleased to say that we will be hearing from a balanced panel of experts 

today—I stress ‘‘balanced’’ because in planning this hearing I wanted to make sure 

that we heard from as many sides of the debate as possible. 

I would like to thank all of our witnesses for taking the time to travel to Washington this week and look forward to hearing your testimonies. 

Mr. LANCE. Thank you, Mr. Chairman. The legal gaming industry is a multi-billion dollar operation with significant economic impact in the State of New Jersey, which I represent here in Congress, and of course, in the United States. 

According to the American Gaming Association, commercial casino operator’s reported revenue of $37.3 billionin 2012. In New 

Jersey, revenue from legal gaming in 2012 topped $3 billion. 

In recent years the development of mobile technology and the 

Justice Department’s 2011 legal interpretation of the Wire Act 

have opened the door for states to operate Internet gaming within 

their borders. In November, New Jersey became the third state to 

operate Internet gaming, joining Nevada and Delaware. 

Online gaming in New Jersey allows consumers who are present 

within the State to have access to the same games of skill and 

chance that are offered in Atlantic City’s casinos. Online gaming 

has the potential to provide much-needed revenue to Atlantic City 

and to the State of New Jersey’s budget. A report in our largest 

newspaper, the Newark Star Ledger, states that Internet gambling 

is expected to produce hundreds of millions, if not billions, of dollars in revenue annually. Since 1978 when gambling began in Atlantic City the gaming industry has been an important part of New 

4 

Jersey’s economy, and Internet gaming has the potential to reinvigorate the State’s industry and secure its financial solvency in the 

future. 

At this hearing we will also examine legislation introduced by my 

friend and colleague, Representative Barton of Texas, the Internet 

Poker Freedom Act of 2013. This legislation would establish a program for the licensing of Internet poker by states and federally-recognized Indian tribes. 

I look forward to examining this legislation and the hearing and 

testimony from the panel on the state of online gaming. Thank you, 

Mr. Chairman. 

Mr. TERRY. Thank you, Mr. Vice Chairman. I now recognize the 

Ranking—— 

Ms. SCHAKOWSKY. Do you want to ask unanimous—— 

Mr. TERRY. Oh, yes. Thank you. Ask unanimous consent to allow 

Mr. Heck from the greater Las Vegas area to join us on the panel 

today. Hearing none, so ordered. I now recognize the gentlelady 

from Chicago, the ranking member of the subcommittee, for her 5 

minutes. 

OPENING STATEMENT OF HON. JANICE D. SCHAKOWSKY, A 

REPRESENTATIVE IN CONGRESS FROM THE STATE OF ILLINOIS 

Ms. SCHAKOWSKY. Thank you, Mr. Chairman. I look around. I see 

there are no weather wimps in this room, and I welcome all of you. 

I know us Midwesterners, this is nothing. We don’t get it. 

But anyway, I am very happy that you are here to give your testimony. This is an important issue that has a significant following, 

and I look forward to hear from our witnesses and gaining from all 

of your perspectives. 

The issue of online gambling is incredibly complex and is certainly deserving of our attention. It also is becoming increasingly 

important as last month New Jersey joined Nevada and Delaware 

as the only States to offer real money, online casino games. Most 

states are considering or many states are considering similar action, possibly including my home State of Illinois. 

I understand that some amount of gambling is already occurring 

online. Establishing a stronger federal role might improve oversight, reduce illegal operations, and provide new revenues at the 

federal or state level. However, I do have some serious concerns 

about expanding online gambling. Studies show that low income 

workers, minorities, retirees suffer disproportionately from problem 

gambling. It is important that if online wagering expands, protections are in place to prevent the exploitation of vulnerable populations. That should include limitations on using lines of credit 

rather than real assets to bet. The government should not be in the 

business of increasing the number of people struggling with gambling addiction. 

As a lifelong consumer advocate, I also think it is critical if federal legislation is to expand online gambling it does so with consumer protections as a top priority. Safeguards must be in place to 

ensure that consumer data is well protected. That can be accomplished in part by ensuring that standards are in place to limit the 

unnecessary collection of consumer information. Consumers must 

5 

be adequately informed of the data being collected about them and 

the policies regarding the handling of that data. In any legislation 

to expand online gambling, high standards of privacy must be 

maintained for those who choose to engage or not to engage in online gambling. Information about frequent betters or those who 

have self-identified as problem gamblers to limit their access to online gambling must not be shared or sold without the consent of 

that individual. Individual consent should not be wrapped up in a 

complex privacy agreement but should be clear and transparent to 

the user. If an expansion of online gambling is allowed, those who 

choose to play should also have confidence that the game they are 

playing is operated with integrity. 

Is it bots? 

Mr. TERRY. Bots. 

Ms. SCHAKOWSKY. I don’t even know what that is. Bots, collusion, 

and other unfair practices must be kept away from any gambling 

Web sites created to maintain fairness for players. I thought maybe 

that is bets or bats or whatever. 

Again, I appreciate the varied perspectives of our witnesses, and 

I look forward to hearing from them today about the current state 

of online gambling, where we go from here and how any future actions can address the many consumer protection concerns that I 

have raised. And I yield back, Mr. Chairman, and I think—let us 

see, Mr. Welch, I asked the others. Are you interested in the remaining time? 

Mr. WELCH. You spoke for me. 

Ms. SCHAKOWSKY. I spoke for him. Thank you. I yield back for 

all of us. 

Mr. TERRY. All right. Mr. Barton, you are now recognized for 5 

minutes. 

OPENING STATEMENT OF HON. JOE BARTON, A 

REPRESENTATIVE IN CONGRESS FROM THE STATE OF TEXAS 

Mr. BARTON. Thank you, Mr. Chairman. To my good friend, Jan 

Schakowsky, a bot is a computer program that uses artificial intelligence and pre-programmed instructions to play not just poker or 

games of chance but all kinds of things on the Internet. And it is 

there. They are not good things, in my opinion. So that is what a 

bot is. 

I want to welcome some former members out in the audience. 

Jon Porter of Nevada, and the former Chairman of the Ag Committee, from California I think, Richard Pombo is out there, and so 

we welcome him back to Congress. 

I want to tell the committee, Mr. Chairman, that God must be 

for this bill because I got up this morning at 4:00 in Ennis, Texas, 

outside of Dallas and braved icy roads and 20-degree temperatures 

to get to DFW airport when my good friends at American Airlines 

left exactly on time and God put a 200-mile-an-hour tailwind behind the plane and I got here an hour early. So that tells me that 

God is for this bill. That is my opinion. 

Well, Mr. Chairman, I first want to thank you for holding this 

hearing and Chairman Upton and Ms. Schakowsky and Mr. Waxman for agreeing to do it. I want to thank our witnesses. This is 

a serious issue, and it has a lot of ramifications for the country. 

6 

When I first got elected 30 years ago, there was no such thing 

as the Internet. You could actually still send a telegram. And I 

talked about flying up here on American Airlines this morning. 

Members of Congress still got two paid, roundtrip train tickets to 

their district. OK? The world was completely different. If you wanted to make a bank deposit, you had to literally go to the bank. If 

you wanted to see a doctor, you had to literally go to a doctor’s office. Everything had to be done in person. 

Well, now we have the Internet and iPhones and iPads and apps 

and all these things. Just about the only thing you can’t do anymore on the Internet is play poker, and that is changing. As Ms. 

Schakowsky has pointed out, lots of states are beginning to allow 

intrastate poker and/or other games of chance. Only 2 states in the 

Union don’t allow within their borders some form of gaming, 2 out 

of 50. 

So I think the time has come to recognize that in the Internet 

age we need to regulate and set a level playing field for those of 

us who would like to play poker online. And I want to emphasize 

that the Internet Poker Freedom Act, H.R. 2666, is a poker-only 

bill. And for my good friends on the Republican side of the aisle, 

it is a states’ rights, user-friendly bill. It is an opt-out. We start out 

saying all 50 states are going to allow poker to be played, but if 

a state doesn’t want to do it, it just takes the governor of a state 

to write a letter maybe even on the back of a postcard, send it to 

the Secretary of Commerce, and that state will not allow Internet 

poker within its boundaries. 

H.R. 2666 has been developed in openness and transparency. It 

is a refined product of a similar bill that I introduced in the last 

two Congresses. I think it is a good work product. I think it would 

work. I think it would provide fairness and all the things that several of the other members who have talked about this this morning 

support. It is not a perfect bill, and obviously the purpose of this 

hearing will be to see where it needs to be improved. There are 

some that talk about the problems of addiction and gambling to excess. We have taken every recommendation in the bill from the advocates who want to try to prevent such bad behavior. 

So Mr. Chairman, I look forward to the hearing. I do appreciate 

you holding it. And I will point out that in the last Congress a 

similar hearing in this subcommittee was the most-watched hearing of the entire Energy and Commerce Committee in terms of people watching it over the Internet. So I am sure we are going to 

have a lot of people watching this today. 

Mr. TERRY. Yes, I think we will, especially since we are the only 

hearing. 

Mr. BARTON. That is a tribute to your leadership, Mr. Chairman. 

Mr. TERRY. Timing. But Joe, under your states’ rights, I will 

have to ask you at some point in time after the hearing if it is all 

right then if a governor could ban Texas Hold’em and just allow 

Omaha. 

Mr. BARTON. We will talk, Mr. Chairman. 

Mr. TERRY. Thank you. 

Mr. BARTON. If that is the only problem we—— 

Mr. TERRY. Yes, good point. All right. So our Vegas routine is 

now completed, and now off to business with our witnesses here. 

7 

Some of you have been here before, and you know how it works. 

You have 5 minutes to give us your statement. There is a little 

light down there. Green means go, yellow means start wrapping it 

up, red means I am going to start tapping the gavel and go onto 

the next. And then at the end of Mr. Eggert’s testimony, we will 

open it up to the questions, of which each member will have 5 minutes. 

