U.S. GOVERNMENT PRINTING OFFICE

WASHINGTON : 

For sale by the Superintendent of Documents, U.S. Government Printing Office

Internet: bookstore.gpo.gov Phone: toll free (866) 512–1800; DC area (202) 512–1800

Fax: (202) 512–2104 Mail: Stop IDCC, Washington, DC 20402–0001

74–869 PDF 2013

INTERNET GAMING: IS THERE A SAFE BET? 

HEARING 

BEFORE THE

SUBCOMMITTEE ON COMMERCE, MANUFACTURING, 

AND TRADE 

OF THE

COMMITTEE ON ENERGY AND 

COMMERCE 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED TWELFTH CONGRESS 

FIRST SESSION 

OCTOBER 25, 2011 

Serial No. 112–100 

( 

Printed for the use of the Committee on Energy and Commerce 

energycommerce.house.gov 

COMMITTEE ON ENERGY AND COMMERCE 

FRED UPTON, Michigan 

Chairman 

JOE BARTON, Texas 

Chairman Emeritus 

CLIFF STEARNS, Florida 

ED WHITFIELD, Kentucky 

JOHN SHIMKUS, Illinois 

JOSEPH R. PITTS, Pennsylvania 

MARY BONO MACK, California 

GREG WALDEN, Oregon 

LEE TERRY, Nebraska 

MIKE ROGERS, Michigan 

SUE WILKINS MYRICK, North Carolina 

Vice Chairman 

JOHN SULLIVAN, Oklahoma 

TIM MURPHY, Pennsylvania 

MICHAEL C. BURGESS, Texas 

MARSHA BLACKBURN, Tennessee 

BRIAN P. BILBRAY, California 

CHARLES F. BASS, New Hampshire 

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 

HENRY A. WAXMAN, California 

Ranking Member 

JOHN D. DINGELL, Michigan 

Chairman Emeritus 

EDWARD J. MARKEY, Massachusetts 

EDOLPHUS TOWNS, New York 

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 

CHARLES A. GONZALEZ, Texas 

JAY INSLEE, Washington 

TAMMY BALDWIN, Wisconsin 

MIKE ROSS, Arkansas 

JIM MATHESON, Utah 

G.K. BUTTERFIELD, North Carolina 

JOHN BARROW, Georgia 

DORIS O. MATSUI, California 

DONNA M. CHRISTENSEN, Virgin Islands 

KATHY CASTOR, Florida 

SUBCOMMITTEE ON COMMERCE, MANUFACTURING, AND TRADE

MARY BONO MACK, California 

Chairman 

MARSHA BLACKBURN, Tennessee 

Vice Chairman 

CLIFF STEARNS, Florida 

CHARLES F. BASS, New Hampshire 

GREGG HARPER, Mississippi 

LEONARD LANCE, New Jersey 

BILL CASSIDY, Louisiana 

BRETT GUTHRIE, Kentucky 

PETE OLSON, Texas 

DAVID B. MCKINLEY, West Virginia 

MIKE POMPEO, Kansas 

ADAM KINZINGER, Illinois 

JOE BARTON, Texas 

FRED UPTON, Michigan (ex officio) 

G.K. BUTTERFIELD, North Carolina 

Ranking Member 

CHARLES A. GONZALEZ, Texas 

JIM MATHESON, Utah 

JOHN D. DINGELL, Michigan 

EDOLPHUS TOWNS, New York 

BOBBY L. RUSH, Illinois 

JANICE D. SCHAKOWSKY, Illinois 

MIKE ROSS, Arkansas 

HENRY A. WAXMAN, California (ex officio) 

(II) 

(III) 

C O N T E N T S 

Page 

Hon. Mary Bono Mack, a Representative in Congress from the State of 

California, opening statement ............................................................................. 1 

Prepared statement .......................................................................................... 4 

Hon. G.K. Butterfield, a Representative in Congress from the State of North 

Carolina, opening statement ............................................................................... 7 

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

opening statement ................................................................................................ 8 

Hon. Brett Guthrie, a Representative in Congress from the Commonwealth 

of Kentucky, prepared statement ....................................................................... 9 

WITNESSES

Alfonse D’Amato, Chairman, Poker Players Alliance ........................................... 11 

Prepared statement .......................................................................................... 13 

Parry Aftab, Advisory Board Member, Fair Play USA ......................................... 22 

Prepared statement .......................................................................................... 24 

Ernest Stevens, Jr., Chairman, National Indian Gaming Association ................ 35 

Prepared statement .......................................................................................... 37 

Keith S. Whyte, Executive Director, National Council on Problem Gambling ... 60 

Prepared statement .......................................................................................... 63 

Kurt Eggert, Professor of Law, Chapman University of School of Law .............. 67 

Prepared statement .......................................................................................... 69 

Daniel Romer, Director, Adolescent Communication Institute, Annenberg 

Public Policy Center, University of Pennsylvania ............................................. 100 

Prepared statement .......................................................................................... 102 

SUBMITTED MATERIAL

Letter, dated October 24, 2011, from Frank J. Fahrenkopf, Jr., President 

and CEO, American Gaming Association, to Mrs. Bono Mack, submitted 

by Mr. Barton ....................................................................................................... 115 

Statement, dated October 25, 2011, of Frank J. Fahrenkopf, Jr., President 

and CEO, American Gaming Association, submitted by Mr. Barton .............. 117 

Statement, dated October 25, 2011, of Louis Freeh, Advisory Board Member, 

Fair Play USA ...................................................................................................... 128 

(1) 

INTERNET GAMING: IS THERE A SAFE BET? 

TUESDAY, OCTOBER 25, 2011 

HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON COMMERCE, MANUFACTURING, AND

TRADE, COMMITTEE ON ENERGY AND COMMERCE, 

Washington, DC. 

The subcommittee met, pursuant to call, at 10:38 a.m., in room 

2123 of the Rayburn House Office Building, Hon. Mary Bono Mack 

(chairman of the subcommittee) presiding. 

Members present: Representatives Bono Mack, Blackburn, 

Stearns, Bass, Harper, Lance, Cassidy, Guthrie, Olson, Kinzinger, 

Barton, Butterfield, Gonzalez, Towns, Schakowsky, and Inslee. 

Staff present: Kirby Howard, Legislative Clerk; Brian 

McCullough, Senior Professional Staff Member, Commerce, Manufacturing, and Trade; Jeff Mortier, Professional Staff Member; Gib 

Mullan, Chief Counsel, Commerce, Manufacturing, and Trade; Andrew Powaleny, Press Assistant; Krista Rosenthall, Counsel to 

Chairman Emeritus; Lyn Walker, Coordinator, Admin/Human Resources; Shannon Weinberg, Counsel, Commerce, Manufacturing, 

and Trade; Michelle Ash, Democratic Chief Counsel; Felipe Mendoza, Democratic Counsel; and Will Wallace, Democratic Policy Analyst. 

Mrs. BONO MACK. Come to order. Good morning. Today we turn 

our attention to a growing controversy in America—should Internet 

gambling be legalized, and if so, what role should the Federal Government play? We have divergent opinions represented on our 

panel this morning, and if I were a betting person, I would wager 

that we are going to have a very interesting hearing. 

And the chair now recognizes herself for an opening statement. 

OPENING STATEMENT OF HON. MARY BONO MACK, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA 

In many ways, the debate over legalizing Internet gambling is a 

lot like Texas Hold’em poker. Three cards are dealt face-up. Is the 

further expansion of gambling in the United States a good bet? Can 

online gambling be regulated effectively? And what role should the 

Federal Government play to protect American consumers from 

‘‘sharks?’’ This is the ‘‘flop’’ we have been dealt for today’s hearing. 

Then there is the ‘‘turn’’ card. With billions of dollars sitting on 

the table, can Congress afford not to get involved? 

And finally, the ‘‘river’’ card—what impact would legalized Internet gambling have on American consumers and the U.S. economy? 

2 

Clearly, the stakes are high, and a ‘‘showdown’’ is likely on Capitol 

Hill in the months ahead. As chairman of the House Subcommittee 

on Commerce, Manufacturing and Trade, this is an issue which I 

will be following very closely to make certain Americans are dealt 

a fair hand, regardless of the outcome. 

The purpose of our hearing is to simply take a close look at the 

‘‘face-up’’ cards—the things we know with some certainty after 80 

years of legalized, regulated gambling in the United States. Today, 

we will hear from both sides of this important yet very contentious 

issue. 

One thing we do know is this: the vast majority of Americans 

have gambled at some point in their lives. According to the UCLA 

Gambling Studies Program, approximately 85 percent of U.S. 

adults have gambled at least once—60 percent in the past year. 

What is more, some form of gambling is legalized in 48 States plus 

the District of Columbia. The only 2 States without legalized gambling are Hawaii and Utah. 

Gaming policy and regulation is generally handled by the States, 

although the Federal Government has been involved in shaping the 

boundaries of what is not permissible. But the legal status of online gaming is a lot more complicated. In 1961, Congress passed 

the Interstate Wire Act, more than 20 years before anyone had 

ever heard of a thing called the Internet. Yet according to the Justice Department, online gambling is illegal under the Interstate 

Wire Act because it prohibits the use of wire communications for 

the interstate facilitation or transfer of wagers. 

In 1988, gambling in the United States began to proliferate after 

Congress passed the Indian Gaming Regulatory Act, addressing the 

jurisdiction and authority of tribes to establish gaming on their 

lands. Since its passage, tribal gaming operations have seen tremendous growth with revenues last year exceeding $26 billion. 

And speaking from my own experience—with seven casinos located in my Congressional District—tribal gaming has been a huge 

plus. It has created thousands of jobs during difficult economic 

times, and the tribes have been great neighbors, too, contributing 

regularly to charities and civic events. 

Unfortunately, illegal gambling has been growing in popularity 

as well. So in 2006, to combat the proliferation of illegal Internet 

gambling, Congress adopted the Unlawful Internet Gambling Enforcement Act. This effectively outlawed interstate online gaming 

in the United States by prohibiting gambling-related businesses 

from accepting payments in the form of checks, credit card payments, or electronic funds transfers relating to unlawful Internet 

gambling. The law also establishes fines and penalties for banks 

and financial companies that process such payments. 

In April of this year, three of the top poker Web sites were shut 

down and 11 people were indicted for bank fraud and money laundering, raising new questions about the law. Proponents argue that 

the statute has not reduced Internet gambling; it has simply driven 

it underground and offshore, where sharks can operate with impunity. Legalizing Internet gambling, they argue, would actually 

allow the government to provide greater protection for consumers. 

Proponents also argue that if Internet gambling is legalized, the 

U.S. would realize significant tax revenues from online bets that 

3 

are currently directed to non-U.S.-based gaming companies. It is 

estimated that Americans wagered $16 billion last year on Internet 

poker sites alone. But those who want to keep the ban on Internet 

gambling in place argue that repealing the current law will expose 

more Americans to serious problems such as compulsive gambling. 

They are also worried about an increase in fraud, money laundering, and organized crime. Still others have expressed concern 

that State budgets could be harmed by the loss of lottery and gaming revenue, and they point to a huge potential impact on existing, 

legitimate gaming operations. 

So, as policy makers, the issue of legalizing Internet gambling 

certainly raises a lot of questions for us to consider: How effective 

is current enforcement of online intrastate gaming? What, if any, 

forms of interstate gaming online gaming should Congress consider 

allowing? What consumer protections exist for online gaming today 

and do they need to be strengthened? And how would any easing 

of legal restrictions on Internet gaming affect American consumers 

and other stakeholders? Hopefully, after today’s hearing, we will 

have a better idea of whether we need to hold ’em or to fold ’em. 

[The prepared statement of Mrs. Bono Mack follows:] 

4 


74869.001
5 


74869.002
6 


74869.003
7 

Mrs. BONO MACK. And so with that, I am happy to recognize the 

gentleman from North Carolina, Mr. Butterfield, the ranking member of the subcommittee, for 5 minutes for his opening statement. 

OPENING STATEMENT OF HON. G.K. BUTTERFIELD, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF NORTH 

CAROLINA 

Mr. BUTTERFIELD. Let me thank the chairman for convening this 

important hearing today. This is a topic that I have heard so much 

discussion about since I have been in Congress, and I am just looking forward to the six witnesses that we have in front of us. And 

hopefully, you can bring us a perspective that we have not heard 

before or perhaps you may be able to reinforce some of the views 

that we have heard. 

And so as your ranking member, Madam Chairman, I look forward to working with you on this issue. 

Congress is no stranger to this issue, and we have grappled with 

how to best address it for some time now. My good friend, Congresswoman Shelley Berkley, talks about this very often both to us 

privately and in our caucus meetings, and so we want to keep her 

involved and try to bring some closure to this issue. 

Part of the reason why I think is because Members of Congress, 

just like all of our constituents across the country, have very personal feelings about gambling. Certainly in my community there 

are divergent views and all across the country it is the same. Some 

are strongly opposed to all forms of gambling while others see it 

merely as entertainment. The debate shouldn’t be over whether 

gambling is moral or not moral. Instead, we should acknowledge 

that Internet gaming is happening now all over the world, including here in our country where online gambling has been treated as 

illegal by the Justice Department. 

As a result, the American Internet gamblers have turned to unregulated foreign offshore entities for access to games. The offshore 

entities may not provide consumer protections for those who gamble, and there is no U.S. oversight to ensure U.S. citizens are not 

harmed. There is often no legal recourse for consumers who have 

been wronged by bad offshore actors. 

There is also the small issue of money. Last year alone, Americans wagered $16 billion just on Internet poker. While some of that 

money went back to players in the form of winnings, the overwhelming majority remained offshore, unregulated and untaxed. 

With our significant national debt, a commonsense solution seems 

clear. We need a robust debate on whether Internet gaming should 

be legalized in the U.S., and if so, we will need an oversight structure put in place to ensure consumers the strongest possible safeguards. Games like poker and bingo are as ubiquitous in the U.S. 

as baseball and football and are played by young and old alike. But 

technology has indeed evolved permitting individuals to participate 

in games of chance and skill in real time and remotely. 

Instead of embracing a new twist on an old game, our inaction 

has led Americans to spend their money offshore and at their own 

peril. Permitting Internet gaming entities to operate within the 

U.S. could yield tremendous financial benefits to struggling Federal 

and State coffers through unrealized direct and indirect tax reveVerDate Aug 31 2005 08:45 Feb 21, 2013 Jkt 037690 PO 00000 Frm 00011 Fmt 6633 Sfmt 6633 F:\112-10~1\112-10~1 WAYNE
8 

nues. It would also allow for oversight of and accountability for the 

industry’s business practices. Most importantly, we would have the 

opportunity to create and implement strong consumer safeguards 

that each entity would have to follow. 

Having anytime access to gamble real money raises significant 

concerns. The compulsive gambler would no longer have to expend 

any effort like driving to a casino to play the game. A mouse click 

and a credit card number are all that he or she needs to play but 

with no human interaction with the house. There is no one and no 

way to cut someone off if they have played too much. Before long, 

that same gambler has maxed out his or her credit cards and faces 

the dreaded bankruptcy or worse, he turns to criminal activity to 

finance his habit. 

While my example may be extreme it is very possible and it happens daily at conventional gaming houses. People ultimately must 

have personal responsibility to know when enough is enough, but 

when the line blurs, safeguards must be in place. That is why any 

legislation that permits Internet gaming in the U.S. must, must 

have protections in place to mitigate compulsive gambling. Consumer protections must also be in place to ensure that the games 

are honest and fair and truly randomized. 

Economic boom that could result from legalized Internet gaming 

is perhaps the most compelling reason to give it serious consideration. Hundreds of millions of dollars in new revenues could be realized by struggling States. Tens of thousands of jobs could be created all across the country to directly support the new industry. 

Considering the fragile and struggling state of our economy, I 

strongly believe that all potential remedies should be considered to 

return us to greater prosperity. 

Thank you, Chairman. I yield back. 

Mrs. BONO MACK. I thank the gentleman. 

