The summer of 2006 was a heady one for Senator Bill Frist and a small cabal of Republican members of Congress. Frist smelled the Republican nomination for President and he needed friends in some key early primary battlegrounds. Frist wanted it and he was going to get it.

The steamy Washington D.C. summer turned Frist into an irresponsible and randy teenage boy. He wanted it. He didn't care who he had to manipulate to get it. To get what he wanted, he had to ignore the potential consequences of his actions and accept he would be saddling others with a long-term burden. He was the selfish father of a throwaway kid. Now, as Frist tries to figure out who he can count on to make him governor of Tennessee, the progeny of his carelessness and ambition has become everybody else's problem.

If you're just now learning of UIGEA or haven't yet paid enough attention, it breaks down like this: A service that provides gambling on games subject to chance, except for horse racing and fantasy sports, is now considered criminal by the federal government. The UIGEA does not provide funding for the enforcement of its mandates. Rather, it forces American financial institutions to police gambling providers, determine whether they are breaking the law, and then stop doing business with them.

The financial institutions collective, along with UIGEA detractors, say it is well nigh impossible for the banks to be responsible for policing the anti-gambling laws. One of the strongest arguments is that banks, credit card companies, credit unions, and wire transfer companies have no way of knowing from one day to the next who is a bad guy and who is not. The UIGEA does not outline, except in broad terms, which companies break the law. Further, government regulators at the Federal Reserve and Department of Treasury have not been able to come up with an adequate list they can provide to the banks. At this point, the banks would not only suffer the financial burden of policing the internet, but also the ambiguity of the law itself.

UIGEA proponents don't buy it. The national sports leagues (yes, those that benefit so grandly from fantasy sports) are strongly in favor of getting UIGEA regulations finalized tout suite. "There should be no difficulty in identifying and blocking financial transactions directed at promoting sports betting," the leagues wrote in a letter to the Committee.

Proponents, like Alabama Republican Congressman Spencer Bachus, believe it is entirely possible to create a list of offenders like that of the Department of Treasury's Office of Foreign Assets Control. Rep. Bachus, despite having a last name worthy of some envy, likely loses a lot of credibility when he puts up statistics that suggest 74% of internet gamblers became addicted and many of those have turned to crime.

Regardless, the reality is that Treasury has, in fact, built the kind of lists about which Bachus and the professional sports leagues speak. They exist. According to Bachus, the NCAA has identified a list of 900 such gambling entities that can be considered illegal from which the banks could identify the illegal companies. Moreover, there are lists the banks and Department of Treasury use to battle money laundering.

Regulators seemed duly nonplussed. "Money laundering is a global concern," said Louise Roseman at the hearing. Her point? Banking is not a business exclusive to America. Banks all over the world work together to fight money laundering. Those same banks that walk in lockstep in that battle would be put at odds if the same sort of cooperation was expected to fight gambling. After all, in most countries in the world, gambling on the internet is not illegal. What's more, it's big business.

The financial services industry is beside itself. Wayne Abernathy represented the American Bankers Association at the hearing. No one--least of all the regulators, but including the banks themselves--has any idea how much the UIGEA will cost American banks. The financial burden aside, the banking industry points out the law will result in a no-win situation for the customers. Abernathy said the UIGEA will force banks to either be unfairly restrictive or "highly intrusive." Banks would have to take a gamble of their own. They could allow customers their privacy, but in an abundance of caution be forced to close the accounts of law-abiding entities. In the alternative, they could be more diligent, but be forced to dig deeper into their customers' private transactions.

Among the bills in Congress that seek to undo the confusion caused by the UIGEA is Rep. Barney Frank's HR2046. The bill, as outlined in the official Q&A, would "establish a regulatory and enforcement framework to license companies to accept bets and wagers online from individuals in the U.S., to the extent permitted by individual states, Indian tribes and sport leagues." Frank's bill has the most support of any right now, but there is no reason to believe it has any chance of making it out of committee this year. For Frank's efforts to be successful, a new administration needs to be in place. Optimists can look to this time next year before getting excited.