So with that, Mr. Freeman, thank you all again for being here, 

and you are recognized for 5 minutes. 

STATEMENTS OF GEOFF FREEMAN, PRESIDENT AND CEO, 

AMERICAN GAMING ASSOCIATION; ANDREW ABBOUD, VICE 

PRESIDENT, GOVERNMENT RELATIONS AND COMMUNITY 

DEVELOPMENT, LAS VEGAS SANDS CORPORATION; JOHN 

PAPPAS, EXECUTIVE DIRECTOR, POKER PLAYERS ALLIANCE; LES BERNAL, NATIONAL DIRECTOR, STOP PREDATORY GAMBLING; RACHEL VOLBERG, PH.D., ASSOCIATE 

PROFESSOR, SCHOOL OF PUBLIC HEALTH AND HEALTH 

SERVICES, UNIVERSITY OF MASSACHUSETTS AMHERST; AND 

KURT EGGERT, PROFESSOR OF LAW, DALE E. FOWLER 

SCHOOL OF LAW, CHAPMAN UNIVERSITY 

STATEMENT OF GEOFF FREEMAN 

Mr. FREEMAN. Thank you, Chairman Terry, and Ranking Member Schakowsky and members of the subcommittee. It is great to 

come back before the committee again. I did this several times 

while with the U.S. Travel Association and appreciate the opportunity to work with you. 

This hearing couldn’t be more timely. Three states have already 

kicked off their versions of online gaming, New Jersey, Nevada and 

Delaware. The demand to play is high, and your attention is critical. 

I would like to start by joining the almighty and thanking Congressman Barton for his leadership on this issue and pragmatic efforts to create a regulated gaming environment. That is certainly 

what we need more of. 

There are three points that I would like to make to committee 

today. The first is that the experience of the past several years has 

yielded one crystal clear conclusion and that conclusion is the prohibition of online gaming has not and will not work. Until this 

year, online gaming, poker or otherwise, has been illegal in every 

corner of the country, and the Justice Department has led an aggressive crackdown on offshore operators. The result? Last year 

Americans spent nearly $3 billion on illegal offshore gaming sites 

constituting nearly 10 percent of the entire worldwide online gaming market. 

In other words, recent prohibition attempts have only created a 

thriving black market. This should come as no surprise to a country where sports betting takes place just about everywhere despite 

an ostensibly blanket government prohibition. In fact, it is fair to 

argue that prohibition has given shady offshore operators the best 

ally they could imagine. Legitimate operators, such as my members, respect the law, have licenses at stake and stay out of the 

American market. Illegal operators disobey the law and often disVerDate Nov 24 2008 12:31 Nov 05, 2015 Jkt 037690 PO 00000 Frm 00011 Fmt 6633 Sfmt 6633 F:\MY DOCS\HEARINGS 113\113-107 CHRIS
8 

regard their own customers. Make no mistake, online gaming is 

here to stay. The government cannot put the Internet back into the 

bottle. The question is, are we going to regulate online gaming or 

allow the black market to continue to thrive? 

My second point is the demand for online gaming will only continue to grow. The world over, the Internet is changing how we live 

our lives and it is certainly changing the face of business. Some 

companies get on the first wave of that change and thrive in the 

marketplace. Other companies, like Blockbuster or Hollywood 

Video for example, refuse to adapt to the needs of their customers 

and are left in innovation’s wake. 

Just 2 weeks ago, in the very first week that online gaming was 

offered legally in New Jersey, more than 50,000 people signed up. 

Last week Juniper Research estimated that 100 million will conduct gambling on mobile devices by 2018. The demand is extraordinary and certainly not going away. 

With this demand and the blossoming black market, my final 

point is that there is an important role for the Federal Government. Congress should provide a uniform set of protections for consumers while respecting states’ rights to choose what is in their 

best interests. The AGA supports a strong regulatory regime that 

insists on player identification, age verification, transparent 

records of all transactions, geolocation, aggressive tools for responsible gaming and help for those with gambling disorders. New technologies are proven to detect the vulnerable and those who may 

wish to do us harm. And it is worth noting that as an industry, 

we are completely aligned on the need to protect vulnerable populations, even as we may disagree on the best means of doing so. 

The United Kingdom, France, Italy, Spain, Denmark, Belgium, 

Sweden, Finland, Australia, Japan, Hong Kong, and Canada, just 

to name a few, have all considered the serious issues brought before you today, and all have chosen to pursue a regulated market. 

Consumers are protected, national security concerns are addressed 

and economic development is realized. 

In conclusion, let me say that Americans will always gamble, offline, online or in whatever form is invented in the coming years, 

and as countless studies show, more than 95 percent will do so in 

a responsible manner. We believe the best protection for consumers 

and for our country is strong and effective regulation that respects 

states’ rights. We look forward to working with you and others in 

Congress to build the type of regulatory framework that is important here. 

Thank you for inviting me, and I look forward to your questions. 

[The prepared statement of Mr. Freeman follows:] 

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Mr. TERRY. Thank you. And now Mr. Andy Abboud, you are recognized for 5 minutes. 

STATEMENT OF ANDREW ABBOUD 

Mr. ABBOUD. Thank you, Congressman Terry, Madam Ranking 

Member. I have to say it is an honor for me. This is my first time 

testifying before Congress and have a unique opportunity to testify 

before two hometown congressmen, one being my Husker friend 

here, Congressman Lee Terry, and my congressman in Las Vegas, 

Congressman Joe Heck. Thank you for allowing us to be here 

today. 

I have three simple points as well. I am the Senior Vice President for the Las Vegas Sands Corp. in Las Vegas, Nevada. We are 

the world’s largest gaming company in the world by market cap. 

We have three simple points. Internet gambling takes gambling too 

far. We would like Congress to restore the Wire Act, and we would 

implore Congress to shut down the illegal gaming sites that are out 

there today. 

Simply, a lot of people say it can’t be done. Congress did it by 

shutting down 1,200 online pharmacies that were black market 

pharmacies. It can be done, it needs to be done. There are no provisions in place to do that. 

The thought of every single one of these becoming a casino 

should concern all of you. You go into states like Florida where we 

are negotiating for an opportunity to spend $3 to $4 billion on an 

integrated resort creating tens of thousands of jobs. And not a casino-centric mentality which is what the industry has moved away 

from. But you have to negotiate each gaming position. Can you do 

2,000 machines? Can you do 100 tables? And you have to figure out 

how you blend into the marketplace so you don’t saturate the market, so you don’t injure the existing infrastructure, so there is just 

not too much of it. 

And now, for whatever reason, they want to turn every single 

one of these into a casino with unlimited access, unlimited provisions. Congressman Terry, I am pretty sure that I have known 

your family from the beginning. Your father delivered the news on 

Channel 7 when I was growing up, and I know that you and I probably never saw our parents’ credit card, let alone did we touch it. 

But the world has changed. Children have 100 percent access to 

credit cards. They buy their apps with it, they buy their iTunes 

with it. And I don’t want to speak to the integrity or the intelligence of anyone here on this committee and their ability to understand technology, but if they legalize it, it is going to be the kids 

that teach their parents how to get on. 

There is a point when it goes too far. Simply because we can, 

doesn’t mean we should. December 2011 was not the day that the 

Internet became safe. It is the day the Wire Act was overturned. 

And rather than my industry rushing to make the marketplace 

more safe, it has become a rush to the marketplace, without any 

provisions. The Internet, bots, netbots, all those things, Congresswoman, are more prevalent than ever. The Internet is more dangerous than ever. 

20 

But I have a lot of respect for Geoff Freeman and for the American Gaming Association, and I have tremendous respect of our 

competitors on the strip. We just happen to disagree on this issue. 

But I also have a lot of respect for Frank Fahrnekopf, who was 

Geoff’s predecessor, and I want to read a letter he put in Gaming 

Compliance in just February of 2012. ‘‘Finally, it is important to remember what the DOJ decision really is. It is an opinion of the current Justice Department, not the law of the land as determined by 

the Supreme Court or any other court decision. The opinion is 

counter to that of four prior administrations that considered this 

matter, and when President Obama ultimately leaves office, the 

DOJ serves under the next president to reverse this opinion. Near 

the end of last year I had the opportunity to testify on behalf of 

the commercial gaming industry before the U.S. House Committee 

on Energy and Commerce, Subcommittee on Commerce, Manufacturing, and Trade. I told Congress that without a federal framework on online gaming, there will be a patchwork quilt of rules and 

regulations that while aimed at protecting consumers could have 

the opposite effect by confusing customers and making it difficult 

for law enforcement to manage. I believe that still in the DOJ’s 

opinion and its implication reinforce my concerns.’’ 

Members of the committee, the thought of a 50-state solution is 

scary. We are imploring on Congress to act, to restore the Wire Act, 

to conduct a study, if it shows that the Internet can eventually be 

safe. But it is time to stop. Don’t make a race to the bottom of the 

marketplace. Restore the Wire Act and protect American consumers. Thank you, and I look forward to your questions. 

[The prepared statement of Mr. Abboud follows:] 

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Mr. TERRY. Thank you. Mr. Pappas, you are now recognized for 

5 minutes. 

STATEMENT OF JOHN PAPPAS 

Mr. PAPPAS. Thank you. Chairman Terry, Ranking Member 

Schakowsky, and distinguished members of this committee, I would 

like to thank you for holding this hearing and for allowing me to 

testify. 

I have the great honor of serving as Executive Director of the 

Poker Players Alliance, an organization of 1.2 million American 

poker enthusiasts. Poker players are passionate about the freedom 

to play this game, and I have little doubt that every member of this 

subcommittee has heard from poker activists in their home states 

urging Congress to enact a sensible federal policy that licenses and 

regulates Internet poker. 

It is my hope that the committee will respond by taking up legislation introduced by Congressman Joe Barton, H.R. 2666, the 

Internet Poker Freedom Act. The PPA stands in strong support of 

Congressman Barton’s bill, and I congratulate the Chairman Emeritus for his leadership on this issue, and the poker player community thanks God that you are on our side. 