And in accordance with committee rules, Chairman Upton has 

yielded his 5 minutes to me, and I would now recognize the gentleman from Texas, Mr. Barton, chairman emeritus of the full committee, for 3 minutes. 

OPENING STATEMENT OF HON. JOE BARTON, A 

REPRESENTATIVE IN CONGRESS FROM THE STATE OF TEXAS 

Mr. BARTON. Thank you, Madam Chairwoman. It is good to have 

Senator D’Amato on the panel, and I see former Congressman John 

Porter out in the audience. It is good to have you here. 

Poker is the all-American game. President Richard Nixon financed his first congressional campaign partially with poker 

winnings from World War II. Our current president, President 

Obama, is reputed to be a very good poker player. I learned to play 

poker, believe it or not, in the Boy Scouts. So if you learn something in the Boy Scouts, it has got to be a good thing, right? Unfortunately, because there is some chance to it, while it is a game of 

skill, there are those that think we should not allow poker to be 

played for money on the Internet. 

Consequently, we passed the bill or law several years ago that 

is unenforceable, UIGEA. It is a bad law regardless of which side 

of the debate that you are on. I have introduced a bill as the chief 

sponsor to remedy this, and two of my cosponsors are Barney 

9 

Frank and Ron Paul. I will postulate that if you have got a bill that 

Barney Frank, Joe Barton, and Ron Paul are all for, who can be 

against it? I mean we have covered the spectrum. 

You can’t see this in the audience but this is a photocopy of a 

registration from yesterday. A person who is in the audience today 

signed up on bodog.com to play poker for money. He deposited $50, 

he got a $5 bonus for making the deposit, and he got a solicitation 

that if he could be more people to sign up, too, he could get an additional, I believe, $200 in poker chips. People are playing poker on 

the Internet in the United States for money today. We think as 

many as 8 million players per month play poker for money online 

in the United States per month. 

Having said that, it is not regulated, and so these sites are offshore, overseas, and consequently outside the ability for us to tax 

the winnings, to regulate, to make sure that it is a fair game and 

everybody has an equal chance to win based on their skill. The legislation that I have introduced, H.R. 2366, is not perfect but it 

would remedy most of the major problems that we face today. 

I want to thank Chairwoman Bono Mack for having this hearing. 

I want to thank the ranking member, Mr. Butterfield, for what he 

said in his opening statement. I think we should have a robust debate. Perhaps there should even be an additional hearing. But at 

some point in time in this Congress I hope we can move 2366 or 

something similar to it, Madam Chairwoman, to let everybody in 

America who wishes to play poker in States that allow it to do so. 

And the bill that I have introduced, it is a State option. If the governor of a State says there shall be no Internet poker played by 

residents of that State, it does not happen. So we are not preempting the States, but in the States that thinks it is OK, we set 

up a regulatory scheme and a taxation scheme so that we have a 

fair game and everybody has an equal chance. And future President Nixons and Obamas can play on the Internet for money and 

use those earnings to join us. 

With that, Madam Chairwoman Mack, I yield back the balance 

of my time. 

Mrs. BONO MACK. I thank you, Mr. Barton. 

And the chair now recognizes Mr. Guthrie of Kentucky for 2 minutes. 

OPENING STATEMENT OF HON. BRETT GUTHRIE, A REPRESENTATIVE IN CONGRESS FROM THE COMMONWEALTH 

OF KENTUCKY 

Mr. GUTHRIE. Thank you, Madam Chairwoman, for yielding. 

And I went to college in New York State in the 1980s so I appreciate your service Senator D’Amato. I remember reading at the 

New York Media when I was in college and all the great work you 

did for that State. I appreciate it. 

But I am from Kentucky, and as all you know, in Kentucky we 

are famous for our horses. We have two of the greatest racetracks 

in the world—at Churchill Downs in Louisville and at Keeneland 

in Lexington, and we breed the world’s best horses that run on 

them. And no matter how you cut it, Internet gaming will affect 

the horse-racing business. Expanded online gaming will result in 

less gaming dollars being spent at tracks. Fewer dollars in the racVerDate Aug 31 2005 08:45 Feb 21, 2013 Jkt 037690 PO 00000 Frm 00013 Fmt 6633 Sfmt 6633 F:\112-10~1\112-10~1 WAYNE
10 

ing business doesn’t just affect the tracks, breeders, jockeys, and 

trainers; it also affects thousands of other jobs in these communities that depend on the horse industry. 

Because of this concern, the effect on the horse racing must be 

considered in the expansion of online gaming. And I look forward 

to hearing from the witnesses and my colleagues on the underlying 

issue of online gaming legislation. However, as the chairman of the 

Congressional Horse Caucus, I must remind my colleagues that we 

cannot overlook the impact that gaming legislation would have on 

a $50 billion equine industry. 

While I am biased towards Kentucky’s thoroughbreds and our 

signature race, which is truly the greatest 2 minutes in sports, this 

is not a one-State issue. The horse-racing industry supports over a 

million jobs nationwide. We cannot ignore this important industry 

as we consider changes to online gaming. 

Thank you, Madam Chairwoman, and I yield back. 

Mrs. BONO MACK. I thank the gentleman. 

And now we turn our attention to our panel. We have one panel 

of witnesses joining us today. Each of our witnesses has prepared 

an opening statement that will be placed into the record. Each of 

you will have 5 minutes to summarize that statement in your remarks. 

For introduction, one witness is very well known to many of us, 

former United States Senator from New York, the Honorable 

Alfonse D’Amato, who now serves as chairman of the Poker Players 

Alliance. We all welcome you. And then we have Parry Aftab, Advisory Board Member of Fair Play USA. Also testifying we have 

Keith Whyte, Executive Director of the National Council on Problem Gambling. We have Kurt Eggert, Professor of Law, from Chapman University School of Law. We have Ernest Stevens, Chairman 

of the National Indian Gaming Association. And our final witness 

is Dan Romer, Director of the Adolescent Communication Institute 

at the Annenberg Public Policy Center. 

Good morning. Thank you all very much for coming. Again, you 

will be recognized for 5 minutes. To keep track of the time, there 

are lights and timers in front of you. When the timer turns yellow, 

you will have 1 minute left. And please remember to turn your 

microphone on and bring it close to your mouth. Although we 

might hear you, the TV audience might not at home, so it is very 

important you remember to do that. 

So Senator D’Amato, we are very pleased to welcome you and 

recognize you for 5 minutes. 

11 

STATEMENTS OF ALFONSE D’AMATO, CHAIRMAN, POKER 

PLAYERS ALLIANCE; PARRY AFTAB, ADVISORY BOARD MEMBER, FAIR PLAY USA; ERNEST STEVENS, JR., CHAIRMAN, NATIONAL INDIAN GAMING ASSOCIATION; KEITH S. WHYTE, EXECUTIVE DIRECTOR, NATIONAL COUNCIL ON PROBLEM 

GAMBLING; KURT EGGERT, PROFESSOR OF LAW, CHAPMAN 

UNIVERSITY SCHOOL OF LAW; AND DANIEL ROMER, DIRECTOR, ADOLESCENT COMMUNICATION INSTITUTE, 

ANNENBERG PUBLIC POLICY CENTER, UNIVERSITY OF 

PENNSYLVANIA 

STATEMENT OF ALFONSE D’AMATO 

Mr. D’AMATO. Well, Madam Chairman, thank you so very much. 

And let me wish you a belated happy birthday. I understand yesterday you celebrated your birthday. And I would like to thank you 

again for giving us an opportunity to testify on an issue which I 

care very much about. Indeed, in my capacity as chairman of the 

Poker Players Alliance, I have been privileged to represent 

1,200,000 Americans who have joined our organization and who 

love this great American pastime. They love playing poker in their 

homes, casinos, card rooms, charitable games, and yes, on the 

Internet. I want to congratulate the committee for holding this 

hearing, an opportunity to get a better understanding of what the 

status quo is as it relates to poker and the Internet. 

And let me say status quo is badly broken, and it benefits no one. 

Although it may have been well intended, the legislation that 

passed 4 years ago, the fact of the matter is that it has created 

many more problems than it has solved. It has endangered young 

people. It has endangered problem gamblers. It has endangered 

those who want to participate in an honest, legitimate game. And 

it is my fervent hope that this committee will respond by taking 

up legislation similar to the bills introduced by Congressman Barton and Congressman Campbell. And at this point, let me take a 

moment to congratulate the chairman emeritus for his leadership 

on this issue. Congressman Barton, you have stolen my speech. 

You have said it all and you said it much more eloquently and 

much more succinctly than any former United States Senator could 

do because we never had time limitations. And so this 5 minutes 

is rather difficult for me to deal with. But let me just touch on one 

or two points. 

Internet poker, as the Congressman has just said, has not gone 

away. And it is hard to envision a scenario where it will. What is 

taking place now is it takes place under the radar with no regulations, with no taxation, with unscrupulous groups who can and do 

operate. They operate in the public and the government can do little if anything and certainly doesn’t safeguard the general public. 

As the Congressman indicated, just yesterday a young man by the 

name of John Pappas with his Federal credit union debit card— 

very interesting, I guess it is the right Pappas debit card—went 

and opening an account at bodog.com. Now, he could have been 

anybody. He could have opening up an account, been underage, 

been under the age of 21 because they give these cards to just 

about anybody. Once I got one for my dog believe it or not. And 

12 

so 16-, 17-, 18-year-old can certainly do that. So where is the protection for young people? 

And let me tell you, we have people on this panel today who 

speak up for young people. Parry has done a fantastic job, Parry 

Aftab. One of the things that the Congressman’s legislation provides for is verification and the type of verification that will keep 

youngsters who are under 21 from playing. That is the kind of 

thing that you need to do. One of the things that the Congressman’s legislation will see to it that you don’t have unscrupulous operators who inveigle the poker player’s money and use it for themselves. And we have seen that situation with Full Tilt, horrible situation where people took poker players’ money that should have 

been placed in a trust account and distribute it as dividends to the 

people who ran that corporation, terrible betrayal of people. 

Let me say there are those Internet sites that operate where they 

do have a trust account. Poker Stars, for example, legislation required that they have a trust account for those dollars, and that 

is what Congressman Barton’s legislation does so that you can’t 

have this inveigling, so you have proper supervision. And again, if 

you want to protect young people—and I understand the genesis of 

this came from a genuine concern that so many young people were 

flocking to the poker rooms, the poker sites. The TV was carrying 

it. I think the third most watched game on television, sports, was 

poker, online poker on television. And so you had kids getting involved. Well, how do you keep them from doing it? By passing legislation that will require verifiable identification. That is how you 

do it. 

How do you keep the deadbeat dad from becoming a problem 

gambling? Well, I will tell you how. You pass legislation similar to 

that that Congressman Barton has put forth and you stop it because States can then post the deadbeat dads that will not permit 

them to go on the Internet and gamble. 

And so for those reasons and lots of others that time will not permit—I don’t want to test your patience—let me say that I really 

hope that we have an opportunity to do something to permit a 

great game, a game which requires skill to be played in people’s 

homes. It shouldn’t be that they can just go to casinos and play. 

Lots of people don’t have the ability to do that. It shouldn’t be that 

they have to go to someone else’s home or have people being invited 

to their home. They may not be able to get together that game. 

Great pastime. This legislation that has created and clouded the 

UIGEA legislation, the situation may have been well intended; it 

has missed its mark. 

I thank the chair and the committee for giving me this opportunity and I look forward to any questions that you might have. 

Thank you. 

[The prepared statement of Mr. D’Amato follows:] 

13 


74869.004
14 


74869.005
15 


74869.006
16 


74869.007
17 


74869.008
18 


74869.009
19 


74869.010
20 


74869.011
21 


74869.012
22 

Mrs. BONO MACK. Thank you, Senator. 

And now I recognize Ms. Aftab for 5 minutes. 

STATEMENT OF PARRY AFTAB 

Ms. AFTAB. Good morning. Thank you very much, Chairman 

Bono Mack and Ranking Member Butterfield and other members 

of the subcommittee, for enabling me to speak today. 

I am representing Fair Play USA as a member of their Advisory 

Board. I am joined in that Advisory Board by Louis Freeh, who was 

director of the FBI; and the first secretary of Homeland Security, 

Governor Ridge, who are unable to testify today. 

As we look at these issues, we need to recognize that they have 

a lot in common with the issues that this subcommittee has been 

working on—privacy, security, authentication, protecting our consumers. It is very much a matter of protecting our kids and protecting our families as well. So to the extent any of you know my 

work, I have been probably best known for protecting kids and 

families online as the unpaid executive director of Wired Safety. 

We are the oldest and largest Internet safety group in the world. 

And we handle all issues. And in that capacity I receive phone calls 

and emails from people who have gambled online, won, and not retrieved their winnings; people who are confused about whether or 

not it is legal for them to play poker online. 

I am a lawyer and I have to parse the law to really understand 

it. If you walk up and down the street, a lot of people don’t. They 

don’t understand the difference between online poker fun games 

that are just part of computer games and those where there is wagering that takes place. A lot of the other countries around the 

world have looked at this and found the solution for the problems 

that we have identified with online gambling: identity theft, money 

laundering, underage gambling, problem gambling, fraud, identity 

theft, privacy/security breaches. All of these issues can be dealt 

with the ironic position of legalizing certain aspects of online gambling but regulating it and being able to enforce it. 

The benefits of this allow us to help people who are defrauded, 

put in the safeguards that have been put in brick-and-mortar gambling situations. As we look at this, it is not a matter of whether 

gambling is moral or not. I think that issue was dealt with many 

years ago when State lotteries were put in place, when we looked 

at tribal gambling and we saw how many schools could be funded 

with this. But we can put safeguards in effect that are not in effect 

now. What is happening now isn’t working. There are millions of 

people gambling billions of dollars online without any protection at 

all. And because of the laws that we have, it is really a hear-noevil, see-no-evil, speak-no-evil situation. And these people find 

themselves with no place to go but calling my cell phone at three 

o’clock in the morning. 

So I have a group of teens, teen angels and some of the representatives on this subcommittee have teen angels in their districts and they are familiar with them, and they knew that I was 

testifying here today. And they are teen Internet safety experts. So 

they said, well, it is really easy for us to find these online poker 

sites in particular, and they went to several of them. And one they 

went to I have here; it is pokersites.com. It took them about 2–1/ 

23 

2 seconds to find that one. And it has top lists of places that are 

the best legal U.S. poker site 2011—betonline, bodog again. I knew 

they did this because they called and asked for my credit card 

number to be able to put it in place or for permission to use one 

of theirs, and one of the girls was 16 years old and had her own 

credit card that her parents had given her to be able to shop at the 

mall. It is easy. It is too easy and there is nothing we can do right 

now to keep underage gamblers out and protect problem gamblers 

with the kind of things that we can do. 

There are many things that we do to address online gambling as 

it relates to horse racing, although I don’t know anybody who 

would rather go to the Internet than the beautiful State of Kentucky. But I think that there are so many things that can be done 

here if we treat this as another Internet safety, privacy, and security issue instead of something that is unique because it has a lot 

more in common with all of the other things we are looking at than 

there are differences. So I am happy to discuss any of those issues 

with anyone on the committee if you have questions and help in 

any way I can. Thank you. 

[The prepared statement of Ms. Aftab follows:] 

24 


74869.013
25 


74869.014
26 


74869.015
27 


74869.016
28 


74869.017
29 


74869.018
30 


74869.019
31 


74869.020
32 


74869.021
33 


74869.022
34 


74869.023
35 

Mrs. BONO MACK. Thank you very much. 

Mr. Stevens, you are recognized for 5 minutes. 

STATEMENT OF ERNEST STEVENS, JR. 

Mr. STEVENS. Thank you. Good morning, Madam Chairman Bono 

Mack, Ranking Member Butterfield, and the members of the subcommittee. Thank you for this opportunity to provide the views of 

the National Indian Gaming Association on the important issue of 

Internet gaming. 

To place our views in context, let us start with the Constitution. 

