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Thursday, Oct. 18, 2007

Regulation, not isolationism, needed for poker

Annette Obrestad, winner of the 2007 WSOP Europe Main Event, may have something to say about an online gambling ban in Norway.

By Earl Burton

The ubiquity of the Internet, and its potential for facilitating human connection, has impelled governments to attempt to regulate and limit access to it. In China, for instance, the ruling party rigidly monitors what its citizens view, and during the recent uprising in Myanmar, the military junta in power cut off Internet access altogether.

Such restrictions and outright bans seem to be a trend in the online poker world as well. The implications, while arguably more harmful to commerce and leisure than to democracy per se, are troubling.

After Norway's Annette Obrestad's victory at the World Series of Poker Europe in September, you would have thought that "Annette_15"'s home country would have expressed pride in what she had achieved. Instead of reveling in her victory, however, Norway has chosen to follow the burgeoning trend among nations addressing online poker and casino gaming.

It has moved toward enacting prohibition of gaming transactions, much like the United States' attempts with the UIGEA.

Norway isn't the first nation on the European continent to attempt to either rein in Internet gaming or to transition it to its own state-run online gaming operations. Both Sweden and France have prohibited their citizens from partaking of the poker action of their favorite sites, those run from such jurisdictions as Gibraltar and the Caribbean, leaving state-sponsored sites the only option for online gamers.

Italy tried to do this for some time but, in the end, was forced to open up its market to foreign competition. In March of this year, the European Court of Justice ruled that Italy must adhere to the EU's free trade agreement and could no longer prosecute bookmakers based in other European countries. The ruling was hailed by online gambling operators as a landmark decision in their fight to access such monopoly markets.

Sweden and France are now facing similar EU challenges to their state-run monopolies. Norway, while not a member of the EU, still has signed on to an agreement which stipulates that it observe freedom of trade with other EU member nations. It could come under fire if it attempts to enact its proposed UIGEA-like regulations.

By now, everyone has heard about the conflict between the United States and Antigua regarding the UIGEA's effect on Antigua's economy. While the U.S. maintains that the tiny island nation isn't losing any money as a result - it even offered a ridiculous $500,000 settlement to Antigua recently -, the U.S. stands to suffer far greater financial losses in its negotiations with other nations, including England and Australia, where the proposed settlement figures are in the billions of dollars.

Nations that have taken (or are contemplating) the heavy-handed approach to the quandary of online gaming are missing the boat completely. By outright banning people from playing online poker or - as the UIGEA does - making it very difficult to finance their bankrolls, the nations in question have embraced the doomed mechanisms of isolationism and prohibition.

There is no way that either proposal is going to work when it comes to online gaming. These tactics, whether applied to alcohol (as in the early 20th-century U.S.) or trade (Japan from the 17th to the 19th century), have proven ineffective time and again.

Either citizens just worked around official policy to achieve their ends or, in perhaps the worst-case scenario, organized crime filled the vacuum by delivering the contraband.

The best route for all nations to take, rather than banning the activity or forcing their citizens to play on state-sponsored sites, is to cooperate at the international level to permit and regulate the online gaming world.

State-run sites are little more than (quasi-)voluntary taxation and, in the end, perhaps just have the effect of turning players off online poker rather than doing anything to further the game. A total ban on online gaming, meanwhile, is destined to fail, precisely because of the ease of Internet access today (not to mention the demand for the product).

It isn't difficult to see the advantages to taxation and regulation. Governments could devote increased gaming income to combating many potential problems in the online poker world, such as security, underage gaming and gambling addiction. Potential profits for governments are lucrative enough that even a fraction of them would suffice to address these areas, and the remaining monies could be directed to other expenditures. The pluses of taxation and regulation far outweigh the minuses of prohibition or isolationism.

As the Internet poker scene continues to grow, perhaps forward-thinking politicians and legislators will realize there is more to gain from the legal operation of online gaming than there is from prohibiting it.

Nations looking to squelch the rights of online poker players don't have the best interests of their citizens or their countries at heart. Let's hope they recognize this truth sooner rather than later.