The Internet Poker Freedom Act focuses on corralling the current 

unregulated marketplace and turning it into a system that is safe 

to consumes and accountable to regulators and our government. 

The bill mandates technologies to protect consumers from fraud, 

eliminate underage access and mitigate problem gambling. Mr. 

Barton’s bill does not force any state to participate in the federal 

system, and it allows states to implement their own online gaming 

regulations. This is especially important given that three states, 

Nevada, Delaware and New Jersey, have authorized and are regulating Internet poker and Internet gaming today. 

While the PPA would prefer the passage of a federal Internet 

poker bill, we strongly support the rights of states to pursue Internet gaming opportunities in the absence of a federal law. 

The adoption of regulated Internet gaming in the United States 

means the policymakers can no longer consider regulated Internet 

gaming as a theoretical. It is not a theory, it is a reality, and it 

is here today. Not only can we reference the current U.S. regulated 

market, we also have the benefit from learning from Europe where 

it has been regulated for more than 10 years. Of course, there are 

those who advocate for a ban on Internet poker and Internet gaming. This misguided approach would only serve to harm the most 

vulnerable populations that regulation properly protects. 

I would like to take a moment to provide the subcommittee with 

information on how a combination of regulation and technology can 

meet these challenges. Due to time constraints, I urge you to review my submitted testimony for a more in-depth review of these 

facts. 

With respect to underage access, gaming site operators are required to implement state-of-the art age verification software before being licensed and before accounts are opened and bets are 

settled. Failure to undertake rigorous age verification would result 

in the loss of a license and the closure of a business. While the U.S. 

market is still very new, it is notable that in Nevada, which began 

26 

accepting Internet poker play in April of this year, there has not 

been a single reported incident of underage access. 

Another important matter is to ensure we are appropriately addressing problem gambling. Comprehensive research on the issue 

concludes that online gaming operators have effective and sophisticated tools to prevent and combat problem gaming. Most regulated 

online gaming markets require their licensees to employ these technologies to monitor their players and combat against problem gaming abuse. 

Finally, opponents of Internet gaming have claimed that the activity is vulnerable to fraud and criminality. Let me say that prohibition will just play into the hands of the criminal element just as 

it did in the 1920s when alcohol was banned. It is far better for 

the players’ financial fate if the safety and security of their Internet gaming transactions are in the hands of the U.S. banking system and responsible, regulated American gaming corporations. 

Again, I ask that you refer to my submitted testimony for greater 

details on these issues, and I welcome the opportunity to discuss 

them further in the Q&A portion of this hearing. In closing, it 

might be useful to focus on the questions that are not before the 

committee right now. First, this committee is not deciding whether 

Americans will gamble on the Internet. Millions of them do so 

today, and except in a few states where the activity is licensed, 

they are playing on offshore sites with uneven regulation at best. 

Second, the committee need not ask if Internet gaming can be 

successfully regulated. It is successfully regulated today in European jurisdictions, and here in the United States, online casino and 

poker games are regulated in three states and online lottery and 

horse bets are successfully regulated in dozens more. The question 

before this committee is who, if anyone, will provide U.S. players 

with a safe and well-regulated place to play poker on the Internet. 

We continue to urge Congress to enact the Barton bill and thus accomplish this federally. At a minimum, we urge Congress to do 

nothing to prevent the states from licensing and regulating Internet poker. 

Once again, Mr. Chairman, members of the committee, I thank 

you for the opportunity to testify, and I look forward to answering 

your questions. 

[The prepared statement of Mr. Pappas follows:] 

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Mr. TERRY. Thank you. Mr. Bernal, you are now recognized for 

5 minutes. 

STATEMENT OF LES BERNAL 

Mr. BERNAL. Good afternoon. My name is Les Bernal. I am the 

National Director for Stop Predatory Gambling, and our mission is 

to end government sponsorship and promotion of gambling. I appreciate the invitation to be here today. 

As you consider Internet gambling, I ask you to imagine yourself 

sitting down with your kids, your grandchildren, your nieces and 

nephews, in front of a video game, and encouraging them to put 

their money into it, to play it over and over again, but you knew 

they could never win, yet you kept encouraging them to do it. 

You would never do that, but for the last 40 years in American 

life, that is exactly what government has been doing by sponsoring 

and promoting casinos and state lotteries. The more citizens put 

their money into these games, the more money they are going to 

lose. Government in this case is not merely permitting private, consensual behavior. This is a public policy. This is a government program that actively sponsors gambling and promotes it by granting 

monopolies and awarding regulatory advantages to favored firms. 

Government-sponsored gambling is a public policy that has 

failed, and it has failed because, one, it has transformed gambling 

from a private and local activity into the public voice of American 

government such that ever-increasing appeals to gamble and everexpanding opportunities to gamble now constitute the main ways 

that our government communicates with us on a daily basis. 

Government-sponsored gambling has also failed because it has 

failed to deliver on its promises to fund education, to lower taxes, 

to pay for needed public services. Just look at the evidence from 

your own states. 

But thirdly, most importantly of all, government-sponsored gambling has failed because it has contributed to patterns of inequality 

in America, increasing the divide in our country between the haves 

and the have-nots. Now, there are many forces currently contributing to the rise of inequality such as globalization and technological change that cannot be directly controlled by public policy. 

But government-sponsored gambling is a public policy and it exists 

only because policymakers want it to exist. 

So whether it is Internet gambling or other forms of governmentsponsored gambling, this is a public policy that is based on cheating and exploiting citizens. The best example is slot machines. The 

machine is mathematically designed that you will lose your money 

the longer you play it. From the get-go, the more you play, the 

more you lose, and the big money in Internet gambling is in online 

slots which make up the 65 to 80 percent of all gambling traffic. 

And you should know that in the brick-and-mortar business, 75 

percent of that money they make is coming from slots. It is all 

about slot machines. And there are countless stories about how 

government-sponsored slots are cheating and exploiting citizens, 

but I am going to share just one. In 2004, New York Times reporter 

Gary Rivlin toured the headquarters of International Gaming Technology, known as IGT. They are America’s biggest maker of elecVerDate Nov 24 2008 12:31 Nov 05, 2015 Jkt 037690 PO 00000 Frm 00043 Fmt 6633 Sfmt 6633 F:\MY DOCS\HEARINGS 113\113-107 CHRIS
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tronic slot machines, and today they design the leading platform 

for Internet gaming. 

Rivlin, the New York Times reporter, tells a story of his visit to 

the IGT building. ‘‘Most of the time most of the people I met inside 

IGT told me they never played slot machines on their own time. 

Even one corporate PR staff couldn’t resist shaking her head in disbelief as she described scenes of people lining up to play a new machine. ’It was unbelievable to me,’ she told me. And when I asked 

one IGT artist if he ever plays, he acted as if I insulted him. ’Slots 

are for losers,’ he spat and then coming to his senses begged me 

to consider that an off-the-record comment to a New York Times 

reporter.’’ 

‘‘Slots are for losers,’’ he said, and many of these losers are your 

constituents. In government’s partnership with gambling, there is 

one kind of loser who is the most lucrative of all, the problem gambler. We refer these people as the expendable Americans because 

everyone else is going to benefit from the public dollars that come 

in from people’s gambling losses, but this money, we have read it, 

millions of America is expendable, the addicts. 

Gambling operators spend millions of dollars on public relations 

and research to create the public impression they are not exploiting 

citizens. Yet, despite all this money, there are two questions they 

never answer, and maybe we will get that at this hearing today. 

The first one is how much gambling revenue comes from problem 

gamblers? And the second question is, what percentage of gambling 

revenue comes from people who follow ‘‘responsible gambling codes 

of conduct’’? We hear that a lot, responsible gambling. How much 

of the revenues come from people who actually practice that? 

So on the last page of my written testimony, there are 11 different studies, 11 different independent studies that show 40 to 60 

percent of their profits, gambling profits, come from problem gamblers. That list was compiled as part of a recent report entitled 

Why Casinos Matter written by the Institute for American Values. 

The second question, gamblers who manage to follow responsible 

gambling codes of conduct, they contribute a mere 4 percent of 

gambling revenues. 

So in closing, government’s partnership with gambling has failed. 

The evidence is all around us that it has been a failed experiment, 

and sponsoring Internet gambling would be the biggest failure of 

them all. Just like we wouldn’t encourage our own kids or grandchildren to put their money into a video game they would never 

win, it is time our government stopped cheating and exploiting our 

own citizens by sponsoring gambling. 

[The prepared statement of Mr. Bernal follows:] 

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Mr. TERRY. Thank you. Dr. Volberg? You are recognized for 5 

minutes. 

STATEMENT OF RACHEL VOLBERG 

Ms. VOLBERG. Thank you, Chairman Terry, Ranking Member 

Schakowsky, and members of the subcommittee. I would like to 

thank you for inviting me to testify this morning. My remarks 

today will focus on the likelihood of an increase in problem gambling in the wake of the introduction of online gambling, in possible 

changes in those most vulnerable to developing problems and on 

additional measures that could be adopted to protect consumers 

and minimize harm. 

The bill before you, H.R. 2666, provides for federal oversight of 

states and tribes that would issue licenses for online poker. H.R. 

2666 includes several laudatory requirements for addressing problem gambling and responsible gambling including provision for a 

federally managed self-exclusion program. H.R. 2666 requires 

states and tribes to adopt practices that the Federal Government 

recommends to protect consumers and amends the Public Health 

Service Act to give SAMHSA authority to address gambling addiction. 

While these are welcomed improvements over an earlier version, 

I remain concerned that while H.R. 2666 authorizes SAMHSA to 

establish and implement programs for the identification, prevention and treatment of problem gambling, there is no specific mention of research or any provision to assure that research on online 

gambling and its impacts will be undertaken. 