Indian tribes are recognized in the United States Constitution as 

governments. Through treaties with the United States, tribal governments ceded hundreds of millions of acres of their homelands to 

help build this great Nation. In return, the U.S. promised to preserve remaining tribal lands and tribal sovereignty and provide for 

the health, education, and general welfare of Indian people. 

Unfortunately, Madam Chairman, the United States has broken 

many of these treaty promises. After suffering generations of failed 

Federal policies, tribes took matters into their own hands in the 

1960s and ’70s when they began to use gaming as a means to generate revenue to meet tribal needs. That is when President Johnson and Nixon adopted the policy supporting Indian self-determination. Indian gaming is Indian self-determination. 

In 1988, after more than a decade of legal challenges by States 

and commercial gaming interests, Congress stepped in and established a Federal law through the Indian Gaming Regulatory Act, 

or IGRA. IGRA acknowledges Indian tribes as governments with 

the right to regulate and operate gaming. IGRA provides that tribal gaming revenues be used for tribal government purposes. It also 

provides that tribal revenues are not subject to taxation. And finally, the Act established a comprehensive regulatory system that 

involves 3 levels of government regulation: tribal, Federal, and 

State. 

Twenty-three years later, more than 200 Indian tribes have 

made IGRA work to begin to rebuild their once-forgotten communities. Gaming revenues are working to improve tribal education, 

health, elder care, and rebuilding tribal infrastructure, and so 

much more. For many tribes, Indian gaming is about jobs. In 2010, 

Madam Chair, Indian gaming created more than 600,000 American 

jobs. Without question, Indian gaming is putting people to work. 

These tribes realize that the games would not be possible without strong regulation. The tribal regulatory system employs more 

than 3,400 regulators, along with state-of-the-art technology to protect tribal revenues. In 2010, tribes spent 375 million in regulation. 

The system is costly, it is comprehensive, and our record of experience shows that it is working. Because of Indian gaming, tribal 

governments are stronger, our people are healthier, and an entire 

generation of Indian youth have hope for a better future. 

As a result of these gains, all tribes are weary when Congress 

considers changing the playing field with regard to gambling. Legalized Internet gaming raises significant concerns. In 2010, tribal 

leaders conducted more than a dozen meetings to discuss the issues 

of Internet gaming. From these meetings, tribal leaders nationwide 

have unified behind a set of general principles regarding Federal 

36 

Internet gaming legislation. These principles are listed in my written testimony, and I will try to summarize these for you, Madam 

Chairman. 

First, our principles require that Federal legislation provides 

similar authorizations and protections for tribal Internet gaming 

that IGRA provides for Indian gaming. To accomplish this goal, 

Internet gaming legislation must acknowledge that tribes are eligible to operate and regulate Internet gaming. If a Federal regulatory system is required, tribes ask that the NIGC be vested with 

the authority to regulate tribal Internet gaming. The National Indian Gaming Commission is the only Federal agency with experience in regulating any form of gaming in the United States. 

Indian Country’s fourth principle states that the Federal legislation must acknowledge that customers may access tribal Internet 

sites as long as such gaming is not prohibited where the customer 

is located. And five, legislation must acknowledge that tribal Internet gaming revenues are not subject to taxation. Tribal gaming revenues are 100 percent taxed. These funds go to serve the public 

purpose of tribal and nearby communities. There is no room for 

Federal and State taxation. 

Our final principle is based on the fact that tribes have invested 

significant resources on the current law. Thus, legislation must 

fully protect tribal rights under the Indian Gaming Regulatory Act 

and existing tribal State gaming compacts. 

Internet gaming bills that have been introduced in the 112th 

Congress violate many of these principles and we oppose their passage as currently written. In addition, there are many stakeholders 

that have yet to be heard from. For example, neither of the Departments of Justice, Interior, Commerce, Treasure, or the National Indian Gaming Commission have been heard on this issue. 

I know my time is short so I will briefly conclude, Madam Chairman. Indian gaming has proven to be the most effective tool to help 

Indian tribes address more than a century of Federal policy failures. Tribes are concerned that legalized Internet gaming will 

threaten these games. NIGA has dialogued with Congress on Internet gaming for close to 15 years, and on the most recent discussions, tribes have met and unified behind these set of core principles. 

We look forward to working with Congress and this subcommittee and to ensure that any legislation moving to legalize 

Internet gaming adheres to these principles that are developed and 

established by the tribes across the United States. And I thank you 

again for this opportunity to testify and I am here to answer any 

questions you may have, Madam Chairman. 

[The prepared statement of Mr. Stevens follows:] 

37 


74869.024
38 


74869.025
39 


74869.026
40 


74869.027
41 


74869.028
42 


74869.029
43 


74869.030
44 


74869.031
45 


74869.032
46 


74869.033
47 


74869.034
48 


74869.035
49 


74869.036
50 


74869.037
51 


74869.038
52 


74869.039
53 


74869.040
54 


74869.041
55 


74869.042
56 


74869.043
57 


74869.044
58 


74869.045
59 


74869.046
60 

Mrs. BONO MACK. Thank you, Mr. Stevens. 

And now I am happy to recognize Mr. Whyte for 5 minutes. 

STATEMENT OF KEITH S. WHYTE 

Mr. WHYTE. Thank you, Madam Chairman, Ranking Member 

Butterfield, and the committee members. 

My name is Keith Whyte. I am the executive director of the National Council on Problem Gambling. This is actual my 12-year anniversary with the National Council; I started 12 years ago this 

week. The NCPG is the national advocate for programs and services to assist problem gamblers and their families. We have a 39- 

year record of independence and objectivity in dealing with the 

often controversial issue of gaming. We are neutral on legalized 

gambling taking no position for or against it. Our main concern is 

advocacy for problem gamblers and their families. 

We believe strongly the most ethical and cost-effective response 

to problem gambling issues raised by the Internet is a comprehensive public health approach. Problem gambling, like other diseases 

of addiction, will likely never be eliminated, but we can and must 

make better efforts to protect consumers, prevent addiction, and 

mitigate the damage. It is inconceivable that Internet gambling be 

legalized without dedicating a portion of the new revenue to address the known social costs of gambling addiction. 

Madam Chairman said this in her opening statement: at least 85 

percent of adults have gambled once in the past year, 15 percent 

at least once in the past week. You are looking at $95 billion generated by casinos, tracks, and lotteries in legal gaming revenue 

alone, which obviously does not include most sports gambling and 

much of the Internet gambling today. $6 billion per year comes 

from the special Federal withholding tax on legalized gambling 

winnings. Yet unlike the Federal excise taxes on tobacco and alcohol, not a single penny of this Federal tax revenue from legalized 

gambling is returned back to prevent and treat the social cost of 

gambling addiction. 

Between 68 million adults and 500,000 adolescents meet criteria 

for a gambling addiction in a given year. High-risk groups include 

members of racial and ethnical minority groups, young males, and 

veterans. The estimated social cost to families, business, and communities top $7 billion per year from addiction, bankruptcy, and 

crime. Problem gambling is therefore an important national public 

health concern. Gambling problems are significantly correlated 

with other substance use and abuse problems that we know are extremely costly to our State governments and to our families and individuals. Gambling problems are significantly correlated with 

higher rates of unemployment, bankruptcy, arrest, incarceration, 

and poor physical health. In addition, millions of spouses, children, 

families, and parents, employers are also negatively impacted by 

gambling addiction. 

It is not clear with the impact of the legalization of Internet gambling is going to be on problem gambling. The available research 

does consistently show that Internet gambling has the lowest participation rates of any form of gambling regardless of legality of 

gambling in that jurisdiction. The rates of participation do not 

seem to vary significantly whether it is legal or illegal. And as we 

61 

have heard this morning already, there are massive numbers of 

Americans that are gambling online currently. Yet studies throughout the world also find relatively high rates of gambling problems 

among those who do gamble online. Of course, those who gamble 

online are also very likely to gamble in traditional forms to the extent that Internet gambling almost seems to be an adjunct to people who are already gambling in traditional forms. 

It is also possible that people who gamble online may be exacerbating their problems due to the unlimited access, the high speed 

of play, use of credit and non-cash instruments and perceived social 

anonymity, all of which are known risk factors for gambling addiction in the bricks-and-mortar world. Since online gamblers are 

known to have high rates of problems, it is important to require 

extensive responsible gaming policies. 

These programs provide an opportunity to create informed consumers, to provide informed consumers with a variety of information designed to encourage safe choices and discourage unsafe behavior. The technology exists to allow players to set limits on the 

amount of money gambled, the time they gamble, and the deposits 

they make. And I am pleased that Dr. Romer is going to speak a 

little bit on some of these consumer protection policies. 

Strong regulation is important but it cannot be effective alone. 

It must be accompanied by equally robust prevention, education, 

treatment, and research services. A portion of gambling revenue 

from legalized gambling, which we estimate would be not less than 

$50 million annually, must be set aside for such programs. This 

need is magnified by the disparity of services among the States as 

more than 1/3 of the States, including a number of States represented by members of this committee, provide absolutely no public funds whatsoever to prevent or treat gambling problems. This 

is neither cost effective nor an ethical means of responding to a 

known public health concern. 

An important and cost-free first step is to cut social costs by designating a lead Federal agency on problem gambling. Unbelievably—although we have heard a lot of testimony that gambling has 

been around and is certainly present in most States—there is no 

single Federal agency that coordinates efforts on this issue. I call 

your attention to H.R. 2334, the Comprehensive Problem Gambling 

Act, which has been introduced now for the fourth time in the 

House, which would designate the Substance Abuse and Mental 

Health Services Administration as the lead agency on problem 

gambling to address the public health concerns of this issue. 

I thank Representatives Barton, Schakowsky, Pitts, Whitfield, 

Campbell, Frank, and many others who are current or former sponsors of this legislation. And as Member Emeritus Barton has said, 

we certainly appreciate the broad sponsorship on our bill as well 

with you and Representative Frank. 

In closing, millions of Americans are experiencing gambling problems today like my friend Mike. He gambled away more than 

$250,000 in the past 3 years gambling on the Internet. He lost his 

job, his house, and his family. He sat in his grocery store parking 

lot here in Northern Virginia and contemplated suicide. Fortunately, he was able to get treatment, and today, he works to ensure 

that hope and help are available for problem gamblers and their 

62 

families. Simply put, treatment works. It is an investment that 

pays for itself many times over. 

In closing, those who legalize, regulate, promote, and profit from 

gambling have an ethical and an economic imperative to minimize 

the social cost of gambling addiction. Thank you for the opportunity 

to testify. 

[The prepared statement of Mr. Whyte follows:] 

63 


74869.047
64 


74869.048
65 


74869.049
66 


74869.050
67 

Mrs. BONO MACK. Thank you, Mr. Whyte. 

And Professor Eggert, welcome, and you are recognized for 5 

minutes. 

STATEMENT OF KURT EGGERT 

Mr. EGGERT. Good morning, Madam Chairwoman. Thank you, 

Madam Chairwoman and Ranking Member Butterfield and members. I appreciate your inviting me to talk about this important 

issue. You should know I come at this from a different angle than 

most. I come from a consumer protection angle where I have 

worked in most of my career. I was an advisor to the Federal Reserve Board on consumer financial issues on their Consumer Advisory Council, and you can imagine what fun that was during our 

recent years. And so when I think about gambling, the question I 

have is what consumer protection should be in place? And I am 

very happy to hear many of you talk about the importance of consumer protection in gambling because it is in fact a crucial issue. 

Gamblers used to be looked down on but now they are just consumers. It is just another industry. And so we should treat them 

as consumers as we would in other industries and think about 

what consumer protection is important in this industry. The purpose of consumer protection is to make consumers good shoppers, 

to give them the tools they need to make smart decisions when 

they purchase—when they go to a casino, when they gamble online, 

whatever they do, we want to make them good shoppers and protect them from shark practices. Because the engine of the consumer economy is if the consumers drive it and as long as they are 

given the information they need to make good decisions, then companies will have to compete based on quality of product and price, 

which is what makes our economy run. 

Now, in the gambling industry, they talk often about consumer 

protection is honesty, fairness, and making sure that the gambler 

gets paid. Those are all very important, but equally important is 

that the gambling industry provides accurate price disclosure to 

consumers who are gambling. Now, the price of the game in the 

gambling industry is a very interesting thing. If you play $100 slot 

machine, you put $100 in, but on average you get money back. Otherwise, why do it? And so the real average price of a slot machine 

is the amount that the casino retains from the gambler’s bets. So 

if you bet $1,000 and you get $970 back, then the price of that 

gambling was $30. 

For slot machines, casinos know exactly what the average hold 

percentage of the slot machine is. They can order a slot machine 

with a 5 percent hold percentage, a 10 percent hold percentage, 15 

percent hold percentage, and they know that is on average what 

that machine will cost. The problem is that information is not disclosed to gamblers. They may be sitting at a 2-percent-hold-machine table or a 15-percent-hold-machine table and not know the 

difference. They could be sitting at one much more expensive or 

much cheaper and not be given that information. 

It is crucial that gamblers have this information so that they can 

make smart decisions and so that they can shop based on price. 

Any Internet gambling should include that. And so any legislation 

68 

for Internet gambling should require disclosure of the hold percentage of every slot machine on the system. 

Now, for Internet poker, it is a different proposition because the 

price made by the borrower is based more on competition of other 

players than it is by any setting of the site. Here, the problem is 

that professional players have new tools to use against recreational 

gamblers that far exceed anything that they could do in a casino 

poker table. There are computer boosts that they have; there are 

computer bots that are getting increasingly effective. And so recreational gamblers may find themselves playing against professionals who far exceed their ability to play and the recreational 

gambler may have no idea what they are getting into. There is 

even computer tracking software using data mining that helps 

strong gamblers identify who the weak gamblers are so they can 

follow them to tables and play against them. 

This is a real problem for the Internet poker industry because 

the industry doesn’t want all of its recreational gamblers’ money to 

be drained out by professionals using bots or other tools. And so 

any legislation has to think about how to have a level playing field 

in Internet poker. And I have some ideas on that but my time is 

up so I will appreciate any questions later on. Thank you. 

[The prepared statement of Mr. Eggert follows:] 

69 


74869.051
70 


74869.052
71 


74869.053
72 


74869.054
73 


74869.055
74 


74869.056
75 


74869.057
76 


74869.058
77 


74869.059
78 


74869.060
79 


74869.061
80 


74869.062
81 


74869.063
82 


74869.064
83 


74869.065
84 


74869.066
85 


74869.067
86 


74869.068
87 


74869.069
88 


74869.070
89 


74869.071
90 


74869.072
91 


74869.073
92 


74869.074
93 


74869.075
94 


74869.076
95 


74869.077
96 


74869.078
97 


74869.079
98 


74869.080
99 


74869.081
100 

Mrs. BONO MACK. Thank you, Professor. 

And Dr. Romer, welcome. You are recognized for 5 minutes. 

STATEMENT OF DANIEL ROMER 

Mr. ROMER. Good morning, Madam Chair and Ranking Member 

Butterfield and other members of the committee. Thanks for inviting me this morning. It is a pleasure to be here and to hear all the 

different points of view about what I think is a very difficult issue 

for you to deal with. 

So I have been doing research on adolescent gambling since 2002 

at the Annenberg Public Policy Center and trying to understand 

both the prevalence and the harms that might occur to young people as a result of all kinds of gambling, not just on the Internet. 

And we have found with a lot of the research that we have been 

doing is that young people at a very early age are starting to gamble and this puts them at risk potentially for gambling dependence 

as they get older. So it is very important for the committee and for 

the Congress to think about what the impact will be on young people and their families as a result of any actions that are taken with 

regard to online gambling. 

One of the things we have done since 2002 is conduct a National 

Annenberg Survey of Youth, which studies young people ages 14 to 

22, and what we have found from this survey is that most of the 

attempts to restrict online gambling haven’t been particularly effective, as we have already heard. We found in our last survey in 

2010 that more than 400,000 youth in the college-age range gamble 

once a week and 1.7 million or more once a month. So a lot of people are online as you have heard. The same is true of high school 

kids, very high rates, but not so much on a regular basis. So we 

think that age restrictions and laws that would encourage age-restricted responsible gambling—which is what we have seen in some 

of the other countries that have allowed online gambling—may be 

an approach that would work, but we are still very much in the 

early phases of understanding how online gambling will work, and 

I think we need research to understand it better. 