For now, the only plausible option for lawmakers is to continue working with the existing law and try to work out regulations that will satisfy both the law and the reality of the situation, a proposition that very well may be impossible.

Subcommittee chairman, Luis Gutierrez said it well. "Our time would be better spent restricting predatory lending," he said. That is, lawmakers have more important work to do than babysit Bill Frist's throwaway kid.

Other coverage

UIGEA Hearing Live Blog

Associated Press

Hard-Boiled Poker

Poker Works

1:00pm--We'll explore this more in the coming days, but the short hearing pretty much made offficial what everyone expected. Federal regulators were tasked with putting together regs on an ambiguous law and did their best with what they had. The financial services industry is beside itself that it could possibly be forced to serve in a law enforcement and judicial role in deciding what companies can do business in America. In short, UIGEA would be a tremendous burden on the American banking system, compromise its ability to do its job effectively, and, in the long run, likely not do much more than current laws do to stop the spread of internet gambling.

For people wondering about poker's role in all of this...the game did get brief mention in terms of a carve-out for its role as a skill-based game, but this hearing wasn't really geared toward that sort of discussion.

That's all for today.

12:54pm--And that's it. Hearing is over.

12:48pm--Abernathy: If UIGEA regs go forward as set up..."It continues to compromise the quality of the payment system."

12:45pm--Abernathy points out that, if forced to move forward in this manner, banks will have a choice, and neither of them food. They can be highly restrictive in transactions and cut out a bunch of legitimate folks. Or, they can be "highly intrusive" and ask a lot of questions that would end up violtating the customer's privacy.

12:37pm--Ron Paul is back to ask about potential cost to banking and financial services industries. Wayne Abernathy is the one who takes the questions. He seems to be the most vocal and hot about UIGEA. "It's difficult to put a cost on something that isn't in place yet." Again, ambiguity is the issue. Furthermore, say the reps from the banks, they would be be the judge, jury, and executioners for UIGEA...none roles they want to take.

12:34pm--Ted Teruo Kitada from Wells Fargo is up. He should be the last witness.

12:31pm--Leigh Williams from The Financial Services Roundtable...

--Difficulty in defining internet gambling increases 1000-fold if every banking institution is forced to come up with its own interpretation of the regulations.

--Legitimate business might end up getting caught up and restricted and illegal activity will get through.

--Members of his group seem to like Frank's bill to hat would essentially repeal UIGEA

12:24pm--Wayne A. Abernathy from the American Bankers Association now on the block. No surprise, the banks don't just dislike this law. They freaking hate it.

12:22pm----Short version of May's testimony.

--UIGEA is impossible to enforce unless a list of offenders is created that banks can follow
--Banks are given safe harbor, but have no clear way to prove they didn't know they weren't supoprting gambling

"Urge congress to take action to avoid hardhsips that might arise,"

12:15pm--Members of the financial services industry are now up. Frank has taken over as chariman. We're hearing first from Harriet May, speaking on behalf of the credit unions. "I relish the opportunity," she says.

12:00pm--If you don't feel like reviewing all of the stuff below, here are some Cliff's Notes. The Federal Reserve Board and Treasury have been working to put together regulations mandated by the UIGEA. After putting out the proposed regulations in October, they received a couple hundred letters from people and entities on both sides of the issue. The problems right now run the gamut. First, the UIGEA was exceptionally vague on what constitutes Intenet gambling. Second, it puts the law enforcement burden on the banking system. Although the proposed regulations have been put together, they still leave a very grey area on how banks should police the issue. Furthermore, some payment systems (like checks for interest) have no real way to be coded to stop the transactions. Proponents of UIGEA say banks and regulators could easily use existing lists and regulations (money laundering, existing gambling laws, etc) to form practices to support UIGEA. However, as regulators pointed out, America is nearly on its own in the quest to stamp out online gambling, but the banking system is global. Rep. Wexler made the first foray into the poker carve-out issue, though the issue wasn't discussed at any length. The representatives from Treasury and the Federal Reserve Board seemed rightly frustrated in being forced to build regulations for a law that is, at best, painfully ambiguous. Before banks can reasonably be held responsible for policing internet gambling, they will have to be told what internet gambling really is. With exceptions for activities like horse betting and fantasy sports, the ambiguity issue doesn't seem to be one that is easily solved.