There is substantial research internationally showing that problem gambling rates are three to four times higher among online 

gamblers compared to those who gamble but not online. It is quite 

likely that there will be an increase in problem gambling prevalence in the United States as online gambling participation increases and as inexperienced players encounter difficulties controlling their involvement. 

Although these new problem gamblers may eventually overcome 

the difficulties related to their gambling, most of the financial, psychological, social, work, school, and legal harms associated with 

problem gambling cannot be undone. 

Problem gambling is not distributed evenly throughout the population, and some groups are more vulnerable than others. Generally speaking, males, adolescents, some racial and ethnic groups 

and people with low income an education have the highest rates of 

problem gambling. However, in some countries, rates of online 

gambling participation are higher among women and older adults 

compared with more traditional forms of gambling, and these new 

groups of gamblers may be particularly vulnerable to developing 

problems going forward. 

Understanding who is vulnerable has relevance to both gambling 

policy and the development of effective interventions. Beyond likely 

increases in prevalence, risk profiles may also change, and it would 

be important to be prepared to address the needs of new groups of 

problem gamblers as these emerge in an online environment. 

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nationally, research serves an increasingly critical role in informing 

gambling policy and regulation. However, the roughly $3 million 

that is spent annually on gambling research in the United States 

means that we know very little about how gambling in our country 

can be most safely provided. 

My own experience suggests that redressing this issue requires 

enshrining both consumer protection and the role of research in 

legislation that permits new forms of gambling. Most such legislation emphasizes revenue generation, and mention is rarely made of 

consumer protections. 

That is why I am particularly proud of the legislation that was 

passed 2 years ago in my home State of Massachusetts. The Expanded Gaming Act makes it clear that the intention of the statute 

is to provide the greatest possible economic benefits while reducing 

to the maximum the potentially negative consequences of introducing casino gambling to the Commonwealth. The effort to reduce 

negative consequences includes establishment of a public health 

trust fund from which 5 percent of the tax revenues generated annually by the three new casinos will be distributed for problem 

gambling research, prevention, and treatment. 

Thank you for the opportunity to testify, and I look forward to 

answering your questions. 

[The prepared statement of Ms. Volberg follows:] 

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Mr. TERRY. Well, thank you, Dr. Volberg. Mr. Eggert, you are 

now recognized for your 5 minutes. 

STATEMENT OF KURT EGGERT 

Mr. EGGERT. Thank you, Mr. Chairman, and madam ranking 

member and members of the committee. I appreciate you inviting 

me back. I was here 2 years ago at a similar hearing and testified 

similarly. I talk about consumer protection and gambling, and gambling is a consumer industry which means that consumer protection should be hard-wired into every aspect of its regulation. And 

so I would like to talk about what I consider three very important 

aspects of consumer protection that should be considered in legalizing Internet gambling. 

Number one is that gamblers should always be provided with all 

of the information that they need in order to make good decisions 

about whether, when, where and how to gamble. They should be 

given the information they need to be good shoppers. It used to be 

that we looked down on gamblers and treated them as like lesser, 

you know, almost evil people. And now they are just consumers. It 

is like buying a car, and if you are buying a car, you get to have 

information about gas mileage. In the same way, if you are buying 

gambling, you should get all the information you need. 

A crucial piece of information for slot machines is the hold percentage. Every slot machine is designed to have a specific hold percentage which is the amount that the casino on average keeps of 

the bet, returning the rest in winnings. Why don’t we get to know 

that every time we use a slot machine? That is basic information 

that every consumer should have any time they play a slot machine, either on the Internet or in land-based casinos. 

It is especially important for Internet slots because you are not 

in a casino. You haven’t picked the slot machine based on the staff 

or the ambiance or the floor shows. You are just sitting in front of 

your computer, and so if you are looking to decide where to play, 

the hold percentage of the slot machine should be paramount. And 

so any Internet slot machine should tell you as you shop and as 

you gamble what hold percentage you are facing. 

The second rule of consumer protection Internet gambling concerns bots, poker bots. What these are are consumer software programs designed to play poker, and I think it is important that players shouldn’t lose money to poker bots that can play better than 

they can, unless they want to. If you choose to say I want to go 

against the best bot in the world, then more power to you. But you 

should get to know that that is what you are doing. 

Now, there was a poker bot ring in Sweden in the last year that, 

as far as I can tell from the news, won like a million dollars or 

more in just a couple months. If bots are strong enough and good 

enough to do that, they are a significant threat and we have to address that problem. Bot-makers are getting better all the time. 

There is a bot playing Limit Texas Hold’em that, according to the 

New York Times, can beat most people in the world. There is a 

new company that says they designed a neural network bot that 

can play No Limit Texas Hold’em as well as most people. 

And so as computers get better, as neural networks get better, 

making bots is going to get easier and easier. And the day will 

79 

come where some kid in their garage with a high-powered computer can make a bot that can defeat most human players. It will 

be a challenge to stop that, and if we can’t stop that, we have to 

give players some defense so that they know if they are playing a 

bot or if they are playing somebody who plays abnormally well like 

a bot might, so what I would recommend is we would have ratings 

for poker players so that you can tell when you are facing a much, 

much better player that may well be a bot. 

A third important aspect of consumer protection is giving players 

the power to self-exclude and to limit their play, either by the day, 

week or month by how long they play or how much they bet and 

give them this kind of protection so that they can control their betting. It is a consumer industry. Consumers should be empowered 

to make good decisions. And so the industry should give them the 

tools they need to make good decisions. 

In my testimony I talk a lot about what the different states have 

done and what Congressman Barton’s bill has done, and I would 

be happy to answer questions about that further. But again, I 

thank you for allowing me to testify. 

[The prepared statement of Mr. Eggert follows:] 

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Mr. TERRY. Well, thank you for your return performance, sticking 

with kind of a show theme. Thank you all for your testimony, and 

now it is time to begin our questions. And my first one, because 

you are a law professor, I want to ask you this question—— 

Mr. EGGERT. Guilty as charged. 

Mr. TERRY. This is a DOJ opinion about the Wire Act. People tell 

me it is the law. Can you work us through as quickly as you can 

as a law professor, is that the law? 

Mr. EGGERT. Well, the law is what the courts and the people enforcing the law say it is to some extent. I think that is—— 

Mr. TERRY. Good point. 

Mr. EGGERT. I think it is a valid interpretation of the law. The 

DOJ’s position, I think you can make a strong argument that it is 

the correct one. And so it isn’t the law itself but it is not a horrible 

misinterpretation of the law. 

Mr. TERRY. What happens if New Jersey or Nevada or Texas 

goes forward and there is a new administration next year or I 

mean in a couple years or there will be and the DOJ goes back to 

the previous four administrations’ interpretations of the Wire Act? 

Mr. EGGERT. Then you would have an interesting battle between 

the states, which I think at that point would be loath to give up 

their flourishing Internet industry, and they and the DOJ would 

have to fight it out in the courts. And ultimately the courts would 

determine who was correct. 

Mr. TERRY. And that would be a ripe one for the Supreme Court 

to probably take up on a fast track. 

Mr. EGGERT. I would think so. 

Mr. TERRY. Yes, legally, it is just very interesting, and as a 

former lawyer, those are the type of issues that kind of get my attention but also as a father they get my attention, and probably 

starting at about 8, my kids became pretty savvy shoppers with my 

credit card online. In fact, it is to the point where I just say you 

go to the Web site and do it yourself. 

Ms. SCHAKOWSKY. Add to cart. 

Mr. TERRY. Add to cart. Yes, on Dad’s credit card which they 

think is theirs. And in fact, they at least for their lacrosse equipment, does that all the time. My card is already in there. And so 

they go get their new set of lacrosse gloves or pads or whatever, 

and then the next day I open up my email and see the receipt and 

call them and say what the heck did you do? 

But Mr. Abboud and then to Mr. Pappas as well, how do we prevent the children who, as Mr. Abboud said and when you said that 

it hit right at home, how do we really know if a minor is playing, 

if they are using Dad’s credit card or Mom’s and how do we prevent 

that? Mr. Abboud first. 

Mr. ABBOUD. Don’t legalize it and—— 

Mr. TERRY. OK. Mr. Pappas? 

Mr. ABBOUD [continuing]. Shut down the illegal operators that 

are here that are operating today. You can get into a long, technological discussion about whether you can or can’t prevent minors 

from getting involved, and I think some people believe you can, 

some people believe you can’t. I have seen the technological demonstrations. I think they are a barrier to market. I think by the 

time someone has to go through all of that, they will find that if 

109 

you don’t shut down the illegal sites, that is where they will end 

up. 

But also when you speak to children I think with respect to Congressman Barton whom I have tremendous respect for, and for Mr. 

Pappas to my left, I think their intentions about poker are very 

clear. But I don’t think that is the intent of the legalization of online gaming. I think that the unclear nature of what the Wire Act 

means was hopefully Congress would take action. And I think that 

using the poker analogy, for the industry to go state by state, particularly in Nevada, to try to scare Congress into acting, was probably the worst bluff in the history of poker. 

In Nevada, almost shamefully, they rushed it through the legislature with an emergency declaration, passed unanimously by both 

houses. We need to pass this poker bill now. We need to set the 

precedent. It is just poker. It is just poker. It is just poker. Nine 

months later it turns out it wasn’t just poker. They have the ability 

without the act of the legislature to do full online gaming because 

it wasn’t sustainable. Poker is not a sustainable market. It is fine 

if people want to play poker online. If it is safe they can probably 

do it. But it is about this. It is about slot machines geared toward 

children, Marvel comics, Iron Man, kiddie slots. You know, this 

stuff is not what we are about. That is where the industry is going 

to go, and unless you—— 

Mr. TERRY. All right. Let me—— 

Mr. ABBOUD [continuing]. Shut down those illegal sites and unless we restore the Wire Act—— 

Mr. TERRY. I want to save some time—— 

Mr. ABBOUD [continuing]. We keep—— 

Mr. TERRY [continuing]. For Mr. Pappas on that. And by the way, 

when I got on one of my iPads, they did download an app for slots. 