But if we have legislation that can provide some safeguards that 

could potentially restrict underage gamblers and also to the extent 

they do go online, make it harder for them to lose control while 

they are online would be excellent safeguards to include in any legislation. 

And I think the principle that I see when I look at what is going 

on in Europe is this idea of responsible gambling, and so one idea 

that I think is particularly helpful is that gambling operators 

should not receive disproportionate income from users who are unable to control their habit. And I think the bill that has been put 

forth by Mr. Barton and others might have a mechanism in it for 

the public to observe, monitor how funds are being made on Internet gambling so that you could see if certain gamblers are disproportionately contributing to profits. 

Now, some of the other ideas that we have heard about age restrictions and so forth I think are very important. The method of 

payment is really important. We still don’t really know how well 

they work. We need research, and this country is actually way behind the U.K. and countries in Europe on understanding what hapVerDate Aug 31 2005 08:45 Feb 21, 2013 Jkt 037690 PO 00000 Frm 00104 Fmt 6633 Sfmt 6633 F:\112-10~1\112-10~1 WAYNE
101 

pens when young people go online and gamble. We really need to 

find that out. We need monies dedicated to that question. 

I think we also need to consider and the law should consider 

money and time limits. I think Keith mentioned that he thinks this 

is a good idea. There should be a running clock online, there should 

be a win/loss total online so that the young person knows how 

much they are wagering. And this is true whether they are 18, 21, 

or 51. This is something I think is straightforward but we really 

don’t know how many of these kinds of restrictions would work. 

We also need prevention messages online. It is much easier to 

put these online than it is, for example, at a casino. And we need 

to regulate or monitor the advertising that is done to attract people. We don’t want the advertising to target young people disproportionately or addicted gamblers disproportionately. 

And so I think the challenge will be if you do legalize this will 

be to put in place both things that Keith talked about in terms of 

treatment but also a program of research to figure out are restrictions that you put in place working? What mix of restrictions work 

best? And what can we do in the future to maximize the chance 

that this kind of activity will not produce harms for young people 

and their families. And I have included a bunch of other ideas in 

my testimony. 

And I thank you for this opportunity to say these things. Thanks. 

[The prepared statement of Mr. Romer follows:] 

102 


74869.082
103 


74869.083
104 


74869.084
105 


74869.085
106 


74869.086
107 


74869.087
108 

Mrs. BONO MACK. Thank you, Dr. Romer. 

And I am going to begin the questioning. And I thank all of the 

panel for your testimony and recognize myself for 5 minutes for 

questions. 

Mr. Whyte, I would like to begin with you. And Dr. Romer just 

spoke about this, too, but you state problem gamblers could exacerbate their problems by gambling online because of the use of credit 

and 24-hour availability. Would restrictions on those factors reduce 

the problem, for example, limited times and limits on credit? Do 

other countries offering Internet gambling currently have restrictions to limit the use of credit and availability, and if so, can you 

talk about their results? 

Mr. WHYTE. Yes, I can. There is some evidence from Canada and 

Europe that there are supposed to be restrictions that have been 

put into place which generally include, as you say, limits on the 

use of certain types of payment processing, limits on the time and 

money spent gambling seem to be able to not necessarily intervene 

with pathological gamblers who will keep gambling despite any and 

all barriers put in their way. They seem rather to be better targeted at those people that are at risk for gambling problems or 

they are moderate problem gamblers. These restrictions, properly 

tailored, can be and have shown to be effective in some studies at 

stopping people from stepping over the edge and developing severe 

gambling problems. 

As Dan said, we are not entirely sure exactly what works best, 

but we believe that there is enough evidence to show that some of 

these interventions can be effective, and in fact some of them can 

be much more successfully implemented on the Internet with account-based wagering than in a traditional gambling forum. 

Mrs. BONO MACK. Thank you. 

Mr. Stevens, you suggest that any legislation authorizing online 

gambling should allow tribal governments’ early entry with a period of exclusivity. Can you explain the rationale for your position? 

Mr. STEVENS. Yes, I can. You know, I think it is important to understand and appreciate what tribes have been through and the 

history with the United States Government. You know, if I could 

speak just quickly about my grandmother. She is 101 years old and 

she lives in her own apartment independently in an apartment 

that is assisted but not a nursing home. And she lives in that 

apartment at 101 independently. She started out her life going to 

boarding schools and working and wearing a uniform and disciplined for being left-handed like my friend next to me and speaking her language, you know, and, you know, leaving her family. 

The family would go by the boarding school and not even be able 

to wave or visit or look at your children. And again as we approach 

a little bit emotional to bring it up because even though my grandma is doing fine and if you called her apartment on the reservation 

in Oneida, Wisconsin, you would probably find that she is not 

home. So she is involved in activities which she is a retired schoolteacher. She spent her whole life teaching the language and the 

culture that was attempted to be taken from her. 

And again, that is a success story, but really if you look at the 

way her life was, her grandfather who raised her was a Civil War 

veteran and he used to ride by the boarding school and throw 

109 

candy but he would never look because the government said you 

couldn’t even look at your kids. And again, that is a mild story 

about what our people have been through. Millions and millions of 

Indian folks when our first European contact, in spite of all those 

struggles and challenges that we have been through, we have been 

able to persevere and survive and fight back. And if anybody deserves to be at the front line in this industry, it is Native American 

people. 

Mrs. BONO MACK. OK. 

Mr. STEVENS. And at the very least equal footing, Madam Chair. 

Mrs. BONO MACK. Well, why is it important that legislation permit tribes to operate Internet gaming without renegotiating their 

tribal state compacts? What is the concern? 

Mr. STEVENS. Well, I believe that that is a new industry and I 

believe that they shouldn’t undo or attempt to amend the current 

law in order to accomplish that. 

Mrs. BONO MACK. Can you please clarify your principle regarding the preservation of tribal regulatory authority? Should we actually legalize online gaming? Can you speak to that and how do you 

see that authority affected by Federal legislation to legalize online 

gaming? 

Mr. STEVENS. OK, I am sorry, Madam Chair. I misunderstood 

you. 

Mrs. BONO MACK. I actually think I missed a comma in there. 

So could you please clarify your principle regarding the preservation of tribal regulatory authority should Federal legislation legalize online gaming? 

Mr. STEVENS. I think that I spoke briefly to that in my testimony 

and quite extensively on it in my written testimony. The regulators 

in Indian Country have analyzed this and they are the ones responsible. The National Indian Gaming Commission is the only 

Federal authority that has experience in gaming, so we feel like 

that in order to oversee this element of it, we should utilize experienced folks. 

Now, just by coincidence I have my—it is the nicest one I got but 

it is the National Tribal Gaming Commission and Regulators. It is 

a national association independent of NIGA and independent of the 

tribes that have worked to analyze the expertise and the important 

aspects of tribal regulation to make a stronger and able to adhere 

to the responsibilities to our constituents. 

Mrs. BONO MACK. I am sorry. I hate to cut you off but my time 

is up if you can wrap up in 5 seconds. 

Mr. STEVENS. My bottom line is that we have asked these regulators nationwide if they are prepared to regulate this industry and 

they assured us that they are in strong preparation to do so. 

Mrs. BONO MACK. Thank you. 

All right. Again, my time has expired and I am pleased to recognize Mr. Butterfield for 5 minutes. 

Mr. BUTTERFIELD. I thank the chairman. 

Madam Chairman, I am among those who is beginning to understand I would say online gambling. I am beginning to understand 

that it could provide a great boost to our national economy and it 

could provide a boost for Federal and State coffers. And so I am 

beginning to connect the dots and understand what this is about. 

110 

Today should be the beginning of a robust discussion and this conversation certainly should be expanded as we go forward. 

As the chair pointed out, online gambling is a very complicated 

issue. I am beginning to see that. Other issues still warrant discussion. For example, the great State of California with 53 Representatives and the District of Columbia with a nonvoting Representative are already moving forward with intrastate online gaming 

even though its legal status is unclear given that the U.S. Justice 

Department believes the Wire Act prohibits all online gambling. I 

have to wonder, therefore, under the current state of play, is Justice going to shut these operations down once they are up and running? And there are other critical questions that need to be answered. 

We need to hear from California and D.C.; we need to hear from 

the Justice Department; we need to hear from other State and Federal regulators who would be tasked with implementing and enforcing inter-regulatory framework regarding online gaming. This is an 

issue that warrants further review before this subcommittee. We 

have jurisdiction and we need to certainly inquire into that. 

In his testimony, Mr. Whyte notes that among the groups at high 

risk for gambling addiction are racial and ethnic minorities. I want 

to talk about that for a minute. He specifically identifies African 

Americans, among others, as being at high risk. Earlier this month, 

this subcommittee held a hearing on revisions to the Children’s Online Privacy Protection Act Rule. The testimony of one of the witnesses for that hearing contained references to a study by the Sesame Workshop that included some interesting insights into the online habits of minority children. According to that study, African 

Americans and Hispanic children have less home Internet access, 

but those that have access use the Internet more than white children. African American children between the ages of 5 and 9 spend 

41 minutes online per session. White children in contrast spend 27 

minutes online per session. Hispanic children between ages 8 and 

14 spend almost 2 hours online each day, 40 minutes more than 

white children. The study also pointed out that children from low 

income and ethnic minority homes were less likely to have adult 

guidance when accessing the Internet. As a result, they were 

spending more time on lower-quality Web sites or on activities that 

wouldn’t help them develop school-based skills. 

Now, Dr. Romer, let me try you, sir. I know your own work has 

focused on the prevalence of gambling among high school and college youth. However, I don’t think it would be too much of a leap 

to assume that this tendency by younger minority children to use 

the Internet more and to spend more time on lower-quality Web 

sites persists into high school and college. Given all of this, I am 

wondering whether you can speak to whether you have seen differences along racial and ethnic lines? 

Mr. ROMER. There are racial and ethnic differences in gambling. 

We haven’t seen it in terms of Internet use partly because it has 

still been kind of small in our survey so I can’t really talk to it. 

But from what you have said if there are these disparities that 

occur for kids who are online, I would fully expect that those kids 

to then make the same—— 

Mr. BUTTERFIELD. The data seems to suggest that. 

111 

Mr. ROMER. Yes. 

Mr. BUTTERFIELD. Yes. Do you have any thoughts about whether 

there might be particular implications for young minorities from 

online gambling that should be taken into account in the discussion 

about whether and how to go about recognizing some forms of online gambling as legal? 

Mr. ROMER. Well, I mean are you saying—— 

Mr. BUTTERFIELD. Is there anything in particular we could write 

into the law that would try to safeguard against this? 

Mr. ROMER. Well, I don’t know that you could write a law that 

would, you know, safeguard against particular people other than 

people who are prone to, you know, lack of control. So I think the 

thing you want to prevent is people from using online gambling 

sites who can’t control their gambling. And anything you can do to 

warn them, to remind them, to keep them aware of the fact that 

they may be spending more than they have I think would be valuable. And you need to explain I think, as Kurt Eggert has said, 

people need to know what they are going to win on a site. I think 

that is a valuable thing to tell people at any age. But we don’t 

want kids on there at all. I mean that is the goal. We don’t want 

kids. 

Mr. WHYTE. Another important aspect is to make sure that there 

are health services available if kids do get into trouble. And I think 

that is where, again, the impact on the minority community is disproportionate. There is less access to health services. We also understand that there is less access to, for example, services in Spanish and in other culturally specific services for Native Americans, 

Asian Americans, and others. So on the health side, regulation 

alone cannot adequately protect people from an addiction as we 

have known from drugs and alcohol and tobacco. You must have 

health services and we must have within those health services 

dedicated, culturally specific services available for both youth and 

adults to prevent, educate, treat, and research. That is the way 

that we are going to make the progress that gets to public health 

disorders. 

Mr. BUTTERFIELD. Thank you. 

Mrs. BONO MACK. I thank the gentleman. 

And chair would remind people that we have a 5-minute rule on 

questioning and answering as well if we can try to stick close to 

it. We will have a second round of questioning that way. 

The chair is happy to recognize Mr. Bass for 5 minutes. 

Mr. BASS. I thank the chairman. And I also want to thank my 

friend from Texas, Mr. Barton, for his courtesy. I have to preside 

at noon and the House is not in session now, and when you don’t 

show up at noon, people get uptight very quickly. 

I am also quite perplexed by some of this discussion about this 

money that could be lost in Internet poker. I know quite a few people who have played poker and I haven’t met one yet that admits 

to ever losing anything. I will also point out that New Hampshire 

is, as we all know, first in the Nation presidential primary and it 

will remain so. It also happens to the first State to adopt a statewide lottery in 1964. It has raised over $4 billion and provided 

about $1.3 billion for public education in the State. 

112 

My question and only question is for my former colleague from 

New York, Senator D’Amato. Senator, representing the poker players, in your organization’s opinion, what impact would the passage 

of legislation permitting Internet gambling have on State lotteries? 

And secondly, would your organization have any objection to allowing or giving the State lotteries the opportunity to also compete if 

you will in the Internet poker business? 

Mr. D’AMATO. Congressman, let me answer the second question 

first because that is an easier one to answer. We would have no 

objection whatsoever. As it relates to whether or not there has been 

an impact, we believe that the people who buy lottery tickets are 

generally not the same people and we don’t believe they really compete. We believe that many will continue. If you look at the lottery 

tickets and their purchases, you will find that while the Internet 

does play a role, most of it is at your commercial establishments. 

And so we don’t see a conflict and we certainly have no objection 

to lottery tickets and the scrape-off tickets that the States put out 

there having that ability. 

I would also note that in New York, you presently have a situation where the revenues from the lotteries—I am very conscious of 

this—play a very substantial part in our State’s economy and budget, and we want to protect that. I am certainly not advocating that 

we cut into that. 

But I make one other point. And the ranking member brought 

up the fact that there is a disparate impact and it would seem that 

the young minority children are addicted to a greater extent to the 

Internet and to programs which are not those kind that you would 

generally want to encourage them is going to help them in school. 

And I hope I am paraphrasing your sentiments correctly. More reason to see to it that there is good, tight regulation as it relates to 

using the Internet and poker in particular. There is no regulation 

now. There is nothing to stop these kids from getting on. If we 

want to eliminate those who unfortunately become involved at a 

young age, there is no verification required by these offsite groups. 

There is no way to stop or prevent them. 

And so I think it makes abundant sense if we want to do something to curtail this, the misuse by youngsters to have strong, 

tough regulations protecting the consumers, protecting the young 

people, seeing to it—I would like to hear some of Mr. Eggert’s suggestions because we are certainly not opposed—to how do we give 

the kind of information so that players have a better playing field. 

So I think for all of those reasons that it is important that we move 

forward with this kind of legislation. 

Mr. BASS. Thank you very much, Senator. I appreciate your addressing my question as well as Mr. Butterfield’s and Mr. Eggert’s. 

Mr. D’AMATO. Thank you, Congressman. 

Mr. BASS. And I yield back to the chairlady. 

Mrs. BONO MACK. Thank you, Mr. Bass. 

The chair recognizes Mr. Towns for 5 minutes. 

Mr. TOWNS. Thank you very much, Madam Chair and of course 

the ranking member, Mr. Butterfield, for having this hearing. I 

think this is a very, very important hearing. 

The question before this committee is what if any forms of online 

gaming should Congress consider? Over the course of the next sevVerDate Aug 31 2005 08:45 Feb 21, 2013 Jkt 037690 PO 00000 Frm 00116 Fmt 6633 Sfmt 6633 F:\112-10~1\112-10~1 WAYNE
113 

eral weeks, Congress will decide on how our Nation will begin to 

put its fiscal house in order. And this seems to be a way to get revenue. One of the many proposals that Congress will consider is easing the current restriction of online gamine. Currently under the 

Wire Act, online gaming is illegal. However, that has not stopped 

offshore gaming, Web sites from profiting off of the United States. 