11:57pm--Committee has been on a break for 20 minutes or so. Next up are the reps from the banking industry.

11:37am--The government witnesses are done. Gutierrez looks around the room in wonder at how many people actually showed up. He warns the regulators that people are watching.

"Be careful about where you go with these regulations," he says.

11:33am--So, what about money laundering? Why can't the UIGEA regulations be based on money laundering regulations. Roseman is ready with the perfect answer. "Money laundering is a global concern," she says. Or, to put a finer point on it, banks around the world have an interest in stopping money laundering. However, Internet gambling is actually legal in most places around the world and banks have no interest in cooperating.

11:29am--Hey, it's Ron Paul! He was late, but shows up on time to put forth the Libertarian view of the UIGEA. Thanks, Ron.

11:26am--Roseman states the obvious in terms of stopping Internet gambling. "There is going to be a proportion that will go through irrespective of our regulation."

And so, how is ambiguity affecting the formation of regulations?

"I think it is very difficult without having more of a bright line on what is intended to be included on what is unlawful Internet gambling."

11:17am--Poker mentioned for first time, and skill argument appears, courtesy of Rep. Robert Wexler

Roseman: "We did get a lot of comments for poker players that made that argument There are a number of games that involve a great deal of skill but also are subject to chance."

Wexler calls UIGEA, "Totally inconsistent system of regulation of law-abiding adults wishing to play games such as poker, or mah jong, or chess. This is all in the context of a mortgage crisis and banking crisis in Ameria."

11:13am--Though poker is not mentioned by name, Rep. Peter King brings up what many people in the poker community suggest should happen. Ambiguity could be avoided if the law and regulations were more narrowly defined to address, for instance sports betting. Roseman: "I think it would provide more clarity, except for the sites that have sports betting and other gambling at the same time." She is talking about you, Bodog.

11:08am--Well that was fast. The Reserve Board's Roseman: "I think it is going to be very difficult to enforce. Implementing regulations will not be ironclad at all. I think the law is relying on the payment system."

11:03am--The Joe's T-Shirt Shop Debate--The regs basically state that banks should keep an eye out for Internet gambling and if they become aware of gambling activity, they should stop money transactions. The point is made--online gambing institutions are pretty resourceful. What's to stop one from opening up Joe's T-Shirt Shop from taking bets and how are banks supposed to stop that?

10:55am--Barney Frank states the obvious. No one wants to touch the horse racing industry. Frank admits he doesn't always understand how the peopole on the other side of the aisle.

"I am not a biblical scholar," Frank said. "I can't find an exemption for horse racing!"

"I get a bet on horse racing. I'm a nice little bank here. Do I accept it or do I reject it?" Frank asks, and not rehetorically.

"I would assume that most institutions..." Roseman said.

Franks: "I didn't ask..."

Roseman "Unfortunately the proposed reg was silent on that issue."

Franks: "So, the answer is gamble on it?"

10:47am--Rep. Bachus is back up for questions. He submits letter from all the professional sports organizations and NCAA regarding the law, but the letter is not read out loud. Then he goes on to wonder why everyone thinks the potential regulations are so ambiguous.

Roseman: "The payment system really isn't well designed" for this kind of policing.

Bachus suggests it is, in fact, possible to create a list of offshore, illegal online gambling companies. In fact, he says, Treasury has created these kinds of lists for a lot of other laws. "I'm somewhat mystified," he says. "The NCAA has identified 900 of those."

Roseman: "In this case, it's activities, not entities." Roseman suggests Roseman might have legitimate business than cat be conducted throught the banks.

10:43am--Gutierrez is in the process of asking a series of questions surrounding ambiguity in the law. He says, "It just appears to me since several months have passed...that we would tread carefully as we pursue this issue."

10:40am--No UIGEA rules have been set in stone. All are currently in discussion and no where close to real.