I deleted it, but they weren’t gambling but it was just a regular 

app. Mr. Pappas. 

Mr. PAPPAS. I appreciate the opportunity to respond, and I think 

it is important that we recognize that age verification technology 

exists, not only in Internet gaming but in all forms of e-commerce 

that are age restricted. When you talked about your children buying lacrosse products, those aren’t age-restricted products. Therefore, there wasn’t an age-verification system in place for them to 

make that purchase. If a person wants to make a deposit on an 

Internet gaming Web site, they would have to go through tremendous and rigorous levels in order to be able to make that deposit, 

proving that they are not only who they are, saying who they are, 

this is Jon Pappas depositing, but that Jon Pappas is actually 21 

years of age. 

And as I mentioned in my testimony, underage access in Nevada 

where this has been going on since April is zero. There has not 

been one reported incident of underage access in the State of Nevada and further—— 

Mr. TERRY. How do you know, though? 

Mr. PAPPAS [continuing]. Looking at the European—— 

Mr. TERRY. That is one of the questions I have is how do you 

know, though? 

Mr. PAPPAS. Because regulators actively seek to try to get on the 

sites themselves, and if there was a parent or a child was able to 

110 

access a site and I would suspect if they lost money on that site, 

the parent would have to report that to the authorities, to the regulators as well as to the credit agencies, and they would either get 

a refund for the money. None of that has been recorded. And if you 

look at the European experience which has been going on for a decade, in 2011, the European Children’s Charities Coalition on Internet Safety notified the European Commission that since 2007 they 

have not been made aware of a single instance where a child has 

beaten the system and gotten online to gamble. 

The fact is age verification is here. It is working very effectively 

today. I welcome any way that we can improve it to ensure that 

children don’t have access to these sites because I think that is extremely important. But I will say that it has been working very effectively already. 

Mr. TERRY. Thank you. My time is up. Now the ranking member 

of the committee, you are recognized for 5 minutes for your questions. 

Ms. SCHAKOWSKY. Well, first of all, let me congratulate the 

panel, every one of you. I found myself nodding as the arguments 

are compelling. 

But Mr. Abboud, you gave very passionate testimony I think, but 

I just want to mention this that the Venetian Casino is owned and 

operated by Sands and Mr. Sheldon Adelson, and there is actually 

promotion of mobile casino wagering. A direct quote from the Venetian, ‘‘Is there anything you can’t do on a smart phone or tablet 

nowadays? Mobile casino gaming is available to you on property 

during your stay, and you can even play from your room.’’ That is 

one quote, and the other is they also promote on their Web site a 

mobile sports betting app for smart phones, tablets and PCs, and 

they tout that the app ‘‘allows you to wager anywhere in Nevada’’ 

which is not a far cry from anywhere in the United States. 

So I just want to say that—feels to me a little hypocritical. But 

having said that, I wanted to ask about, Mr. Eggert, the consumer 

protections. Do you feel that it is possible to make sure that the 

consumer protections are built into legislation sufficiently to protect people from the potential abuses of online gambling? 

Mr. EGGERT. I think that there are good consumer protection devices that can be built in. I am not sure if you can ever have a perfect system. I think the problem of poker bots is going to be a difficult one, and I don’t know that there is a good consumer protection solution to bots. But I think for slot machines, we can certainly have better protection than we have in almost any place in 

the country, specifically better information about hold percentages, 

and I think you can also design good methods for people to control 

their gambling that should be hard-wired into it. 

So we can do a lot better, but I don’t think you can have a perfect system. 

Ms. SCHAKOWSKY. I also wanted to ask, was it Mr. Abboud talking about its public policy? Were you the one that was talking 

about how now we have turned gambling into—no, that was you, 

well, here is the thing. I was in the state legislature. We were often 

sold the lottery and other kinds of gambling revenue as helping our 

schools and in Illinois supposedly for education. I know that for a 

time it really displaced money that would ordinarily go for the genVerDate Nov 24 2008 12:31 Nov 05, 2015 Jkt 037690 PO 00000 Frm 00114 Fmt 6633 Sfmt 6633 F:\MY DOCS\HEARINGS 113\113-107 CHRIS
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eral revenue funds to education. I think that was corrected now in 

Illinois. But what is the history of that and do these revenues, 

which are significant, actually help us to fund the needed priorities 

for our governments? 

Mr. BERNAL. Sure. So without question the answer to that is it 

has failed to produce the revenues that they have promised. No one 

can name a state in this country, whether it is from Georgia to 

Washington State, where people have said, in Georgia they are 

going to fund scholarships through their lottery, and then in the 

end what you see happening is low-income people losing money to 

pay for middle-class kids to go to college. And now that revenue 

hasn’t sustained itself. So now they are going to turn to slot machines in Georgia. 

Ms. SCHAKOWSKY. So have there actually been studies that 

would show us? 

Mr. BERNAL. Oh, yes. 

Ms. SCHAKOWSKY. Do you have studies—— 

Mr. BERNAL. The Rockefeller Institute in Albany. SUNY University up in Albany has done a great study, more so than any other 

entity out there, has done a great breakdown of the fact that gambling is not a sustainable revenue source from a governmental 

standpoint. 

Ms. SCHAKOWSKY. OK. And Dr. Volberg, Mr. Bernal also cited 

some studies about the amount of revenue that comes from problem gamblers. Is there a way, do you think, that would actually 

work that could address that problem? 

Ms. VOLBERG. Yes, the—— 

Mr. TERRY. Microphone. 

Ms. VOLBERG. Oh, sorry. The issue of the proportion of revenues 

that come from problem gamblers has been a contentious one, and 

Mr. Bernal’s testimony lists quite a number of different studies 

that have been done. But the challenge is that the ratios are different in different jurisdictions. So the industry’s approach to trying to address the issue of how much they depend on problem gamblers has been to try to expand the pool of people who gamble occasionally so that you have more people who are contributing to the 

pot, if you will. But I think in the end, the industry is going to be 

dependent to a significant degree on people who spent more than 

many of us think they should on their gambling involvement. 

Ms. SCHAKOWSKY. If I could make just one more comment, in Illinois the lottery manager was just directed to expand the promotion 

beyond low-income people to people who have more revenue. Thank 

you. 

Mr. TERRY. The chair recognizes the Full Committee Vice Chair, 

Ms. Blackburn. 

Mrs. BLACKBURN. Thank you, Mr. Chairman, and as a point I 

think just kind of a reality touch point to this hearing, Mr. Barton, 

who we all dearly love, got off on a little bit of a tangent when he 

did his opening statement this morning and said he thinks that 

God is in favor of his online poker bill because his flight got in 

early and, you know, he thinks he had angel wings to help get him 

here. 

But I would encourage the gentleman from Texas to remember 

he only need look at the number of his bill, 2666, to remember that 

112 

the devil is in the details, so just as a point of careful guidance and 

instruction. 

Mr. BARTON. At least you were listening to me. 

Mrs. BLACKBURN. Mr. Barton, I am always listening. We women 

do that very well. Woo, yes. OK. Back to the questioning. Aren’t 

you all glad you came? We are glad you came because I don’t know 

if it is Mr. Eggert, the botnet that is out there spamming our Twitter accounts or what, but indeed they are very active and we fully 

realize that. 

Some of you may be aware that Congressman Welch and I are 

co-chairs of a privacy working group, and Ms. Schakowsky is a part 

of this. And I have to tell you, it is a bipartisan group. It is a part 

of this committee. We are enjoying the education that we are getting on privacy issues and concerns from our constituents, and we 

are learning a lot. And one of the things that we have really taken 

note of is how incredibly complex the expectations of privacy are 

from constituents and from different participants in the industry. 

And we are seeking to work through this in our working group sessions. 

So Mr. Freeman and Mr. Pappas, I want to come to you, Mr. 

Freeman, let us start with you. What are the expectations a consumer will have of privacy for their participation and their information if they log onto one of the sites? First you, and Mr. Pappas, 

if you will follow him? 

Mr. FREEMAN. Thank you, Congresswoman. I think many were 

expecting Andy and I to have the fireworks today, so I am thrilled 

to see you and Mr. Barton taking the stage. When it comes to privacy, that is obviously an area that we value significantly. Consumer protection, a topic that has been a primary issue here today, 

should be an issue, and it is an issue we believe in very passionately. The only way to address privacy, the only way to address 

consumer protection, is through effective regulation. The black 

market is the one area where these issues won’t be addressed. 

With online gaming, all of this is voluntary. People are going on, 

they are providing the information themselves. They are choosing 

to enter that information in there, and through the regulatory bodies, the protection of that information is assured. That is what 

makes this situation unique in that sense, that one, people are 

choosing to do this in a voluntary manner, and two, the regulators 

are assuring that this information is protected. 

Mrs. BLACKBURN. OK. 

Mr. PAPPAS. First, let me start by saying that the messages you 

have been receiving via Twitter and Facebook I assure you are 

from real people who live and reside in your district and care passionately about their right to play online. Secondly, the issues of 

privacy and data security for Internet gaming are no different than 

they would be for any other e-commerce company, be it Amazon or 

Facebook. We believe that licensed entities would have to require 

all of the same privacy and data security laws that every other 

American company must apply. You know, today we have a situation where American consumers, except for those in the three 

states where it is authorized, are playing on offshore sites and they 

are not subject to any U.S. law or regulation. So we are asking for 

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ized, regulated and that those sites are adhering to all the strong 

data privacy laws that this Congress or states come up with. 

Mrs. BLACKBURN. OK, thank you. Mr. Chairman, I have got two 

other questions I am going to submit because of time. One pertains 

to Mr. Abboud’s testimony and the November 13 FBI Crimes Division letter, and then the other pertains to the 2009 British hacker, 

Ashley Mitchell, when he was posing as an administrator for Zynga 

poker games. With that I yield back. 