Gaming industry experts have estimated that United States spent 

over $16 billion in 2010 online poker alone. Some experts also suggest that revenues generated by online gaming would bring in significant tax revenues to the Federal Government that currently are 

directed to non-U.S. gaming companies. This additional revenue 

could be used to help balance our growing Federal deficit without 

causing drastic cuts to entitlement programs that so many Americans rely on. 

While I am sympathetic to the view that more revenue is needed 

to help balance the Federal budget, I am concerned with the unintended consequences of this proposal. So first I want to begin by 

asking you, Mr. Stevens, you know, I am not sure in terms of your 

real reasons for opposing any kind of change, what are your real 

reasons? Could you be very specific? 

Mr. STEVENS. I don’t think I understood your question, sir. 

Mr. TOWNS. I understand that you oppose this, right, and you 

mentioned the fact that there were certain agencies that were not 

involved in it, you know. What are the reasons as to why you might 

oppose it? 

Mr. STEVENS. And again, Representative Towns, we had several, 

as much as 12-plus meetings on this issue, and the Indian tribes 

are opposed to this discussion based on 6 points. Indian tribes are 

sovereign governments with a right to operate, regulate, tax, and 

license Internet gaming and those rights must not be subordinated 

to any non-Federal authority. Internet gaming as authorized by Indian tribes must be available to customers in any locale where 

Internet gaming is not prohibited. Consistent with long-held Federal policy, tribal revenues must not be subject to tax. Existing 

tribal government rights under the tribal state compacts and Indian Gaming Regulatory Act must be respected. The legislation 

must not open up any gaming regulatory act and Federal legislation of Internet gaming must provide positive economic benefits for 

Indian Country. Those are the 6 points that were developed in a 

series of meetings with tribal leaders from throughout the country. 

Mr. TOWNS. You know, this committee must ensure that, you 

know, all the stakeholders involved are able to benefit from any 

legislation that may take shape over the coming weeks and 

months. You know, so we are very sensitive to that as well. But 

you know, my concern would be the fact that the oversight and the 

fact that we make certain that, you know, it is being done fairly. 

And of course that would be a real concern because I think that 

we have to look at ways to be able to deal with the deficit. And 

based on what everybody is saying, this is a way to attract revenue. 

Now, I am also concerned about youth and all of that but I think 

that based on programs that are in place that we can sort of look 

at that and be able to make certain that they are safe and that 

they are not involved in any way. And any time you have anything, 

114 

you are always going to have some folks that take it to the extreme. I think that what we need to do is to make certain if they 

do, that there is something in place, you know, for them. I mean 

so you can name almost anything and I can tell you, you know, 

how someone has gone and taken it to the extreme. You name it. 

I think the main thing, though, is to try to put safeguards in place. 

And I think that is an issue that we need to talk about as to safeguards that we can put in place, programs that we can put in place 

that will make it possible for people to continue to function without 

destroying families. 

So I want to thank all of you for your testimony and I am going 

to respect the 5 minutes. 

Thank you, Madam Chair. 

Mrs. BONO MACK. Thank you, Mr. Towns. I will remember you 

at Christmas for that. 

And I am pleased to recognize I think the best poker player in 

Congress, Mr. Barton, for 5 minutes. 

Mr. BARTON. Well, I don’t know about that. I haven’t got some 

bills passed through the Senate yet. That is where you play real 

poker up here is when you play with the Senate at the end of the 

year on getting your bills through. 

Mr. BUTTERFIELD. Mr. Engle wouldn’t like that, either. 

Mr. BARTON. That is exactly right. 

Mr. BUTTERFIELD. He considers himself world-class. 

Mr. BARTON. First of all, Madam Chairwoman, I would ask unanimous consent to put into the record a letter to you from Frank 

Fahrenkopf, who is the president of the American Gaming Association, and written testimony that he was prepared to give had there 

been room on the panel. I am told this has been cleared by your 

staff and the minority staff and that it is not a problem. 

Mrs. BONO MACK. Hearing no objection, so ordered. 

[The information follows:] 

115 


74869.088
116 


74869.089
117 


74869.090
118 


74869.091
119 


74869.092
120 


74869.093
121 


74869.094
122 


74869.095
123 


74869.096
124 


74869.097
125 

Mr. BARTON. OK, thank you. 

My first question to the distinguished panel: Is there any one of 

you who believes that millions of Americans are not playing poker 

for money on the Internet right now? Let the record show that they 

all are staring. So is there any of you that believe it would be possible to prevent American citizens who wish to play poker for 

money on the Internet from doing so? The gentlelady with Fair 

Play. 

Ms. AFTAB. Underage gamblers we would be able to deal with. 

I was part of the Berkman Center, the Harvard Center Age 

Verification Group, the Internet Safety Technology Taskforce, and 

although you can’t prove for the purposes of COPPA who is under 

the age of 13, you certainly can prove who is over the age of 21. 

So we would be able with the right things in place—— 

Mr. BARTON. I will stipulate that whatever we can do if the bill 

moves to prevent underage poker players, you tell me how to do it, 

and we will put it in the bill. 

Ms. AFTAB. We actually had a study that was done at the Kennedy School at Harvard with Dr. Sparrow, and it was presented 

last year at the hearings with Barney Frank. And if anyone on the 

subcommittee would like that, I am happy to enter that into additional testimony—— 

Mr. BARTON. As the chief sponsor of the bill, I can assure you 

that I don’t want underage poker players, so we will work with you 

on that. 

I want to ask the gentleman who is representing the Indian 

tribes, under the proposed legislation that I have introduced, a 

State that wishes not to allow its citizens to play poker for money 

on the Internet simply opts out. We give that same option to the 

tribes. Why would that not protect your sovereignty? If you don’t 

want your citizens in the Indian Nation to play, all you have to do 

is send a letter to the Secretary of Commerce that you don’t want 

them to play. 

Mr. STEVENS. I am sorry. Could you restate that question, sir? 

Mr. BARTON. Well, we respect sovereignty. We respect State sovereignty and we respect the Indian Nation’s sovereignty, so the bill 

that I have introduced, it gives the governor of a State—I would 

have to check what it does for the Indian tribes. I would assume 

it would give the chief or the tribal council the same right that we 

give a governor. If you don’t want to let the citizens within your 

boundaries play poker for money on the Internet, you simply opt 

out so they can’t play. So we treat the Indian tribes the same as 

we treat the States. That seems pretty fair to me. 

On the other hand, if you think it is OK for them to play, then 

you play by the same rules that everybody else plays by in terms 

of regulating poker players for money on the Internet. I mean that 

seems to me to be a very fair position. We are not anti-Indian; we 

are not pro-Indian. We are fair to all concerned. 

Mr. STEVENS. I think in the States on behalf of the tribes, I think 

that covers it, but we want to be recognized as tribal governments 

appropriately under the law. 

Mr. BARTON. Well, that is beyond the scope of the poker bill I 

think. I played poker at an Indian casino in Oklahoma so I am 

126 

with you and I am 1/32nd Cherokee. So I am 1/32nd with you there 

on that. 

Mr. STEVENS. Well, sir, I am a full-blooded Oneida from Wisconsin who used to engage in New York State. And under the Jay 

Treaty, you know, we are encouraged to do commerce for not just 

with other Indian tribes but other regions and even across into our 

friends in the First Nations in Canada. 

Mr. BARTON. Well, that may be larger than the scope of this bill, 

but we are not trying to treat Indian tribes for poker playing any 

differently than anybody else. 

Senator D’Amato, do you think there are any technical issues in 

terms of addressing problem poker players and underage poker 

players that couldn’t be addressed in this legislation? 

Mr. D’AMATO. We definitely have the technology now, Mr. Congressman, to deal certainly with problem gamblers where there is 

nothing now restraining them. There is no impact. There is no one 

out there looking. And we can build into the system the kind of 

program that can identify or they can be placed on a list where 

they will be not allowed in if they go over a certain amount of 

money to participate. Is this going to solve all the problems? No. 

But it certainly will eliminate and curtail what is taking place 

now—no protection for the kids or the problem gamblers. 

Mr. BARTON. My time is expiring. Let me simply say to Mr. 

Eggert before I yield back, this issue of the bots, these mechanical 

or automatic players, whatever needs to be done to prohibit that 

and outlaw it, if you have got proposed language, if you will give 

it to the committee staff. We absolutely don’t want to set up a system where somebody in this audience can play poker online for 

money if their governor says it is OK and play against a computer. 

That is not what we are trying to do. So if you have got a program 

that can prevent it or language to prohibit, we will certainly look 

at it positively. 

With that, I yield back, Madam Chairwoman. 

Mrs. BONO MACK. I thank the gentleman. And the chair recognizes Mr. Lance for 5 minutes. 

Mr. LANCE. Thank you, Madam Chair, and good morning to you 

all. This is a subject that interests me greatly, last term on the Financial Services Committee and this term on the Energy and Commerce Committee. 

Louis Freeh could not be here today, Madam Chair. He has a 

statement that states in part, ‘‘addressing a growing threat that 

can mutate as rapidly as illegal Internet-based gambling operated 

outside of the country is challenging in and of itself for Federal law 

enforcement.’’ And he goes on to say, ‘‘online poker stands apart because it is a game that millions of Americans play at home with 

friends and family or even at charity fundraisers. Unlike most 

games played against other players rather than against the house 

and relies on a set of practiced skills, unlike most other games, it 

is also not defined as illegal in other statutes. Clarifying which online games are illegal also creates an opportunity to establish a 

strict and transparent regulatory regime for online poker that allows adult consumers to play safely and securely while ensuring accountability to tax and law enforcement authorities.’’ 

127 

Madam Chair, I would request unanimous consent to introduce 

Mr. Freeh’s statement into the record. 

Mrs. BONO MACK. Without objection, so ordered. 

[The information follows:] 

128 


74869.098
129 


74869.099
130 

Mr. LANCE. Thank you very much, Madam Chair. 

Ms. Aftab referenced a wonderful study in my judgment from 

Malcolm Sparrow at the Kennedy School of Government up at Harvard titled, ‘‘Can Internet Gambling be Effectively Regulated: Managing the Risks.’’ And while I will not ask that the whole study be 

placed into the record, I would read a pertinent part that ‘‘notwithstanding the current prohibitionist legal and regulatory approach, 

millions of U.S. residents gamble online through offshore gambling 

sites. The establishment of a well regulated industry under U.S. jurisdiction would offer far better protection against online 

gambling’s potential social harms than outright prohibition.’’ That 

is my considered view and certainly those who are interested in reviewing the full study can contact my office or I am sure Ms. Aftab. 

To Mr. Stevens, good morning to you. And sir, I certainly respect 

your opinions and I recognize your sovereignty and honor your sovereignty. You mentioned that tribes should not be subject to tax or 

third-party regulation based on their sovereign status. I respect the 

status of Indian tribes but isn’t it true that tribes in gaming and 

other businesses can make a sovereign decision to do business in 

the 50 States outside of their reservation lands and subject themselves to State and Federal regulation? For example, Mohican Sun 

is licensed in Pennsylvania with a casino, although Mohican Sun 

is obviously in Connecticut, and the Florida Seminoles purchased 

Hard Rock. If tribal gaming is to be expanded beyond the borders 

of the reservation through the Internet, isn’t it inevitable that 

tribes will have to submit to some sort of regulation other than 

that of their own tribal governments? 

Mr. STEVENS. You know, I think that our regulation is established and prepared for to deal with this type of situation. I think 

that dealing with sovereign governments doing business from their 

sovereign territories are different than some of the areas where 

they have branched out and again appropriately games and other 

economic endeavors to reach beyond gaming as far as building our 

future. 

Mr. LANCE. Thank you. Certain Indian tribes have been pushing 

the idea of regulating Internet gaming at the State level, I think 

that this might mean a challenge for tribes in small States. In 

poker, for example, where you need a critical mass of players to operate a site, how could a tribe in Rhode Island or South Dakota or 

even Connecticut hope to participate? It seems to me that this 

would only benefit a small number of tribes in California and the 

other larger States. 

Mr. STEVENS. Yes, I think that we have tried to analyze where 

tribes are working through coalitions and working within their 

State organizations, and so we have yielded to the State tribal authorities to handle those types of situations. 

Mr. LANCE. Thank you for your response. 

And finally—and my time is about to expire—let me say it is an 

honor for me, Madam Chair, to be in the same committee hearing 

room with Senator D’Amato. I was rooting for his election as a 

graduate student at Princeton in 1980, and as I recall, Senator 

D’Amato, I wagered $10 you would win your primary and another 

$10 that you would win the general election. This was not on the 

Internet because, of course, it hadn’t been—— 

131 

Mr. D’AMATO. You should have gotten some good odds. 

Mr. LANCE. I was confident in your public service, sir. 

Thank you, Madam Chair. 

Mrs. BONO MACK. I thank the gentleman and now recognize Mr. 

Harper for 5 minutes. 

Mr. HARPER. Thank you, Madam Chair. 

I welcome each of you here today and appreciate you taking time 

out of your schedule, and it has been interesting to hear the input 

from each of you and the concerns well noted of what do you do 

about preventing or reducing the possibility of problem gamblers. 

You know, that is something we would all agree that there are certain people that shouldn’t gamble. There are some that gamble that 

maybe need to have limits on them. And it is one thing with the 

physical location where you can do that, but to have it online with 

the anonymity, with all of the concerns that can go on is that I 

have not been given any real comfort here that since it can’t be regulated offshore or in illegal sites how we are actually going to be 

able to do that if this takes what appears to be an interest in another step. 

So I know we have heard different opinions here, some that are 

trying to decide. The idea of online gambling, legal or illegal, gives 

me great concern. But with that, I do thank you for your time here. 

And I guess one question I would have for each of you is do any 

of your organizations receive any money from offshore casinos? 

Does your organization receive any funds or contributions from offshore casinos? And I will start with Mrs. Aftab. 

Ms. AFTAB. Fair Play USA does not accept any money from offline casinos. And if I could address just for a moment unlike other 

aspects of the Internet where you are looking for anonymity, when 

you are dealing with online gambling, you need to look for authentication and verification of identity. 

Mr. HARPER. Sure. 

Ms. AFTAB. And that, given your expertise already in the subcommittee, you will understand that it will allow you to track problem gamblers and allow them to opt into programs to protect them. 

So this is the one area where we are not looking for anonymity. 

Mr. HARPER. All right. 

Ms. AFTAB. But Fair Play USA does not accept money to my 

knowledge from anyone offshore. 

Mr. HARPER. Thank you. Mr. Stevens? 

Mr. STEVENS. Not to my knowledge, sir. 

Mr. HARPER. Mr. Whyte? 

Mr. WHYTE. We have received a donation from companies that 

operate offshore. We accept no restrictions on those donations, but 

yes, we have received some money. 

Mr. HARPER. And how many different entities? 

Mr. WHYTE. I think just one. We have a long tradition of encouraging that anybody that operates gambling should contribute to responsible gambling, so Mississippi Casinos have donated to our organization. We accept again no restrictions on any money we receive from any source, especially from the gaming industry. 

Mr. HARPER. But you have received funds from offshore sources? 

Mr. WHYTE. Yes. 

Mr. HARPER. OK. Senator D’Amato? 

132 

Mr. D’AMATO. Yes, we have. And I would note, though, we encourage this legislation so that we will permit onshore activities 

and we say it should not be just offshore. 

Mr. HARPER. OK. 

Mr. D’AMATO. And to your question, Congressman, as it relates 

to being able to ensure the age, right now there is nothing that restricts youngsters basically and requires age identification. We 

would say that we have the technology that is developed that is 

used today in banking, online banking, as it relates to the kinds 

of proofs necessary for people to conduct banking activities. And it 

is that same process that we would utilize here. 

Mr. HARPER. Thank you, Senator. 

Mr. D’AMATO. Thank you. 