10:36am--Valerie Abend from Treasury now gets a chance to speak. I don't envy her position. Treasury has received more than 200 comments from wide variety of groups and people. Treasury is still reviewing those comments. Proposed rules hit just about every kind of payment system from credit cards to wire transfers.

10:32am--The government speaks. We're now hearing from the first panel, made up of a member of Treasury and The Federal Reserve Board. The biggest issue is one we've been talking about for a while: Ambiguity. Not only is the law ambiguous about what kind of gambling is prohibited, but it is also ambiguous about how the banks will be able police it.

10:26am--Rep. Maxine Waters voted for the bill initially (like, well, just about everybody). Now she says she is reconsidering her vote. "I'm very seldom in a position where I change my vote, but this might be one of those times," she says.

10:17am--Barney Frank in the house. Not reading from a statement, Frank goes on a tear, suggesting the notion that we prohibit an activity because a few people might abuse it is a little more than silly. On Con"They really didn't like gambling and they wanted our committee to be the one to drive a stake through it's heart."

10:09am--First mention of Barney Frank repeal bill from from Spencer Bachus (R-AL). Bachus, like some of his fellow Republicans, is no fan of HR2046. Bachus readers letter from 45 of his fellow detractors. He says "Internet gambling ruins lives and tears families apart. Internet gambling is a scourge on our society...that leads to moral decline." According to Rep. Bachus, a recent study shows 74% of intenet gamblers became addicited and many of those have turned to crime.

Rep. Spencer Bachus

10:04am--Chairman Rep. Luis V. Gutierrez (D-IL) is predicting a "lively debate" Department of Treasury/Federal Reserve Board vs. banking community. You think? Biggest issues at this point are the vagueness of the regulations put forth by the government. Gutierrez says... "Our time would be better spent restricting payday lending...predatory lending."

NETeller execs have announced that the U.S. government has seized "not more than $55 million" in U.S. funds and that those seizures will result in ongoing delays in repaying customers what they are owed.

While NETeller continues to make efforts to find a way to repay its U.S. customer base, there is no timetable for payment.

NETeller's Ron Martin said, "The return of funds for our U.S. customers is a top priority for NETeller."

According to NETeller's statement, the U.S. Attorneys Office will likely employ a forensic accountant to start investigating the funds. It appears much of what was seized was in the process of being transfered to or from NETeller. Anyone who sees that static "pending" announcement in their NETeller account, it appears NETeller is talking to you...without really talking to you.

So, that's not good news.

Here is the whole of NETeller's statement:

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NETELLER Plc (LSE: NLR), the leading global independent online money transfer business, today issued the following update with regard to its US business and criminal charges against two of its founders.

On 19 January 2007, at the request of the Group [Neteller], the Group's legal advisers met with representatives of the United States Attorney's Office for the Southern District of New York ("USAO") to clarify the Group's position with respect to the complaints brought on 16 January 2007 against two of the Group's founders, Mr. Stephen Lawrence and Mr. John Lefebvre. Neither are current employees or directors of NETELLER.

In that meeting, the Group pledged to cooperate with the USAO, indicated it was prepared to begin document production promptly and discussed a potential mechanism for arranging an orderly repayment of funds to US customers.

The discussions between the Group's legal advisers and the USAO are ongoing. The Group is, under advice of its legal advisers, commencing production of documents and intends to cooperate with the USAO in its investigation.

Following upon the complaints dated 16 January 2007, banks in the US began declining to permit transactions involving the Group through accounts maintained at one or more automated clearinghouses in the United States. Additionally, the Group has been advised that the USAO has obtained court-ordered seizure warrants seizing funds pertaining to the Group's transactions.

To the best of the Group's knowledge, it believes that the amount of funds seized by the USAO or otherwise restricted by third parties does not exceed US$ 55 million. These funds were largely in the process of being transferred from the Group to its US customers or vice versa.

As a result of the restrictions placed by third parties, court-ordered seizures, and related legal concerns, the Group is currently unable to make payments to US customers.