Mr. TERRY. Thank you. Now recognized for 5 minutes, the gentleman from Vermont. 

Mr. WELCH. Thank you very much. Folks are going to gamble. 

They like to do it, and any way they can, they will. And there obviously are legitimate reasons and then there are some folks that get 

overwhelmed by it just like with any other kind of activity. So anything that we do has to include some protections. You have been 

trying to do that in Las Vegas as I understand it. 

But I want to direct these questions to Professor Volberg and 

Professor Eggert. How do we ensure that minimizing the harm is 

baked in as a priority from the start and not simply laid on afterwards, after the fact, and the harm is done? I mean, if we get at 

it from the beginning with some sensible plan, that has in my view 

more prospect for being successful in helping more people. If you 

could—— 

Mr. EGGERT. I think that the way you do that is you plan it before you legalize the Internet gambling. It should be something 

that should be written into the regulations from day one. I think 

there is a lot of room. I am with Dr. Volberg on this, a lot of research to see what helps with problem gamblers. But as far as consumer protection, it is pretty straightforward what information 

people need and want in order to gamble, and they should be provided that. 

One of my concerns about the state-by-state approach is that I 

am worried that it will be a race to the bottom with states with 

weak protections will win out over states with stronger protections, 

and any federal program has to take that into account and prevent 

it from happening. 

Mr. WELCH. OK. Dr. Volberg? 

Ms. VOLBERG. I guess I would echo Professor Eggert’s remarks. 

I think you do have to start, even before the regulations, you have 

to bake the language into the legislation that says this is not just 

about raising revenues or paying for other programs. This is about 

consumer protection and making sure that what we put in place is 

going to work. 

Mr. WELCH. OK. Thank you. Mr. Freeman and Mr. Pappas, you 

are advocates for this. What are your views on having as part of 

any authorization, A, consumer protections, and B, some help to 

problem gamblers. We can start with you, Mr. Freeman. Go ahead. 

Mr. FREEMAN. It is not often an industry comes before you asking for regulation. That is what the gaming industry is doing today, 

asking for some very specific points around age verification, around 

consumer protection, and around duties of responsible gaming. The 

way to do that is obviously through regulation. 

To the previous point that was made, the way our industry behaves, being regulated in Nevada and Mississippi and countless 

114 

states around the country, we are actually held to the highest 

standard because any state in which we do business can punish us 

for what we do in another market. So we actually have a race to 

the top in that sense, and it has worked for an extended period of 

time for our industry. 

Mr. WELCH. All right. Mr. Pappas? 

Mr. PAPPAS. Most definitely. I mean, I represent a consumerdriven organization, so consumer protection is paramount to our 

concern, and that is why we believe a regulated market is going to 

far better protect consumers than a prohibition or even the status 

quo. 

So we believe that regulation, that lawmakers should require 

that regulators implement best-of-breed technologies and that it 

gives the companies the flexibility to innovate and be all of the potential problems that have been raised, and I think that that is the 

best way to proceed, with lawmakers setting the standards, regulators enforcing those standards and companies innovating and 

making them even better. 

Mr. WELCH. OK. And Mr. Abboud, you raised some legitimate 

concerns I think that are on the minds, obviously, of lawmakers in 

the states and also here. I mean, is it your view that there really 

are no protections that could be part of any authorizing legislation 

that would get the job done so it is better not to do it at all? 

Mr. ABBOUD. Well, as I said, when the Wire Act was overturned, 

that is not the day that the Internet became safe. And it is an issue 

that we study. It is an issue that we study every day. But we don’t 

feel that the technology there is to safeguard consumers to the extent—— 

Mr. WELCH. Well, let me ask this. If the technology were there, 

then would you have a different point of view? 

Mr. ABBOUD. I don’t think this is a market that we would ever 

go into. We just think that turning every device into a casino takes 

gambling too far. 

Mr. WELCH. So what would be the proper limit, as you see it? 

Mr. ABBOUD. None. We talked about the European model. We 

have something in the United States that they don’t have, billions 

and billions of dollars of brick-and-mortar casinos that generate 

jobs, that generate a lot of livelihoods for a lot of people across the 

country, based on shows, conventions, trade shows, all those types 

of things. Europe doesn’t have that. Simply because Europe 

stepped forward and pandered to the lowest common denominator 

is not something our industry should follow. 

Mr. WELCH. OK. Thank you. I yield back. 

Mr. TERRY. Thank you, Mr. Welch. I now recognize the vice 

chairman of the subcommittee, Mr. Lance, for 5 minutes. 

Mr. LANCE. Thank you very much, Mr. Chairman, and I think 

this is a very important panel, and I respect everyone who is on 

the panel. I hope to participate in the hearing for its full length. 

I do have a Health Subcommittee as well, but I certainly am deeply 

interested in the views of everyone on the panel. 

To Mr. Pappas, you have stated in your testimony that the bill 

does not force any state to participate in an intrastate Internet 

poker system, and equally as important it allows states to implement their own online gaming regulations. As you are aware, New 

115 

Jersey has begun Internet gambling. Would this legislation in your 

view in any way preempt what New Jersey is currently doing? 

Mr. PAPPAS. Mr. Barton’s bill, H.R. 2666, would not in any way 

restrict the ability of Nevada or any other state to provide—— 

Mr. TERRY. I think your microphone is off. 

Mr. PAPPAS. Oh. You are right. I am sorry. Mr. Barton’s bill 

would not restrict in any way the ability of New Jersey or any 

other state to provide house-banked casino games, lottery tickets or 

any other games other than poker. However, with poker it would 

require that the state would have to become an authorized federal 

body, authorized by the Federal Government to continue to do that. 

Given that New Jersey is known for being one of the most robust 

gaming regulations in the country—— 

Mr. LANCE. And heavily regulated. 

Mr. PAPPAS. And heavily regulated, that they would easily meet 

if not exceed whatever standards the Federal Government sets 

aside. 

Mr. LANCE. Thank you. And then to Mr. Freeman and Mr. 

Abboud, regarding the DOJ opinion as it concerns the Wire Act, I 

know you reach a different conclusion ultimately, but is it the view 

of both of you that there needs to be statutory legislation in this 

regard as opposed merely to an opinion from the current DOJ? 

First Mr. Freeman and then Mr. Abboud. 

Mr. FREEMAN. It is our opinion that the online gaming environment would be better with Congress’ putting in place some minimum thresholds in the areas that I discussed of age verification, 

of geolocation and others. Without that, states are moving forward. 

They are putting in place as your state is doing very comprehensive regulations. I think they are showing an ability to regulate 

this market effectively. 

Mr. LANCE. Thank you. Mr. Abboud? 

Mr. ABBOUD. Well, as I stated previously, we think that the Wire 

Act being overturned can be overturned at any moment by any administration. The states that are going forward are doing so with 

great risk as are my follow industry members are going forward 

with great risk. So that is why I am here today asking for the Wire 

Act to be restored so that we can take away that ambiguity. 

Mr. LANCE. And you would restore it in such a way that this 

would not be permitted? 

Mr. ABBOUD. Correct. 

Mr. LANCE. And Mr. Freeman, you would modify it to permit it 

with certain federal regulations? 

Mr. FREEMAN. Again, putting in place those minimum standards. 

In the absence of that, or even with the changes that are recommended, people are going to continue to game. As we mentioned 

before, in 2012 nearly $3 billion was spent. Fixing the Wire Act 

does nothing to change the desire that has been referenced. 

Mr. LANCE. I tend to agree with that, and certainly I believe in 

New Jersey we have tried to be responsible. And let me repeat that 

I believe that New Jersey regulation is strict, and we have had a 

generation of experience in this regard. But I certainly respect both 

of your points of view on this issue. 

116 

Mr. Pappas, regarding Congressman Barton’s legislation, would 

it in any way prevent New Jersey from offering games of chance 

such as blackjack or slots? 

Mr. PAPPAS. No, sir, it would not restrict the ability for any 

house-banked games. Poker would be the only place where New 

Jersey would have to consult with the federal law. 

Mr. LANCE. And from your perspective, that consultation would 

be relatively easy and seamless and it is likely that New Jersey 

could continue to do what it is currently doing? 

Mr. PAPPAS. That would be our hope. As an organization, we 

fought very hard for the New Jersey law and we support that law. 

We also support Mr. Barton’s law, and we hope that they can work 

together. 

Mr. LANCE. Thank you. Let me say that from my perspective, the 

governor of New Jersey, my close friend Governor Christie, and the 

legislature of New Jersey and those who administer our laws in 

New Jersey try to work in a comprehensive fashion and we try to 

work with all of those who are interested in this issue including all 

of those on this panel, and I want to thank the panel. And Mr. 

Abboud, you certainly represent a very great corporation in this 

country, Sands, and I deeply respect that. Thank you, Mr. Chairman. 

Mr. TERRY. Thank you, Mr. Lance. And now the Chairman Emeritus for the Full Committee, Mr. Joe Barton. You are recognized. 

Mr. BARTON. Well, thank you, Mr. Chairman. Let me start out. 

I was being somewhat flippant when I talked about God being for 

this bill. Obviously, God doesn’t care a fig one way or the other 

about our bill, but I will say as a practicing Christian that God 

does give men and women free will, and I think we ought to have 

a law that reflects free will in this issue. 

I did not say in my opening statement but we do have some representatives of the Indian casinos and the Indian Gaming Association in the room. And they were invited to present testimony and 

to be a part of the panel. And it is a voluntary basis. So they were 

invited, and they chose not to. But obviously Indian gaming is a 

huge part of this issue since almost as much and perhaps more 

people play in Indian casinos than in non-Indian casinos. 

Mr. Freeman, in your testimony you gave the list of things that 

you said federal legislation should include or accomplish. In listening to you I believe that my bill, H.R. 2666, hits all those points. 

Do you agree with that? 