Mr. HARPER. Professor Eggert? 

Mr. EGGERT. I work for Chapman University. I have no idea who 

their donors are. 

Mr. HARPER. Sure. 

Mr. EGGER. I hope there are many, though. 

Mr. HARPER. Dr. Romer? 

Mr. ROMER. Yes, so the Annenberg Public Policy Center doesn’t 

accept money from any commercial—— 

Mr. HARPER. I think it is important that we just kind of know 

where we are on this, but it doesn’t appear to me that there are 

really being any real steps taken that are being used to block—perhaps the way to deal with the offshore or the illegal casinos is to 

come up with ways to block payment to those sites. That is something that I think we could develop more. But, you know, we certainly have some that have argued that we should develop legalized online gambling in this country much the same way that we 

have heard others argue that we should legalize certain drugs. So 

I think, you know, this is something that I think we need much 

more to look at. I am not confident at all that we have the tools 

in place to do what we need to do. 

And the question in looking back and preparing for this, Senator 

D’Amato, I know in September of this year, the U.S. Attorney in 

New York referred to Full Tilt Poker as a global Ponzi scheme and, 

you know, apparently thousands of online poker players out about 

$300 million, Ultimate Bet, another organization that I believe you 

represent—does Poker Players Alliance receive dues or contributions from either Full Tilt Poker or Ultimate Bet? 

Mr. D’AMATO. No, we don’t. 

Mr. HARPER. OK. 

Mr. D’AMATO. And again, Congressman, I don’t mean to beat a 

dead horse to death, it is already killed, but the one way to deal 

with Full Tilt and people like that who have taken advantage of 

the system is to provide a tough, strong, enforceable licensing bill. 

And I mean tough. 

Mr. HARPER. Um-hum. 

Mr. D’AMATO. There should be a requirement as there has been 

for Poker Stars—I mention them because they are the largest offshore—where those dollars are segregated and placed in a special 

account so that these kinds of things can’t take place. Had we had 

legislation, we could have prevented players from being taken advantage of and that is why it cries out for regulation. 

133 

Mr. HARPER. And Senator D’Amato, with all due respect, perhaps 

it is better that we not go down this road, we work on ways to protect people against offshore sources. And with that I yield back. 

Mrs. BONO MACK. The gentleman’s time has expired. 

The chair recognizes Ms. Blackburn for 5 minutes. 

Mrs. BLACKBURN. Thank you all for being here. I will have to 

admit this is a feisty debate and a wonderful conversation and I 

think many of our Members are like me. We have got friends that 

are for it and friends that are against it. And it is good to have 

you all here and to listen to what you have to say. 

Mr. Whyte, I want to come to you and, Senator D’Amato, I am 

glad that the two of you are sitting there in the center, kind of like 

these debates. I have got the two people I want to talk to right in 

the middle. 

Now, Mr. Whyte, you said that you didn’t think that having online poker would expand the use and so that is curious to me. I 

would like for you to talk about if there is something in the American culture that is different about our addictive behavior? And 

then I would like to know if it is not going to increase participation, 

then why are entities so anxious to offer online gambling? Mr. 

Whyte first. 

Mr. WHYTE. Thank you very much. That is a great question. It 

does seem that right now the participation in poker is generally 

very low. You know, whether or not legalization would dramatically 

increase that is an open question. In the U.K., for example, it has 

not except among young men. Young men do seem to show in replication surveys in the United Kingdom more propensity to gamble 

online. So there may be—— 

Mrs. BLACKBURN. OK. Now, let me interrupt you right there. 

And then, Mr. D’Amato, I want you to weigh in on this. You mentioned the U.K. 

Mr. D’AMATO. Yes. 

Mrs. BLACKBURN. So what are the successes of the European jurisdictions that have licensed and regulated Internet gambling and 

what are their mistakes? So the lessons learned, basically. 

Mr. WHYTE. Sure. The lessons that we take away from the European experience is that you have to have a balanced approach with 

both regulation and public health protections. Obviously, in a country like the U.K., there is an extensive social welfare, a health system to make sure that if people do get into trouble, they have resources to go. 

Mrs. BLACKBURN. OK. So they have got a safety net. 

Mr. WHYTE. Yes, ma’am. 

Mrs. BLACKBURN. Senator D’Amato? 

Mr. D’AMATO. Well, I think that Mr. Whyte has touched on it. 

Number one, we can and should provide revenues and I think $50 

million that he has mentioned that should be there to treat youngsters, to treat addicted people, to deal with their problem, easily 

could be made available with the revenues that would be generated 

from online poker players. 

Robust verification, we can do that today so that we know who 

it is that is playing and we can keep that youngster off. We have 

learned that. Seeing to it that funds are utilized and segregated as 

they have in Europe to keep the kind of thing that Full Tilt enVerDate Aug 31 2005 08:45 Feb 21, 2013 Jkt 037690 PO 00000 Frm 00137 Fmt 6633 Sfmt 6633 F:\112-10~1\112-10~1 WAYNE
134 

gaged in where they took monies that belonged to the players and 

distributed them out. So there are those things that we have 

learned that they have done well and we can expand upon them. 

We can build on them and bring those protections here. 

Mrs. BLACKBURN. OK. If I may interrupt you right there and I 

have got 1–1/2 minutes left, and I want to start with Ms. Aftab and 

work down. I would like to have each of you answer. Looking at 

brick-and-mortar gambling and the rules and regulations that 

apply in a brick-and-mortar sense, should those same rules and 

regulations apply in the online sense and should those two be 

paired up? And just one right after another. 

Ms. AFTAB. Yes, plus more. Because of the nature of the technology, we can do a lot more with authentication, controls, 

verification—— 

Mrs. BLACKBURN. OK. 

Ms. AFTAB [continuing]. So at least that much. 

Mrs. BLACKBURN. OK, Mr. Stevens? 

Mr. STEVENS. Yes, we believe not, two different forms of gaming—— 

Mrs. BLACKBURN. Two completely different forms? 

Mr. STEVENS. Yes, and our folks are working on that, our national—our regulators—— 

Mrs. BLACKBURN. OK. Mr. Whyte? 

Mr. WHYTE. Yes, but more. I agree with Parry. 

Mrs. BLACKBURN. Yes, but more. Senator? 

Mr. D’AMATO. Well, I think you have the opportunity to be much 

more vigilant as it relates to the utilization of technology and 

knowing who the people are, verification, et cetera. It is easier to 

do. 

Mrs. BLACKBURN. OK. Mr. Eggert? 

Mr. EGGERT. I think you need more in the Internet sense, especially given the problem of bots, which I think you can’t just ban. 

And if that is not dealt with, the Internet poker is going to have 

huge problems. 

Mrs. BLACKBURN. OK. Doctor? 

Mr. ROMER. Yes, I think I mentioned some thoughts about how 

you can put things online that you typically wouldn’t have in a casino, you know, a clock, wins, losses, that kind of thing—— 

Mrs. BLACKBURN. Thank you. 

Mr. ROMER [continuing]. That would remind people that they are 

going over their limit. 

Mrs. BLACKBURN. Thank you. My time has expired. I yield back. 

Thank you, Madam Chair. 

Mrs. BONO MACK. I thank the gentlelady. 

And the chair recognizes Mr. Stearns for 5 minutes. 

Mr. STEARNS. Thank you, Madam Chair. 

Mr. Whyte, is Internet gambling allowed for blackjack, poker, 

roulette, and other things in the European Union? 

Mr. WHYTE. It depends on the State. The regulation is quite 

broad, but in general what we see is a lot of poker and sports gambling. Sports gambling in particular is a big driver of gambling on 

the Internet in Europe. 

Mr. STEARNS. But they also have poker? 

Mr. WHYTE. Yes. Yes, sir. 

135 

Mr. STEARNS. Now, if I go to the 27 countries in the European 

Union, would all of them have poker? 

Mr. WHYTE. The law in the European Union is very complex. 

They are trying to harmonize that right now. It is not my understanding that poker is universally available across the European 

Union. 

Mr. STEARNS. Is blackjack universally available? 

Mr. WHYTE. I believe that is far less available. 

Mr. STEARNS. And what about roulette or slot machines on the 

Internet? 

Mr. WHYTE. They certainly exist both in the legalized, regulated 

framework in the EU and also, of course, on, you know, the second 

tier of unregulated Web sites that always seem to flourish regardless of legality. 

Mr. STEARNS. Ms. Arab? 

Ms. AFTAB. Aftab. 

Mr. STEARNS. Aftab. How do you do identification with children? 

You know, with pornography, you can’t stop it because they just 

ask are you over 18? They say yes and away they go. I mean how 

would you do this to protect the family and the children—or even 

children that are latchkey that are home and their parents aren’t 

there—from gambling? 

Ms. AFTAB. Well, we don’t age verify children. We age verify 

adults so that if the age is set at 21 and older, there are many indicators we have of somebody being the age of 21. They may be registered voters, they may have drivers’ licenses, they may have bank 

accounts that have already been authenticated, they may be holding jobs. There are many other ways where they can be authenticated. 

Mr. STEARNS. How would you authenticate in this case if we 

made poker legal? 

Ms. AFTAB. What I would do is set a goal and the goal is we authenticate that they are 21 and older using the best methods that 

are available at the time, as opposed to locking into a technology 

that is improving all the time. 

Mr. STEARNS. So you have sort of a voter ID? 

Ms. AFTAB. You may use a voter ID, you may use—— 

Mr. STEARNS. License? 

Ms. AFTAB [continuing]. Homeownership, you may be using rental records. There are so many—— 

Mr. STEARNS. And who would keep that and who would verify 

and keep the record up to date? 

Ms. AFTAB. There would be a third-party verification system that 

would be built in and required or at least those standards that are 

applied. And the benefit of this is once you get the professionals 

who have a financial stake in this, you are going to get the best 

practices and the best that you can get because they don’t want 

kids on there. 

Mr. STEARNS. No, I know but just—— 

Ms. AFTAB. And by putting—— 

Mr. STEARNS [continuing]. Like we have an e-verify program that 

we, you know, took a long time to get that working and in some 

cases it is not accurate, so you have confidence that we could set 

up a third-party verification for children—— 

136 

Ms. AFTAB. Yes, but not of children. 

Mr. STEARNS. I mean for adults. 

Ms. AFTAB. Of adults, absolutely. And there is a large Federal—— 

Mr. STEARNS. So if a 17-year-old is working or a 19-year-old is 

working—— 

Ms. AFTAB. Well, they may but we know that they are 17. 

Mr. STEARNS. What? 

Ms. AFTAB. So we know that they are 17 years old. So we would 

require—whatever technology at the time would let us know that 

that person has been verified of being 21 and older, not just a credit card. This is not COPPA. This is something far more that would 

require several levels of authentication that this person is 21 and 

older. And there are a lot of those technologies out there now. And 

actually, the Federal Government is now looking at—in addition to 

Congress we are seeing it out of the White House and a lot of other 

departments that are looking at verification authentication methods to identify who people are, how old they are, and where they 

are really from. 

Mr. STEARNS. I understand that you can’t do Internet gambling 

because we passed the law here in Congress, but in Nevada aren’t 

they doing it on Blackberrys right now, so you can gamble intrastate? In other words, if I am in Nevada today, can’t I gamble off 

my Blackberry today? 

Mr. WHYTE. Yes, sir. It is called remote gambling and it is almost a wireless form of gambling. It is allowed within—— 

Mr. STEARNS. And bet money? 

Mr. WHYTE. Yes. 

Mr. STEARNS. Since the law says you can’t use your credit card, 

you can’t use deposits, you can’t use money transfers, how can Nevada—— 

Mr. WHYTE. Think of it a little bit like off-track betting or even 

more so like having a telephone account for a State that allows 

horse racing where you can call in your bets. This is essentially the 

same sort of system where it is regulated within a State or within 

a property but you are able to use a wireless device to access your 

account and place a wager there from within that property. 

Mr. STEARNS. Now, how do the authorities in Nevada protect 

children from picking up their parents’ Blackberry and gamble? 

Mr. WHYTE. Well, it is not Blackberry. It is a specific custom device that is available. It is treated almost like a gaming device—— 

Mr. STEARNS. Well, let us say the parents have that device—— 

Mr. WHYTE. Right. 

Mr. STEARNS [continuing]. Leave it on the dining room table— 

what she indicated is this identification program. Do they have 

that in place now? 

Mr. WHYTE. I am not an expert on this but again I think—— 

Mr. STEARNS. Do you care to comment? 

Mr. WHYTE [continuing]. You have to use both enforcement and 

prevention that—— 

Ms. AFTAB. Yes, to my knowledge, States do not have an age 

verification system in place, which is one of the reasons we need 

this. We have a problem that I believe only you can solve because 

there is nothing out there now. There are no systems, there are no 

137 

best practices, there is no baseline to keep kids off, to help parents 

with this, to deal with senior citizens and scams, helping law enforcement do what they need to do. Right now there is nothing. 

Mr. STEARNS. Yes. 

Ms. AFTAB. We need to do something and with due respect, when 

we are looking at ways to control what money is being spent, that 

is what UIGEA is all about. And unfortunately, in the same way 

kids can get around all these issues, a lot of the people who are 

trying to gamble can, too. They pretend they buy towels, they 

miscode it and they are able to use the financial systems to do this. 

Mr. STEARNS. Thank you, Madam Chair. 

Mrs. BONO MACK. I thank the gentleman and now recognize Dr. 

Cassidy for 5 minutes. 

Mr. CASSIDY. Thank you. And may I begin by wishing Madam 

Chair a happy 29th birthday. 

Mrs. BONO MACK. I thank the gentleman very much. 

Mr. CASSIDY. Mr. Whyte, did I hear you say that you don’t think 

that if this law passes that there would be an increase in Internet 

gambling in the United States? 

Mr. WHYTE. Well, not necessarily significant increase. 

Mr. CASSIDY. Well, now, I got to wonder why Google ads are even 

purchased. I would just say recently I was looking at the Minnesota Vikings football team and all of a sudden on my sidebar I 

had all sorts of things about Minnesota. Do I want to take a vacation, did I want to do this, did I want to do that? Now, why is 

somebody buying that, number one; and number two, my intuition 

is to think you are wrong. There is a large settlement recently in 

which Google is paying the Federal Government for running advertisements for overseas pharmacies. 

Mr. WHYTE. Um-hum. 

Mr. CASSIDY. So that tells me that somebody thought Google was 

an effective enough advertiser to purchase for overseas pharmacies. 

Why would that not yield a significant increase in gambling? 

Mr. WHYTE. Well, certainly, we may very well be wrong, and I 

think that is one the reasons why we are calling certainly for 

health-based research because it is very unclear. But the experience in other jurisdictions seems to suggest that those people that 

gamble online who are prone to and want to gamble online are already doing so regardless of the legality of the law. But certainly, 

yes, we have grave concerns that—— 

Mr. CASSIDY. Just because I have limited time, it reminds me of 

blue laws. I think I know from my medical training that if a county 

has a blue law, it still has alcoholics but it has fewer drinkers and 

therefore fewer alcoholics. In effect, this is a blue law, correct? 

Mr. WHYTE. Yes, sir. 

Mr. CASSIDY. Ms. Aftab, do we have data on the prevalence of 

underage gambling in countries—I don’t know; I am asking. I am 

not advocating or challenging—prevalence of underage gambling in 

jurisdictions in which they do require the sort of verification you 

are describing? 

Ms. AFTAB. Yes, and it is in the report that we put together with 

Dr. Sparrow, so to the extent that is entered into the record, we 

have it there. 

138 

There are certain countries, in particular in the U.K., that have 

looked at the capability of locking kids out by requiring age 

verification systems that work and they have been very, very effective. So it is out there and it is getting better by the minute. 