Nevertheless, the Group is in discussions with the USAO to manage an orderly return of funds to US customers. As part of these discussions, it is contemplated that the USAO will engage a forensic accounting firm, at the Group's expense, to assist in this process and to examine the Group's financial position.

"The return of funds to our US customers is a top priority for NETELLER" said Ron Martin, Group President and CEO.

US customers wishing to withdraw funds from their NETELLER e-wallet accounts will experience ongoing delays while these discussions continue, and a further update will be provided by the Group once effective repayment mechanisms are determined.

To the Group's knowledge, no criminal action or proceeding has been brought against the Group, its current officers or directors by the USAO. Nevertheless, there can be no assurance that the Group will not be charged in a criminal action at some subsequent time. The Group intends to work with the USAO to seek a negotiated resolution of any allegations relating to its US activities. Any resolution of this matter may lead to potential sanctions against the Group including material financial penalties, fines and forfeitures.

It is emphasized that in line with the Group's standard business practices for all customers, funds held by the Group for US customers are held in segregated trust accounts. The Group's own cash position remains strong and the Group currently has sufficient working capital to fund all its customers' balances as well as ongoing requirements of the business.

NETELLER remains committed to developing its business in line with its stated strategic objectives including geographical and product diversification for all markets. The Group will focus on its continuing business and the opportunities available in the growing markets of Europe, Asia and the Americas outside of the United States. Since the Group's withdrawal from the US market on 18 January 2007, average daily new account sign-ups of new customers from non-US markets has been around 1,400. This compares to average daily sign ups of 3,303 for the year to 31 December 2006. Daily fee revenue since 18 January 2007 has averaged over US$ 200,000 per day (excluding any revenues from Netbanx, 1-Pay and interest income). These metrics demonstrate the resilience of the Group's ongoing business. NETELLER customers not resident in the US continue to be minimally affected by this withdrawal from the US market.

In view of the continuing uncertainty, the Group's shares will continue to be suspended from trading on AIM for the time being. Further announcements will be made as appropriate.

The full text of the NETeller Frequently Asked Questions for U.S. members can be read here.

Here are the lowlights. The following is the actual language from the NETELLER site. We make no claims about its veracity.

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Can I still use my NETELLER account?

Yes. All US members and non-US members will continue to be able to use their NETELLER e-wallet account for safe online transfers to and from non-gambling merchants, secure peer-to-peer transfers and NETELLER Card withdrawals at ATMs around the world.

Does this change affect withdrawals with NETELLER?

US members who currently have funds in their e-wallet account may keep their funds safe in their account or are free to make withdrawals at any time they choose with a NETELLER Card. US members are not required to withdraw their funds from their NETELLER account.

What’s the quickest and most convenient way to withdraw funds from my NETELLER account?

The NETELLER Card is the quickest and most convenient withdrawal option. When you transfer funds from your NETELLER e-wallet account to your NETELLER Card, you can withdraw those funds from any ATM cash machine on the Cirrus/Maestro network and Pulse Star network, depending on your country of residence. You will have to pay a nominal fee for NETELLER Card withdrawals, but your funds will be available from 15 minutes to an hour after they are transferred to your card.

Is my money safe in my NETELLER account?

Yes, your money is safe with NETELLER. All members can hold their funds safely in their NETELLER accounts until such time as they decide to move the funds. The changes in gambling merchant transfers do not affect the ability of US member to maintain funds in their NETELER e-wallet accounts.

NETELLER protects all members’ funds (all deposited, in-transit and un-cleared funds) by holding the value in independent trust accounts. As the largest independent online money transfer business in the world, we maintain our head office in Europe and are a publicly quoted company on the AIM market of the London Stock Exchange. NETELLER UK Ltd is authorised and regulated by the Financial Services Authority.

Am I required to withdraw my money from NETELLER?

No, there is no requirement for US members to withdraw their funds from their e-wallet accounts. US members will still be able to use their NETELLER e-wallet accounts for safe online transactions to non-gambling merchants, secure peer-to-peer transfers and instant payouts with the NETELLER Card.

Does this change affect non-US members?