Mr. FREEMAN. Mr. Barton, your bill certainly hits those points 

and others. There are points we would certainly like to see added 

to that, and I am happy to discuss those with you. 

Mr. BARTON. OK. And Mr. Abboud, I am glad that you are here 

and you represent the Sands Corporation. The first hotel casino 

that I stayed in as a young man when I went to Las Vegas for the 

first time was the old Sands, and just last year I held a political 

fundraising event at the Venetian which I believe is a property of 

the current Sands Corporation. And so I have great respect for the 

company that you represent. 

Ms. Schakowsky pointed out in her questioning some advertising 

material. I would like to put that up on the board, up on the 

117 

screen, that Cantor Gaming, which is a vendor of the Sands and 

does the Venetian, has on that particular slide right there. 

[Slide shown.] 

Mr. BARTON. ‘‘Is there anything you can’t do on a smart phone 

or tablet nowadays. Mobile casino gaming is available to you on 

property during your stay. You can even play from your room.’’ And 

then the next one, which is again at the Venetian. It talks about 

their sports book, that you can wager from anywhere in Nevada. 

Now, I want to be fair on the first slide about the gaming. It does 

not allow you to play poker from your room for some reason. You 

can do slots or roulette or Wheel of Fortune or whatever. I would 

like to hear your comments on this because what you are advertising here, as Ms. Schakowsky pointed out, is the same thing that 

we are talking about in my bill for poker only. It is just a matter 

of how wide the geography is or the wireless connection. 

Mr. ABBOUD. Well, that is why we are here today, and I appreciate the opportunity to respond to what Congressman Schakowsky 

said because it is all about human interaction, right? Congressman, 

all of you, have the right to eyeball me and determine whether or 

not I am telling the truth, and you can hold me accountable. It 

doesn’t happen with a lot of online gaming opportunities, does it? 

And it is also about the location. That is a very controlled environment in a regulated state, in a regulated casino, that can only 

be done within the four walls of our building. You have to go up 

to Congress Terry, if he works at the cage, to fill out the application, have an eyeball-to-eyeball experience, make sure you aren’t on 

the self-exclusion list, make sure that we don’t think you have had 

too much to drink, a whole series—— 

Mr. BARTON. I don’t want you to filibuster the last 30 seconds. 

What your company is advertising here, except for the geography, 

is the same thing that my bill does, and my bill is poker only. 

Poker only. Now, I have never met a professional roulette player. 

I have never met a professional slots player. But there are lots of 

professional poker players because it is a game of skill. Now, if we 

are the final table here, Mr. Long, myself, Mr. Harper, Mr. Terry, 

Ms. Schakowsky, I have got a high probability I can tell you which 

one of us comes out the winner at the final table because I have 

played with Billy Long, and I think he probably beats me. Now, I 

have never played with Jan, so I don’t know. She may be a sleeper. 

But poker is a game of skill, and all my bill does is allow free will 

at the state level if the governor allows it for people who want to 

play poker online. And I again appreciate Mr. Terry for his holding 

this hearing, and I am going to stay and hear the other questions. 

And maybe, if given an opportunity, I would like a second round 

for myself, if that is—— 

Mr. TERRY. The gentlelady from Illinois and I will discuss that. 

Mr. Harper, you are recognized for 5 minutes. 

Mr. HARPER. Thank you, Mr. Chairman, and I thank each of you 

for being here on what is a very important topic and one that has 

created a little bit of a division, OK? Quite a divide. But you know, 

we have of course legal gambling in the State of Mississippi. It is 

a big industry, on average about $2.2 billion worth of revenue a 

year or spent on gambling in Mississippi versus maybe, what, $10 

billion a year on average in Nevada perhaps? But it is a tourismVerDate Nov 24 2008 12:31 Nov 05, 2015 Jkt 037690 PO 00000 Frm 00121 Fmt 6633 Sfmt 6633 F:\MY DOCS\HEARINGS 113\113-107 CHRIS
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driven business. The brick-and-mortar issues very important there, 

and it is a destination so that what you see is not just a casino but 

you see restaurants, golf courses, water parks, I mean other things 

that are there that draw that. This brings none of that. And my 

concern, I guess my overriding concern I have is if we address this 

issue and we do what Mr. Barton proposes or what others may propose, is how are we doing anything to address what is the underlying problem or the background problem of offshore and out-ofcountry illegal sites? We are not addressing that. And certainly if 

we restore the Wire Act and give it some teeth, perhaps we can do 

it. But it would seem to me that this bill, the problem that I have, 

one of the problems I have with it is if we make it legal and then 

states can opt out, it would seem to me if you were going to go that 

route, the better thing would be to make it illegal and let the state 

legislatures opt in, at least might give some better safeguards, not 

that I am proposing that, but I am just saying versus what we are 

seeing here. 

So my concern I guess is, and I will start with you if I can, Mr. 

Abboud, what in your view would it take for the United States to 

be able to efficiently and effectively regulate Internet gambling and 

control the offshore illegal sites? Do we have the ability to do that 

if we were to have the will to do that? 

Mr. ABBOUD. Thank you, Congressman. I think that we do. Government is doing it with online pharmacies today. They shut down 

1,200 illegal online pharmacies. To say that we can’t do it is not 

a plausible answer. And I think when it comes to the safety of the 

industry and the integrity of it, it is the FBI that has testified before Congress and sent letters saying that there is no guarantee 

that you can prevent youth from gambling. 

And with all due respect to Congressman Barton, I am a big fan 

of his. When you all are playing poker together around a table, you 

can’t show each other your cards. You can’t collude against each 

other because it is human interaction. I don’t know what happens 

online. No one has proven to me that you can’t collude against each 

other. 

This is in its infancy, in its infancy. And it is a rush to market, 

as I said before, because the Wire Act was overturned. That is not 

the day the Internet became safe. It is not a safe place for a lot 

of different transactions. And I said before, this is a play to the 

youth of America, and this is going to be our Joe Camel moment. 

And if we do not behave responsibly and protect ourselves against 

what could prey on youth and other people, it could very well be 

the demise of our industry. And to go forward would be irresponsible. 

Mr. HARPER. Wouldn’t it seem that the best place to start then 

is let us go ahead and do everything we can within our power from 

a technological standpoint to shut down the illegal sites? 

Mr. ABBOUD. Absolutely. And there has not been enough discussion but that I think everyone on this panel is in agreement to shut 

down the illegal sites. And it is essential. If that is all that came 

out of this whole process, we would all be a lot better off. But we 

haven’t done anything, and the industry, including my company 

and everyone on this panel and including the no-casino people, 

have not done enough to push for that effort. 

119 

Mr. HARPER. And if you don’t address that, of course if you make 

it legal across the board and there is going to be additional regulatory burden and responsibilities and costs which would seem to 

be something that the players would incur, would that not then 

naturally drive them to the cheaper site in their views? 

Mr. ABBOUD. Well, I think—— 

Mr. HARPER. If you haven’t stopped the offshore illegal sites. 

Mr. ABBOUD. Thank you. I think if it was to be legalized today 

and we don’t shut off the illegal operators, I think that the industry as it exists today is at an unfair advantage because they will 

be operating in the regulated environment. There is nothing that 

is going to prevent the illegal operator for what we call giving away 

the market, giving away the house, adding more incentives, making it easier to get online. They will go down to the bottom, and 

it will be easier to go to the illegal sites unless we shut them down, 

unless it is a complete uniform shutdown of Internet gaming. 

Mr. HARPER. I thank each of you for being here. My time is expired and yield. 

Mr. TERRY. Thank you. And now the gentleman from Ohio, Mr. 

Johnson, is recognized. 

Mr. JOHNSON. I thank you, Mr. Chairman. You know, I believe 

strongly that states’ rights plays a predominant role in the decisions that we will make about gaming. I think the state governors, 

the legislatures, the people of the states are in a better position to 

be able to decide what they want than regulators here in Washington, D.C. But I also understand, being an IT geek myself, that 

the Internet has opened the door to a different kind of technology 

that has to be looked at and evaluated. 

Mr. Freeman, let us start with you. The AGA has changed its position on Internet gaming over the years. What is its current position on Internet poker and online gaming? Do you want a federal 

law or do you want the states to be in charge of that? 

Mr. FREEMAN. The AGA’s position was adopted in 2010, and that 

is the current position of the organization. We support a Federal 

Government role here in regulating this. We support a poker solution at the federal level, and we support the ability of states to optin as to whether or not they choose to want to offer that game. 

In the absence of federal action, states have moved forward with 

this. We have begun to see states like New Jersey do this in a very 

effective manner, along with Nevada and Delaware. And it is true, 

the industry is increasingly interested in what New Jersey is doing 

because they are proving they can do it effectively. And that is of 

great interest to us. 

Mr. JOHNSON. Yes. You know, my concern from a technological 

perspective is to say we are going to regulate it is one thing. To 

do it effectively and protect the innocent—I do believe that gambling is an enticement to some who would see a potential quick fix 

to a financial problem. I understand that. I also understand though 

that we don’t outlaw prescription drugs because some people fall 

victim to addictions to prescription drugs. It is all about the choice, 

and I firmly believe that the American people have the ability to 

make those kinds of decisions. 

My concern is how the technology, how protections would be put 

in place to protect minors, to protect children, to protect the situaVerDate Nov 24 2008 12:31 Nov 05, 2015 Jkt 037690 PO 00000 Frm 00123 Fmt 6633 Sfmt 6633 F:\MY DOCS\HEARINGS 113\113-107 CHRIS
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tion that our chairman talked about where his kid uses his credit 

card and goes out a couple hundred thousand dollars away without 

him knowing about it, because we know today that minors, young 

people, others that should not get to certain restricted adult sites 

and other sites are able to do so because again, being an IT geek 

myself, I know that there is no perfect security. 