Mr. CASSIDY. Mr. Eggert, I really liked your testimony, man. I 

kept on reading your testimony thinking if we think we can restrict 

any sort of super bot or some smart kid from gaming—excuse the 

pun—system, your testimony suggests to me that we cannot. There 

is going to be some kid who has got his buddy right there and the 

buddy is going to be typing in what all the cards are. And so even 

if the bot is not resident upon the computer which is accessing the 

Internet, it is nonetheless telling him what bet to place. Reasonably speaking, is there any way to restrict data mining to find 

weaker players, super bots to play, et cetera? 

Mr. EGGERT. Well, that is an interesting question. The recent 

American Gambling Association White Paper addresses that very 

question, and in the text of the paper it says, you know, sites can 

ban bots. But there is a footnote that says if somebody is using a 

bot to guide them so the bot isn’t playing but it is somebody playing with the bot given them advice, there is no way to restrict that. 

I know of no way to prevent somebody from having a bot on one 

computer telling him what to play on another computer. And so 

this is a huge problem for the industry to the extent that legal industry or illegal in that recreational gamblers don’t want to go on 

their poker site and get killed by somebody using a bot. And that 

is going to happen more and more as bots get smarter and smarter. 

There are international competitions now to design the best pokerplaying bot. And they are doing a darn good job, and they are just 

going to get better and better until they can beat anybody in this 

room or almost anybody—— 

Mr. CASSIDY. Even Joe Barton? 

Mr. EGGERT. Even him. 

Mr. CASSIDY. So once we put the imprimatur of government that 

this is an OK activity and therefore Google can run a sidebar when 

I say I am going to go visit Nevada to see Yucca Mountain and instead I got a lot of places to go gamble on the Internet. How would 

you address what Mr. Eggert just spoke of, how these bots are 

going to be basically ripping people off legally? Yes, ma’am? 

Ms. AFTAB. Well, right now on brick-and-mortar casinos, you 

have card counters. 

Mr. CASSIDY. Yes, but the house watches for those and throws 

them out. 

Ms. AFTAB. The house watches but the online sites, if they are 

well done and operated correctly, can watch for a lot of that as 

well. 

Mr. CASSIDY. But if I were designing such a super bot, I would 

get it so it would win only 90 percent of the time. Every now and 

then it would fold on a full house or something such as that. 

Ms. AFTAB. But once you are dealing with full authentication and 

you know who everyone is, it allows you to start tracking patterns. 

And what will happen is part of what we are doing now on the 

Homeland Security grid, the energy grid, we start sharing the information scrubbed of where the problem occurred with other companies across it so that you can improve your skills in that way. 

139 

Mr. CASSIDY. So before we pass this bill, do we need to have the 

permissive legislation to allow that data sharing? 

Ms. AFTAB. I don’t think you need permissive legislation. I think 

it is a matter of what the privacy policies say and what the expectations of the users are. And I think if you say that it is scrubbed 

of certain things and you are looking at people who are violating 

the law or violating the terms, I think that that can be done with 

privacy policies and so forth. 

Mr. CASSIDY. I am out of time. And I love Mr. Eggert’s opinion 

on the doability of that. But that said, we are out of time and I 

yield back. Thank you. 

Mr. BARTON. Would the gentleman yield the time he doesn’t 

have? 

Mrs. BONO MACK. With negative time. We will have a second 

round of questions if we can do it through that means. 

And with that, I am happy to recognize myself for 5 minutes and 

just say that as I listen to the testimony, I am reminded a lot about 

what we saw with the content industry—music and film and television that they stood in the way of the Internet and were bowled 

over by it not exclusive to that content. And I believe if we are 

going to do this, then the rising tide has to lift all boats, including 

Indian Country. 

Senator D’Amato, do you take any issue with any of the principles advanced by Mr. Stevens on behalf of the National Indian 

Gaming Association? Most specifically, do you agree that the tribal 

governments should be allowed early entrance and a period of exclusivity? And do you agree that tribal Internet operations should 

be open to customers wherever legal? 

Mr. D’AMATO. Madam Chairman, I think we want a competitive 

marketplace for everyone, for casinos, for our Indian brothers. The 

fact of the matter is it doesn’t exist today. The fact of the matter 

is what we have is old operators. None of the legitimate houses 

that we have in this country are going to go forward and risk the 

loss of their licenses, et cetera, until or unless we change the law. 

And so we are going to continue to have all of the problems that 

we have heard about. They will be exacerbated as it relate to young 

people, as it relates to having a fair game so that people have a 

fair opportunity whether they use the super bots or not. There will 

be no opportunity to control that. And you are not going to be able 

to stop the advertising because they will still advertise on Google; 

they will advertise all over. 

So the problem we have now is one that it seems to me is very 

parallel to what we had in prohibition. We know that people who 

overindulge—it was terrible. We know that the cost to society was 

ruinous. And so with all good intent we passed the Volstead Act. 

And what happened? We had the very people who we didn’t want 

to get into the distribution and sale of alcohol, some that was killing people, got in. Government lost revenue. It didn’t cut down on 

all of the problems, the family abuse, the drunkenness, et cetera, 

and I would suggest that here we are 50 years later, we are well 

behind the times to say that you shouldn’t use the Internet for 

commerce. But whether you like poker or not, that is nonsense to 

say, ‘‘Oh, our little kiddies.’’ Did we ever hear about parental responsibility as well? 

140 

Now, let me tell you what moved the gambling—and there did 

come a time when youngsters wanted to play Texas Hold’em. They 

want to say Texas Hold’em, Congressman Barton, the State has got 

the Texas Hold’em. Why? It became famous because of television. 

The third most watched sport—first, NFL, then NASCAR and then, 

yes, poker on the television. Are we going to ban that? Are we 

going to ban showing that at the casinos? What do you think created this impetus and a huge surge in that game in particular of 

poker—— 

Mrs. BONO MACK. Senator, let me just jump in here if I might 

because as you know better than anybody here our problem is to 

try to advance technological problems at the same time as legislative hurdles. And Professor Eggert spoke eloquently I think about 

bots and as Dr. Cassidy and the fear that can we actually protect 

some people. Is this entirely new version the wild, wild west? Is 

this entirely a buyer beware? Professor Eggert in his testimony 

talked about artificial intelligence and I feel like I should ask Seary 

on here if she is capable of gambling. 

Mr. D’AMATO. But Madam Chairman, if we do nothing, that 

problem will grow with no opportunity to interdict, no opportunity 

of having people who will have the skills and have the wherewithal 

because they want to protect their business. So as the professor indicated, one of the things they are going to be looking to do is to 

reduce that. He knows of no system to eliminate it but to reduce 

it. And you can identify—— 

Mrs. BONO MACK. Little questions, though, that we do—I don’t 

know if you all can answer and I have 30 seconds left—and I think 

Professor Eggert’s testimony again, how do you handle something 

as innocent as losing Internet service in the middle of a hand. 

Mr. D’AMATO. I didn’t quite get that. How do I handle something 

as innocent as—— 

Mrs. BONO MACK. Your Internet service just goes out and you 

are in the middle of a big hand and you lose Internet connectivity. 

What happens? 

Mr. D’AMATO. You know, Congresswoman—— 

Mrs. BONO MACK. Do I win if I just flip off my modem? 

Mr. D’AMATO. I have to tell you this legislation can’t protect everybody at every time in every instance but it can go a long way 

to protecting people who have no protections at all, whether it is 

the bots, whether it is the problem gambling, whether it is the 

youngsters, no one can promise 100 percent certainty. When it 

comes to identification and verification, certainly we should be able 

to use the most robust technologies that have been developed and 

will continue to be developed. But there is nothing perfect about 

this legislation. It will be imperfect but a heck of a lot better than 

doing nothing. 

Mrs. BONO MACK. All right. I thank you and my time has expired. And I am pleased to recognize Mr. Butterfield for 5 minutes. 

Mr. BUTTERFIELD. Thank you. 

Technological advances have allowed manufacturers to create 

ever-more enticing products. But I am not concerned about the 

flashing lights and the funny noises or a game’s appearance; I am 

only interested in game attributes or marketing practices that have 

the potential to mislead, deceive, or confuse. 

141 

Mr. Eggert, I think I will try you on this one. You discussed slot 

machines that intentionally give the game player a large number 

of near misses complete with a counter on the side of the screen 

letting them know exactly how many they have had. This is a manipulation of consumers that inhibits their ability to understand 

how the game works and makes the game seem easier to win than 

it actually is. You may agree or disagree with that, but briefly, 

what are the most egregious examples of misleading or deceptive 

tactics that we should be aware of in the online gambling world, 

those worse practices that should be carefully monitored or restricted? 

Mr. EGGERT. Well, in the online world, we have heard some of 

the worst practices are online poker sites not having the money 

that the gamblers have put—have drained the money out so if the 

gamblers try to get their money out, they can’t. That is a very bad 

practice. Another bad practice is insiders being able to see the 

whole cards of their opponents so that they can win much more 

easily because they are playing against. That is another really bad 

thing. But another really bad thing is not being able to tell what 

the hold percentage of a slot machine you are playing is. I think 

that is an important thing for any slot player is to say, you know, 

am I going to lose on average 2 percent, which is a good machine 

or am I going to lose 15 percent, which is a much more expensive 

and much worse machine. That is an incredibly bad practice and 

it exists in Internet slots; it exists in land-based slots. That is 

something that should be addressed. It is an important part of consumer protection. 

Mr. BUTTERFIELD. What kind of expertise and authorities should 

an enforcing agency have in order to keep up with the misleading 

or deceptive tactics of an industry’s bad actors? 

Mr. EGGERT. Well, that is actually an interesting question. I do 

a lot of work in the financial services community, and regulators 

are doing a better job now of actually experimenting to see what 

consumers understand and what they don’t understand. And so 

what we should have is a regulatory agency that focuses on consumer protection and really tries to figure out what can consumers 

understand as far as disclosure is? What information do they want? 

How much information can they use? And so I would assert that 

we should have a Federal regulator who does that kind of investigation to see what works best for gambling consumers. 

Mr. BUTTERFIELD. Can you tell me how vendors describe their 

games when they do it in writing to their consumers? 

Mr. EGGERT. Well, typically for slot machines they say that they 

are either loose or they are looser or they are the loosest, but often 

they don’t give much detail as to what that means. 

Mr. BUTTERFIELD. Is there room for improvement? 

Mr. EGGERT. There is incredible room for improvement. 

Mr. BUTTERFIELD. What about misleading tactics or deceptions 

by other players, for example, when a poker game is infiltrated by 

predatory professional players or algorithm-driven bots that are 

impossible to beat? In a case like this, is an empowered, knowledgeable consumer even enough? 

Mr. EGGERT. Well, the problem consumers have is they often 

don’t know if they are playing against somebody who is using a 

142 

computer assist or computer bot to help guide the game. And so 

you might have some, you know, 21-year-old who is playing their 

first game of poker online facing, you know, somebody who with 

the computer algorithms is, you know, really a top poker player. It 

would be as if you go to the neighborhood to have a pickup game 

and unbeknownst to you, you are playing against an NBA player. 

I don’t think you can prevent people from using bots because I 

think that is just impossible. 

For me, the solution would be to have a rating system whereby 

if you want to play against people and know whether they are good 

or bad, everybody has a rating like in the chess world. Better players have higher ratings; worse players have lower ratings. I know 

if I play against somebody with a 1,000-point higher rating than 

me, I am going to get beat but it might be fun. The same thing 

should happen in the gambling world where if you go online playing poker and you have a 1,400 rating and you are playing against 

somebody who has a 2,100 rating, most likely they are going to 

beat you but you might learn something. 

Mr. BUTTERFIELD. Very informative. Thank you. 

Mrs. BONO MACK. Thank you, Mr. Butterfield. 

And the chair recognizes Mr. Barton for 5 minutes. 

Mr. BARTON. Thank you, Madam Chairwoman. I was going to 

leave and then we were told we were going to have a second round 

so I decided to stick around. But my stomach is starting to growl, 

so let us don’t have 3 rounds even though I asked for the hearing. 

I want to refocus. You know, we are kind of letting the tail wag 

the dog here. We are having a hearing as to whether it is acceptable, appropriate to allow those citizens of the United States that 

live in States that the States want them to play poker for money 

online to do so, and we are getting into some pretty esoteric areas 

about underage and problem gambling and now we are into this 

issue of computer gamblers. I will acknowledge that it is technically possible to set up some elaborate scheme using these computer bots against people, but we can always guarantee that somebody is a live body at the table, right, even if they have a computer. 

That is doable, and if you have that, you know, you are not going 

to set up an elaborate computer scheme to play in a 1-cent, 2-cent 

limit online poker game. There is just enough money. And the 

higher you go in these games—I have never played money online. 

I have played poker online and I have got play money out the 

kazoo. I have got $10, $15 million of play money, but that and 75 

cents gets you a coke. I mean it just doesn’t help you a lot. 

But when I look at the for-money sites, most of them are less 

than $100. Now, you can get 1,000, 2,000, so anybody with any 

sense at all who—to use your term, Professor—a recreational poker 

player, you are going to be an absolute idiot to go online and get 

into a high-dollar poker game. I mean just you go into that game 

knowing that everybody else at that table is really good and unless 

you are an heir to the Rockefeller family or the Perot family or Bill 

Gates or somebody like that, you don’t in your wildest dreams want 

to be playing poker in that game. You just don’t want to do it. 

So if we can verify that they are adults and maybe even require 

people to stipulate that they are not using computer ability when 

143 

they play, even though they can cheat, if they cheat you can catch 

them. Do you agree with that, Professor? 

Mr. EGGERT. I don’t think you can catch poker players who are 

using a computer to guide them. I think as long as they make sure 

that they don’t win too often, that they screw up once in a while, 

that they can fly under the radar and make good money. You don’t 

have to be playing $300-a-bet games to make a decent living. People can make 60, $100,000 playing professional poker with bots—— 

Mr. BARTON. Well, all of the information in your written testimony about data manipulation and data statistical analysis I can 

get. I can get myself right now if I want to take the time to do it. 

It doesn’t mean I understand it, it doesn’t mean I will benefit by 

it, but I have the ability if I want to really find out what is out 

there, I can do that without too much trouble. That information is 

fairly transparent. 

What we want to prevent is somebody using it unfairly, and in 

a real-world situation when you walk into the casino, you can’t 

take a pocket computer with you. You know, you can’t have somebody behind you saying the probability on this hand 33 percent, 

that that guy over there has got pocket aces or whatever. You have 

got to know it. On the computer, you can get access to it, but there 

should be ways to verify with the current technology is somebody 

is routinely beating the system, we can flag that and then we can 

outlaw them. We can put penalties into the bill that if I use computer analysis at all, I can be banned from that site, I can be penalized, and I guess if the committee wants to, we can throw them 

in jail. 

So that is not a reason not to do it. It is something we need to 

work on, it is something we need to be aware of, but because some 

computer whiz kid at MIT develops a problem that they think can 

beat the system, if we are aware that they have got that program, 

eventually we are going to catch them. Do you agree or disagree 

with that? 

Mr. EGGERT. I disagree with that. Think of the chess world. You 

know, if—— 

Mr. BARTON. No, no, chess is perfect knowledge. Everybody 

knows on the chess board where the pieces are. When I sit down 

at a poker table, I know my cards, I know the cards on the table, 

and if I am really, really smart, I might be able to infer what Senator D’Amato has and you have based on the way you bet, but I 

don’t have perfect knowledge. That is why poker is such a great 

game. It is a game of skill, it is bluffing, it is probability, and it 

is reading people, but it is not poker knowledge. This is not chess. 

Mr. EGGERT. But if you have a poker program that plays as well 

as some of the best players in the world and I use it, how do you 

tell if I am using a program—— 

Mr. BARTON. Well, within an hour, everybody at the table is 

going to know that—— 

Mr. EGGERT. How will you know—— 

Mr. BARTON [continuing]. And if you use it for a week, the people 

that are monitoring the site, if it is legalized and regulated are 

going to know it and you are going to be banned. 

Mr. EGGERT. How would you distinguish between me and a really good player who is not using the program? 

144 

Mr. BARTON. I would call you up and talk to you about 15 minutes on the phone if I am the regulator and ask you a few basic 

questions. I would find out pretty quick what kind of a poker player you are. I could do that right now actually. 