No, NETELLER customers with registered addresses outside of the US will not be affected by these changes. The company will continue to operate its non-US business as normal, maintaining all existing products, services, customer and merchant support across all the other countries it currently serves.

How can US members find out about changes to their NETELLER services?

NETELLER will continue to notify you of any pertinent changes to your service. All members will continue to have access to this FAQ site for answers to the most commonly asked questions, but members can also register to receive all NETELLER press releases, by signing up for our e-news alert service.

I am a US resident. Can I still become a NETELLER member?

No. We have temporarily suspended the ability for US residents to create a NETELLER e-wallet account.

Why were the founders of your company arrested?

Although we can confirm that Steve Lawrence and John Lefebvre were detained separately while in the United States, we do not know the details surrounding the detention and cannot provide more clarification. We can confirm that both individuals are no longer employees or board members of NETELLER and have not been involved in the day-to-day running of the company for a number of years.

19 October 2006
NETELLER PLC

Update on US position

Further to the Company' announcement on 12 October 2006, NETELLER Plc today announced the following update in the light of the action on 13 October 2006 by US President George W Bush to approve and sign into law the SAFE Port Act incorporating the Unlawful Internet Gambling Enforcement Act of 2006 ("UIGEA" or the "Act") which includes certain provisions to prohibit "unlawful internet gambling" by restricting gambling sites from accepting certain payments from US residents.

NETELLER, a company registered outside the US, will comply with the Act and its related regulations as if it were subject to the Act's jurisdiction. This action is intended to ensure that the Company is able to continue to operate with the support of its principal commercial partners and to protect its shareholders, business partners, employees and reputation.

Various provisions of the Act, including the obligations of financial transaction providers such as NETELLER, remain unclear. This uncertainty should be largely resolved when the Secretary of the Treasury and the Board of Governors of the Federal Reserve System issue the regulations they are required to prescribe within 270 days.

In view of the importance of these issues, NETELLER has accelerated its review of the Act and all other relevant laws and pertinent developments. The Company also continues to closely monitor the regulatory situation and is determining what actions to take well before the conclusion of the 270-day rulemaking period.

In the interim, US-resident customers are able to use the NETELLER service as
normal. The funds of US-resident customers are held in trust accounts and will be available for withdrawal, on demand. The ability to withdraw funds will exist
regardless of the customer's location or ability to transfer to any site.

NETELLER customers not resident in the US are not affected at all by the legislative changes in the US, and the Company will continue to operate its non-US business as normal, maintaining existing customer and merchant support across all the other markets it currently serves.

NETELLER remains focused on developing its business in line with its stated
strategic objectives including geographical and product diversification. The Company continues to launch localised services within the European market, most recently in Sweden and Denmark, and has plans for three further launches later this year. As well as focusing on the gaming sector outside of the US market, the Board considers the development of additional products and services for wallet users to be integral to its diversified market strategy. We expect to share more information on these initiatives in the coming months. The Company is committed to maximising shareholder value both in the short and longer term, and will explore all possible strategic alternatives, including utilising its substantial resources, to ensure the achievement of its strategic objectives.

The Company's trading update for the third quarter will be issued on Tuesday, October 31st, 2006. In the meantime, the Company will endeavour to keep shareholders informed of any material developments as and when appropriate.

**PokerStars statement about the online gambling law

**Sign up at PokerStars (use bonus code FirstSep2006 for a $50 deposit bonus until December 31st if you are making your first deposit).

**Here is a custom anti Bill Frist PokerStars avatar you can use at PokerStars if you're looking to express yourself. Here are some modified instructions from the PokerStars site.

1. Open your PokerStars software, click "Account" and the "Select/Change Image" then click "Change Image"
2. Find the frist-pokerstars image on your desktop
3. Click on that file, and press Open.
4. Please wait while the selected image is loaded into memory locally to display.
5. Now you need to drag the selection box over the area of the image you wish to display. The smaller window at right shows you what image will appear at the table.
6. Once you are satisfied with the image in the smaller window, press OK. Once your image has been screened for suitability, it will show up along with your User ID (nickname) at the tables.