So those of you that are proponents, you can just sound off one 

at a time if you want to. How do you propose to make sure that 

our innocent young people aren’t the ones, and maybe people like 

my chairman who wind up with a couple of hundred thousand dollar gambling debt that he didn’t know was going to be on his credit 

card, to fall victim? 

Mr. PAPPAS. If I can respond first, and thank you for the question, I think it is very important that we look at these issues and 

that we see how regulation can solve them. Again, we are not talking about a theoretical, can this be regulated. This is being regulated today in three states, and it has been regulated in European 

jurisdictions for over 10 years. Ten years. This is not in its infancy. 

This is a mature industry that has dealt with these issues for over 

a decade and responded to them accordingly. 

With respect to underage access, I have already mentioned to you 

that there has not been a single reported incident of underage access because of these tight age-verification technologies that are 

available. It is not simply going on and clicking here. I am 18 or 

I am 21, let me gamble. You have to go through multi-layer age 

verification to not only prove that you are who you say you are but 

that you are of the approved age. So it is certainly not like any 

other form of e-commerce that is not age restricted. This is very restrictive. 

In terms of problem gambling, there are very specific ways to address it, and I would argue, and this may blow people’s minds, I 

would argue that it is easier to protect problem gamblers online 

than it is in the brick-and-mortar casino. I could walk into the Venetian tomorrow with $1,000 in my pocket, play roulette, play 

craps and play poker and walk out and not a single person knows 

I was in the casino and I lost $1,000. Online it is impossible. They 

know every moment you are on the site. They know every game 

you are playing, every wager you are making, every win you are 

making, every loss you are making. It is tracked and recorded in 

real time, and regulators recognize that that wealth of data is gold 

in terms of properly regulating and ensuring that it is not abused. 

Mr. JOHNSON. I appreciate your passion, and my time has run 

out. I would simply point out we have got a prime example with 

HealthCare.gov. Regulated does not necessarily equal secure. 

Mr. TERRY. Thank you, Mr. Johnson. At this time I recognize Mr. 

Long from Missouri. 

Mr. LONG. Thank you, Mr. Chairman, and Mr. Johnson, with 

your comments about the chairman, I am going to miss you on this 

subcommittee. 

Mr. TERRY. Oh, and by the—— 

Mr. LONG. I want one of those credit cards where you get $100,000 on there or whatever that is. 

Mr. TERRY. To clarify for the record, he was not gambling. He 

was buying lacrosse stuff and iTunes. 

121 

Mr. LONG. Mr. Abboud, I got a question for you. Unfortunately 

during these hearings, we can now go back and pull the transcript 

immediately, so I thought I heard you saying, correct me if I am 

wrong, but when you were talking to Mr. Terry early on, I think 

he did the first questioning after you all gave your openings. I 

thought I understand you to say that you are OK if poker is legalized on the Internet as long as it is not expanded to include all 

forms of gambling. 

Mr. ABBOUD. No, we are, for the record, we are opposed to all 

forms of Internet gaming. 

Mr. LONG. OK. I will have to go back and listen to that because 

that is what I thought I heard. Mr. Eggert, as far as these poker 

bots are concerned, these are computer programs that they operate 

how? Is this the people running the site has someone playing 

against you or is this someone in their apartment that hooks up 

to a computer and acts like they are a living, breathing person 

playing a living, breathing person in another state or another country or how do they work? 

Mr. EGGERT. They can be both types. There have been poker 

sites that have used bots to stimulate games so that there are more 

people to sit down at a game. 

Mr. LONG. Kind of like a shell in a casino then? 

Mr. EGGERT. Right. 

Mr. LONG. OK. 

Mr. EGGERT. And you know there they should be telling people 

it is a bot, but they haven’t always done that. But the bots that 

are of most concern are not from the site, are ones that people have 

designed. They are running on their home computers so it looks 

like they are playing, but actually the decisions they are making, 

whether to bet or raise or fold are being made by the computer 

software and not by a human. 

Mr. LONG. OK. And Mr. Freeman, for you, a few years ago, I 

think back 10 years ago, there was a guy whose name was Moneymaker, believe it or not, that won the world series of poker which 

he had gotten in on what they call a satellite. He played 40 bucks 

or something to play a tournament, ended up winning 6 or 7 million, whatever it was. 

So that really put jet fuel into the whole Internet poker thing 

which it thrived for several years until the Black Friday shutdown. 

But during the course of that there were some very high-profile 

cheating scandals where the operators of these sites were actually 

looking at your cards, at the other people they were playing cards, 

and with the skill of the poker players, I think 60 Minutes did a 

special on that. If this legislation goes through, how can people be 

assured that that type of activity does not continue or starts in 

again I guess? 

Mr. FREEMAN. Yes, Congressman, I think you speak to exactly 

the market we all want to prevent. In those days with companies 

based in Costa Rica and elsewhere around the world, where we 

didn’t have the protections, we didn’t have the regulations built in, 

there were a lot of scary things that took place. What we are talking about is a regulated environment with licensed companies. It 

was a real reason that licensed companies don’t want to see underage people online. There is a real reason licensed companies don’t 

122 

want to see cheating take place. That is because they can lose their 

license, not just of their online facility but their brick-and-mortar 

facility in which it has already been mentioned they have invested 

billions of dollars. You have a moral and a business incentive for 

the industry to do this in the most proper, regulated, and effective 

manner, and that is what will assure, rather than the black market, that is what will assure that consumers are protected. 

Mr. LONG. I know with your American Gaming Association that 

you represent several members that I assume they all have brickand-mortar facilities, do they not? 

Mr. FREEMAN. Everyone within our association on the operator’s 

side has a brick-and-mortar facility. We also have all the leading 

manufacturers in the industry as well. 

Mr. LONG. And I know you can’t say into the future, but as your 

best guess, if this legislation did pass and people were authorized 

to open up online poker only casinos, let us say, do you visualize 

that being an MGM, a Caesars, a Sands, a Wynn? Will it be the 

operators that are out there now in the brick-and-mortar marketplaces or will it be smaller operators? 

Mr. FREEMAN. Yes, I think that goes back to Congressman Harper’s point before. How do we protect the brick-and-mortar investments that have taken place in Mississippi and Missouri and elsewhere? You already have these facilities standing. How do we 

make sure that they thrive? We allow them to tap into the new 

market. If we don’t allow them to tap into the new market, we can 

assure that they go the way of Borders and Blockbuster and others 

if they can’t adapt, if they can’t keep up with innovation. 

Mr. LONG. Yes, but my question is do you think they will be the 

only ones that would—— 

Mr. FREEMAN. I think it is up to states to determine how they 

want to structure this. In New Jersey they have structured it in 

such a way where the brick-and-mortar facilities are the only ones 

that can offer it. 

Mr. LONG. One quick question because I don’t have time to go 

to someone else so I will ask you. Nevada apparently has online 

poker now, New Jersey is going forward and Delaware I believe 

were the three. But let us say that they all three had it tomorrow. 

Can those people in Nevada own—do you have to be a resident of 

those states, number one, to play when you are physically in those 

states? And can you play if you are in Nevada and New Jersey has 

it now, let us say, could someone in Nevada play against someone 

in New Jersey or do Jersey people all play against Jersey people 

and Nevada against Nevada or Delaware? 

Mr. TERRY. The gentleman’s time is over, but I will give you 10 

seconds—— 

Mr. FREEMAN. Thank you. 

Mr. TERRY [continuing]. To order. 

Mr. FREEMAN. I also have two points. 

Mr. TERRY. To answer. 

Mr. FREEMAN. One, you don’t have to be a resident of the state. 

You have to be within the boundaries of the state as identified by 

geolocation companies, number one. Number two, on your point 

about can these states work together. They probably can. They 

123 

have not reached agreements to date, but that option is there for 

New Jersey, Delaware and Nevada to begin to work together. 

Mr. LONG. OK. Thank you. 

Mr. TERRY. Thank you, and that concludes time for questions. I 

do have a unanimous consent request to include the following items 

for the record, one, statement of the National Indian Gaming Association; number two, statement of Lyle Beckwith on behalf of the 

National Association of Convenience Stores; number three, statement of Mr. Thackston. 

VOICE. Yes. 

Mr. TERRY. Independent software engineer. Number four, exchange of correspondence between the late Mr. C.W. Bill Young of 

Florida and the FBI. Hearing no objections, so ordered. 

[The information appears at the conclusion of the hearing.] 

Mr. TERRY. And the next item of business is that we have, we 

as the members, have the right to submit questions to you, written 

questions. We will hopefully have those done within the next couple weeks, and I would appreciate about 14 business days. We don’t 

hold you to an exact standard, but appreciate if you would get written questions from the members, from this committee, that you, 

within about 14 days, have them back to us. I would appreciate 

that. 

And I just want to thank all of our witnesses for being here. This 

was a good discussion. Sometimes we made it a little light, but this 

is an extremely important issue. I will make this comment. When 

Mr. Barton first introduced this bill, a lot of us thought it was pretty way out there. But with this decision by the Justice Department, 

it makes it a very relevant question and one that we have to deal 

with. 

Mr. BARTON. Would the gentleman yield a moment? 

Mr. TERRY. Absolutely. 

Mr. BARTON. Well, my first bill that I introduced in this committee was to repeal the Natural Gas Policy Act of wellhead pricing 

on natural gas, and that was at that time way out there because 

John Dingell was chairman. 

Mr. TERRY. Good point. 

Mr. BARTON. That happened. About 5 or 6 years ago I started an 

effort and held a hearing on the BCS, and everybody thought that 

was crazy. Well, thankfully this is the last year of the BCS, and 

we are going to a modified playoff. So Mr. Chairman, the time is 

coming for this bill. 

Mr. TERRY. We have always thought of you on the cutting edge. 

Mr. BARTON. So time is on our side. Thank you, again chairman 

for holding the hearing. 

Mr. TERRY. Well, thank you. And so again, I thank all of our witnesses, and we are adjourned. 

[Whereupon, at 2:18 p.m., the subcommittee was adjourned.] 

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