Mr. EGGERT. I think that your—— 

Mr. BARTON. And I yield back. 

Mrs. BONO MACK. I thank the gentleman and recognize Mr. 

Kinzinger for 5 minutes. 

Mr. KINZINGER. Well, thank you, Madam Chairman, for putting 

this on. 

Just a few questions to start with, Ms. Aftab. Let us talk a little 

bit about the offshore gambling industry, and I apologize if you 

have been asked this already. But can you tell me a little bit about 

it, just how it exists today? Specifically, you know, where is most 

of it located at? What kind of gambling, you know, for the most 

part is occurring on these offshore sites? And what kind of protections do these offshore sites have for players and particularly for 

minors? If you just want to talk in general about it and then we 

will go from there. 

Ms. AFTAB. Thank you very much. I hate to keep referring to our 

report from the Kennedy Center at Harvard, but it does address 

these things. 

Offshore we are dealing with sites that are legal under the jurisdiction where they are regulated—Gibraltar, the U.K. A lot of the 

different foreign jurisdictions have regulatory schemes that allow 

online gambling under certain circumstances with checks and balances. And then the vast majority of the sites we are seeing are 

unregulated. They are in places that have no regulations in place 

and no checks and balances. 

So when you are looking at a well regulated scheme, they keep 

kids out by requiring adult verification and authentication. They 

have trust systems that money needs to be put into trust accounts 

and kept distinct so that a payment is made on winnings. They 

have checks and balances on money laundering to make sure that 

they know who they are dealing with and you are seeing patterns 

of behavior. They are using artificial intelligence, Symantec web 

that Representative Barton was talking about. From his perspective, it is the good side of the bots to look at certain patterns of 

behavior. They have audits of who is employed, where the money 

came from—— 

Mr. KINZINGER. And again, we are talking about regulated sites 

right now, correct? 

Ms. AFTAB. I am sorry? 

Mr. KINZINGER. We are talking about the regulated—— 

Ms. AFTAB. The regulated sites as opposed to the other ones that 

may be run by terrorist organizations, they could be run by underworld criminal activity, they could be run by somebody out of their 

garage. You don’t know and, you know, you never know who is a 

dog on the Internet and it is pretty hard to figure out who you are 

gambling with. So there are ways of doing this and I think what 

we need to do is cherry-pick the best that we see out there and 

then Americanize it and make it even better. 

145 

Mr. KINZINGER. So on the unregulated sites, basically it really is 

anything can go. I mean you could have 12-year-olds on there betting—— 

Ms. AFTAB. You could have 12-year-olds on it, you will have collusion among gamblers, you are going to have people who aren’t 

paying you on bets, they are taking your money, it is not even real. 

Anything that could possibly go wrong does go wrong. 

Mr. KINZINGER. Do we have any idea approximately how much 

American money is being bet on those sites? 

Ms. AFTAB. The numbers are huge. The 4 to $6 billion a year of 

U.S. gambling is the estimate that we are seeing offshore. That is 

a lot of money that people are spending not in the United States, 

maybe they shouldn’t be spending it, and they are not spending it 

fairly. So it is money that could be brought back here and help us 

and be done better. 

Mr. KINZINGER. And ultimately, you know, if it is unregulated, 

it is almost impossible to put them out of business. I mean we 

can’t—— 

Ms. AFTAB. It is really impossible to put them out of business, 

and the problem I have been seeing is consumers here don’t know 

where to go because if they think that what they are doing is illegal because they are gambling online and they are scammed, they 

are afraid to call the police because they think they might be arrested. So we are finding consumers who have no place to go, no 

recourse in law enforcement but doesn’t know what to do and how 

to do it effectively. 

Mr. KINZINGER. And just one more question for you, too. Operator fraud and theft from players, you touched on that with these 

companies that are—has any of this happened in companies regulated in EU-member states? I mean have you been seeing that or 

is that mostly on the unregulated sites I guess? 

Ms. AFTAB. Well, every once in a while you are going to see 

somebody in a regulated scheme that is violating the laws and they 

police those very carefully. 

Mr. KINZINGER. Right. 

Ms. AFTAB. And that is the difference. People will always break 

the law, but if you have laws in place and law enforcement skills 

and the tools are there, then you can put them out of business 

and—— 

Mr. KINZINGER. You can prosecute it and go after it. 

Ms. AFTAB [continuing]. Put them behind bars. 

Mr. KINZINGER. OK. Great. Well, that is all I have. Thank you 

for your patience. And I yield back. 

Ms. AFTAB. Thank you. 

Mrs. BONO MACK. Thank you. And Mr. Harper, you are recognized for 5 minutes. 

Mr. HARPER. Thank you, Madam Chair. 

You know, there are so many things going through my mind as 

we listen to the different witnesses and the input on this. You 

know, right now if we have offshore online Internet casinos, whatever we want to call them, and they are receiving funds illegally 

from U.S. citizens, would you support legislation that would say 

that those companies that are knowingly right now violating our 

146 

law that would ban them from ever opening up and being a part 

of legal U.S. Internet gambling? 

Ms. AFTAB. I will answer for myself but not necessarily for Fair 

Play USA because I don’t know what the answer is. And as far as 

I am concerned, if you are violating the law, you shouldn’t be allowed to engage in a licensed and regulated regime—— 

Mr. HARPER. OK, thank you. 

Ms. AFTAB [continuing]. In the same way you couldn’t open a 

brick-and-mortar casino if you are a criminal. You shouldn’t be able 

to do this, either. 

Mr. HARPER. Mr. Stevens? 

Mr. STEVENS. Yes, sir, we would be supportive. Absolutely. 

Mr. HARPER. OK. Mr. Whyte? 

Mr. WHYTE. We don’t have a dog in this fight. We are neutral 

on legalized gambling so our organization has no opinion on that. 

Mr. HARPER. Well, then I will ask you personally. 

Mr. WHYTE. Personally, yes. 

Mr. HARPER. Do you have an opinion personally as to whether 

or not a company that has been conducting technically illegal activity offshore is now going to want to come in and be licensed to do 

this in the United States? 

Mr. WHYTE. Yes, if they are breaking the law, it certainly seems 

that they would be unfit to receive licensure under the general 

gaming statutes that we have. 

Mr. HARPER. Thank you. Senator D’Amato? 

Mr. D’AMATO. If you violated the law, you should not be permitted to have a license. 

Mr. HARPER. OK. Mr. Eggert? 

Mr. EGGERT. I also agree that if a company has been intentionally violating the law, I don’t see them as a fit gambling operator here. 

Mr. HARPER. Dr. Romer? 

Mr. ROMER. Well, I mean all of them are violating the law as far 

as I can tell. So I think there have been some agreements with 

some of these companies to acquire, you know, back taxes and so 

forth that might work. 

Mr. HARPER. Thank you. 

Mr. D’AMATO. I might, Congressman—— 

Mr. HARPER. Yes, sir, Senator? 

Mr. D’AMATO. They are not really all violating the law. That is 

a very real question. And indeed I think the 5th Circuit indicated 

that the Wire Act—— 

Mr. HARPER. Sure. 

Mr. D’AMATO [continuing]. Which really creates the violation has 

not been violated as it relates to playing poker but rather that 

Wire Act was intended for sports gambling. So I think, you know, 

there is a legal distinction. Now, some are still battling that out. 

It hasn’t gone up to the Supreme Court, but that is the highest ruling to date. 

Mr. HARPER. And I am certainly aware of that conflict that is 

there. 

Professor Eggert, if I may ask this, and I will just read a little 

something here and then get your thoughts on it. In 2007, Jeff 

Schmidt, CEO of Authis, provider of identity- and security-related 

147 

products, testified before our committee. Mr. Schmidt certainly is 

recognized as an expert on these issues on online identification and 

authentication. In his testimony he stated, ‘‘age verification and determination of geographical location simply cannot be done reliably 

over the Internet.’’ And I would ask has technology changed and 

improved to the point where that has drastically changed since ’07 

and do you agree with Mr. Schmidt’s assertion regarding age and 

geolocation verification? 

Mr. EGGERT. Well, that is actually a good question. I am not sure 

I am the proper person to answer that because I haven’t really 

studied age verification and Internet search. I wouldn’t want to 

hazard an opinion without doing more reading on that. 

Mr. HARPER. And I know that, Ms. Aftab, you would agree that 

it has changed or has improved, would you not? 

Ms. AFTAB. Yes, it is changing radically and very quickly and all 

of us are now carrying around devices with GPS capability on them 

all the time so that it has changed greatly. And I was part of the 

taskforce that said you can’t authenticate kids but you can authenticate adults, so that question needs to be asked in the right way 

when we ask about age verification of adults. 

Mr. HARPER. But if you are doing that, can a person still not sell 

their information or share that with someone else or it be stolen? 

Ms. AFTAB. They could but if you are using biometrics along with 

it that would require that when you log in you are authenticated 

as you and that has been verified through some regimen that has 

been approved, I think we can really get there. And we are getting 

there across the board on a lot of other areas. 

Mr. HARPER. If we legalize Internet gambling in the United 

States, there will be obviously costs associated with that. So what 

will prevent someone from saying, well, you know, it cost me more 

to use what is the legal Internet gambling here; I want to still go 

offshore? What is going to prevent them from still doing what they 

are doing now? 

Ms. AFTAB. Well, now you are going to have a lot of big players 

in the fence. So right now everybody is outside of the fence, but 

when you get a lot of the players who know what they are doing, 

they understand the technology, they understand the patterns of 

play, they understand all of these things who now have a vested 

stake inside, they can turn around and blow the whistle on everybody else and help you get the ones who are the outliers because 

they are competing unfairly. You will have some good allies. 

Mr. HARPER. My time is up. I yield back. 

Mrs. BONO MACK. Thank you. And Dr. Cassidy for 5 minutes. 

Mr. CASSIDY. Mr. Whyte, again, as I think about, OK, we have 

a subset of people; let me just accept what you say earlier—again, 

not to challenge just to learn—that you will not significantly increase the risk, there is a possibility that those that do gamble will 

significantly increase their gambling. 

Mr. WHYTE. Absolutely. We covered that in our written statement. 

Mr. CASSIDY. So let me—— 

Mr. WHYTE. Sorry. 

Mr. CASSIDY. Now, I have learned when gambling was introduced 

in Louisiana, the problem gambling increased dramatically, as well 

148 

as did theft from businesses as people financed their habit if you 

will. Have you learned in these jurisdictions that legalized Internet 

gambling that problem gambling increases and that the incidents 

of theft associated with such increases? 

Mr. WHYTE. That is a great question. In the jurisdictions we 

have looked at to date without exception the rate of problem gambling has not exploded. It has not exploded in proportion to the—— 

Mr. CASSIDY. Now, exploded is a subjective term. 

Mr. WHYTE. Exactly. But still what we do see—and I think to the 

point of your question—is that there are subtle increases in perhaps severity of problems especially among certain groups like, for 

example, young men who tend to be very heavy gamblers, who tend 

to be high adopters of Internet gambling. So I think Louisiana’s example is the same. There are at-risk groups that when gambling 

is made legalized, more accessible, more available, more acceptable, 

they may shift in their patterns of gaming. They may either start 

gambling or take their existing—— 

Mr. CASSIDY. Now, when you say that exploded is objective, 20 

percent is a definite, can you give me a percent, say, across all jurisdictions we see a 5 to 20 percent increase in problem gambling? 

Mr. WHYTE. No, sir, we have not seen that. 

Mr. CASSIDY. Do you have a percent I am asking? I am making 

up a number. 

Mr. WHYTE. Absolutely. I apologize. Yes, in the United States it 

has gone roughly from .5 percent to around 1 percent over the last 

30 years—— 

Mr. CASSIDY. Problem gambling? 

Mr. WHYTE [continuing]. Pathological gambling. So that is a 

large percentage increase, certainly—— 

Mr. CASSIDY. See, my local DA told me that the amount of theft 

associated with it had increased significantly, not a definite number, but after gambling was legalized, the amount of theft—in fact 

they stopped investigating it because it was, you know, so much of 

a problem. 

Mr. WHYTE. That is absolutely—60 percent of problem gamblers 

will commit a white collar crime to finance their gambling. 

Mr. CASSIDY. OK. 

Mr. WHYTE. And as more and higher-stakes forms of gambling 

are available, they may be driven to more severe crimes because 

they are chasing more and more money to—— 

Mr. CASSIDY. OK. Let me ask Dr. Romer and Mr. Eggert, first 

you, Mr. Eggert. If I would say that my goal is to limit the amount 

of problem gambling, to limit the amount of the number of adolescents who enter into a lifestyle which is destructive, but to allow 

people like Mr. Barton if you will to pursue his pastime, Mr. 

Eggert, do you think that this legislation is a positive in terms of 

pursuing that goal or do you think it is a negative? 

Mr. EGGERT. Well, first of all, I am not a problem gambling expert. I am a consumer protection expert. I think that there are 

good things about Internet gambling where you can put in harm 

minimization strategies. I don’t think that there is a good study out 

there that shows whether that has a net benefit or a net—— 

149 

Mr. CASSIDY. So what about consumer protection? Do you feel 

like this legislation is a negative or a positive for consumer protection? 

Mr. EGGERT. Well, I haven’t seen any legislation yet that has 

what I consider strong consumer protection. I think if we had legislation with strong consumer protection, that could be a net positive. 

Mr. CASSIDY. And then the very fact of legalization which some 

folks suggest will allow it to be increased consumer protection, you 

are not convinced of? 

Mr. EGGERT. I am sorry, could you—— 

Mr. CASSIDY. So some folks I am hearing say just legalize it and 

inherent in legalization will come consumer protection. 

Mr. EGGERT. I think that you have to build in strong consumer 

protections. 

Mr. CASSIDY. Dr. Romer, again, let me ask you. Do you think this 

legislation in particular—I gather from your testimony you actually 

think this legislation or some legalization would be beneficial in 

terms of the problem of adolescent gambling. 

Mr. ROMER. I think it would if certain, you know, safeguards 

were put in place, the kinds that have been suggested, because the 

Internet is a place where you can alert people to problems while 

they are gambling, you could cut them off, and we could also examine—I think the bill that is currently proposed suggests that we 

could make public the records of these gambling companies so that 

we could see are they making disproportionate profits from—— 

Mr. CASSIDY. To go back to Mr. Eggert’s comment, he wants to 

see that sort of thing on the front end, not kind of retrofitted on 

the back end. Do you think that such legislation should have that 

sort of transparency built into it on the front end? 

Mr. ROMER. Yes, I think consumers ought to know what their 

chances are of winning on a particular site, and if it is very difficult, they ought to know that. Yes. They ought to know the odds. 

Mr. CASSIDY. OK. And I haven’t read this legislation so critically. 

You may not be an attorney. I hope you are not. 

Mr. D’AMATO. Congressman, we would have no problem supporting legislation that clearly called for the kind of thing that 

Kurt Eggert suggested and that is that there be identified what 

percentage does the house keep? If it is 3 percent on a game, 2 percent, whatever it is, no problem in establishing that. That is great 

consumer protection and putting it out there before they pull that 

slot, if it is not a slot, but before they deal those cards. 

Mr. CASSIDY. OK. I am out of time. Thank you. I yield back. 

Mrs. BONO MACK. I thank the gentleman. And I would like to 

thank our panel very much for being here today. You have been 

very gracious with your time and helpful and enlightening with 

your answers. I look forward to working with all of you again as 

we continue to explore the issue of Internet gambling. 

As chairman of the subcommittee, let me be clear about two 

things: First, we are going to be very thorough in examining a wide 

range of issues related to Internet gambling before coming to any 

conclusions; and secondly, at the end of the day, we are going to 

do what is best for American consumers. 

I remind members that they have 10 business days to submit 

questions for the record and ask the witnesses to please respond 

150 

promptly to any questions they might receive. The hearing is now 

adjourned. 

[Whereupon, at 1:00 p.m., the subcommittee was adjourned.] 

Æ