The solution, the bipartisan group of lawmakers seemed to agree, is some form of federal regulation — but what sort remained a mystery. 

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The hearing of the Senate’s Commerce, Science and Transportation subcommittee is Congress’s first on the topic since the legislatures of Nevada, New Jersey and Delaware approved Internet gambling rules — and there was a wide range of concern on display. 

“What we have here is a free-for-all,” Sen. Kelly Ayotte (R-N.H.) said. “ Shame on us if we don’t get something done on this.  When I think about the issues of money laundering, terrorism [and] drug trafficking, … I hope this is something we move on very quickly.” 

Ayotte was responding to the testimony of Fraternal Order of Police National President Chuck Canterbury and Washington attorney Jack Blum, both of whom said the federal government needs to create a national regulatory scheme because state authorities are ill-equipped to deal with the interstate and international finance problems caused by online wagering. 

“We’re always behind the eight ball on technology,” Canterbury said. “ Local law enforcement won’t be able to attack money laundering and terrorist activity with 50 laws” for 50 states. 

Blum, a former Senate antitrust investigator and longtime financial crimes expert, said online casinos need to be regulated the same way banks are because “any business organization that can open accounts, take money, lend money and spend money is a bank.  The question is how do you regulate these online casinos in any meaningful way?  We already are having a huge problem with our regular banks.” 

But there were also flaws in the suggestion of the sole witness offering an idea for how to combat illicit and underage online gambling.  Thomas Grissen, CEO of Daon, a Reston, Va.-based biometrics firm, demonstrated a system in which users logging into accounts would have to allow their computers or mobile devices to take photos of them and record some audio in order to match it with pictures and voices on record.  Those measures, crossed with geolocation information, would prevent illegal play, he said. 

That suggestion prompted subcommittee Chairwoman Claire McCaskill (D-Mo.) to raise the specter of the recent disclosures about the National Security Agency collecting online communications. 

“In this age, when we’re talking about big data and NSA capabilities and what people know about you based on what you click, it is fascinating that we would open up a whole new treasure-trove of data,” she said. 

Such a system also wouldn’t curb money laundering, Blum said. 

Yet the Poker Players Alliance, a lobby for professional players, threw its support behind a system like Grissen’s. 

“I know from the players’ perspective, providing that kind of personal data is something they are willing to do,” PPA Executive Director John Pappas said. 

Several senators seemed uncomfortable with the topic generally and bemoaned why they were forced to contend with it — because the Justice Department reinterpreted by fiat the Wire Act in December 2011 to allow for electronic betting of all sorts except sports betting.  That altered decades of precedent in which the 1961 measure was used to bar a variety of wagering via the Internet and phone services. 

The distaste seemed bipartisan, with Sen. Richard Blumenthal (D-Conn.) suggesting that human traffickers and pornographers are taking advantage of the ability to shift money around in online casinos. 

“And so, the two worlds merge, pornography and online casinos,” he said. 

Senate Majority Leader Harry Reid (D-Nev.) and former Sen. Jon Kyl (R-Ariz.) drafted a bill last year to “fix” the Wire Act by regulating poker federally and banning most other forms of Internet gambling.  The bill was never introduced and was pilloried by state lottery officials angry that they wouldn’t be allowed to offer most of their games online. 

Reid and Sen. Dean Heller (R-Nev.), the ranking member on the subcommittee that hosted Wednesday’s hearing, have hinted they may introduce new legislation this year. 

Two bills have been introduced in the House, one by Rep. Peter King (R-N.Y.) to legalize and regulate all forms of online gambling and another by Rep. Joe Barton (R-Texas) that focuses only on legalizing and regulating Web poker nationally.  In both cases, the Commerce Department would oversee regulation and enforcement. 

Pappas and other gambling industry advocates said the Senate hearing is a start for a process and that lawmakers need to recognize online wagering — legal or illegal — is happening. 

“Internet poker is a reality that is here to stay,” Geoff Freeman, president and CEO of the American Gaming Association, said in a statement. “ The question is whether Congress will ensure minimum regulatory standards of online poker, protect consumers, exclude bad actors from the American market and provide Native American tribes with an appropriate regulatory framework.”