Note, PokerStars only allows you to change your image once, so if you have already changed your image or don't want to be stuck with an image of Bill Frist for the rest of your PokerStars career, this might not be for you.

Q. Is playing online poker illegal?
A. While the Unlawful Internet Gambling Enforcement Act is still open to a lot of interpretation and has not yet been tested in court, there currently exists no language in the measure that deems illegal the actual playing of online poker. However, some states, including Louisiana and Washington for example, have laws that could make it illegal, if it were ever enforced. Updated 10/6

Q. Which online poker sites still serve United States (U.S.) customers?
A. PokerStars, Ultimate Bet, Full Tilt Poker, Poker.com, Absolute, Doyle's Room, and BoDog have all made public statements indicating they will continue to serve U.S. players. Updated 10/11

Q. Which online poker sites no longer serve Unites States (U.S.) customers?
A.Party Poker, Pacific Poker, Paradise Poker, and all Cryptologic sites have indicated they will cease providing real money games to American players once the bill is signed by President Bush. Updated 10/13

Q. Does this law only apply to online poker?
A. No. This law also applies to sports gambling (it was strongly supported by the NFL, for example) and any other online gambling except for gambling otherwise made legal by state or federal laws. For example, online horse racing sites like Youbet and TVG are currently 100% legal, with no gray area, in most states. This law will not affect those sites. It also will not affect online purchases of state lottery tickets. State lotteries and horse racing are currently regulated and/or taxed by the states and/or federal goverments, and thus, will remain legal online as well. Updated 10/6

Q. What about the United States, the World Trade Organization (WTO), the Caribbean nation of Antigua, and the dispute over online betting?
A. In 2004, the WTO sided with Antigua Barbuda in a despite over the United States' stand on internet gaming. The 2004 interim report said the U.S. could not ban internet bets. The Bush administration is keen on free trade and, thus, has to stay within the good graces of the WTO. The case has continued through several variations of Internet gambling laws in the United States and has still not come to a full resolution. If the WTO finds the United States has not been in compliance with WTO rulings, it could face sanctions. A ruling could come later in 2006. Updated 10/6

Q. Will I still be able to use NETeller to fund my online poker account?
A. NETteller has made a decision to no longer serve as a payment processor between American customers living in the U.S. and gaming sites. This decision almost immediately followed the arrest of NETeller's founders. Updated 1/17/07

Q. Will I be able to use FirePay to fund my online poker accounts?
A. FirePay ceased serving U.S. customers who wanted to fund or withdrawal from online gaming companies on Oct. 13, the day President Bush signed the UIGEA into law.Updated 10/13

Q. What can I do to help fight the online gambling ban?
A. While there is some grousing that the Poker Players Alliance dropped the ball on this one, we feel it is still the best avenue for having a collective voice in the poker world. While everyone will have to make a personal decision on this, we recommend you join the PPA. Updated 10/6

Q. Where can I find more updates on the online gambling ban?
A. Up For Poker promises to keep tabs on the latest developments and will provide commentary and news updates when they are warranted. We will also update this list of questions and answers when and if they change. For other updates, we encourage you check out some of the other efforts:

2+2 Legislative Forum
Neverwin Fourm
Poker Players Alliance
LasVegasVegas Poker Blog
Wicked Chops Poker

The above paragraphs are not an indictment of all online poker players. Further, it is not to suggest that we here at Up For Poker are legislative scholars or know more than any of our readers. It is simply a commentary on how we got to where we are now. For far too long, we have talked about how online poker players make up a large-enough group to have real influence. Unfortunately, a large section of that group willfully ignored how the end of their livelihood could make for fantastic political ammunition. Chief among the gun-toters in Washington was Senator Bill Frist.

Let's make no mistake about Senator Frist. He is, by definition, a legislator, a lawmaker, duly elected and within his rights. However, he is not a statesman. He is a political animal, bent on power and willing to use whatever legislative tools necessary to secure the power he believes he deserves.

While we would still caution you not to take your eye off the ball, we also believe knowing one's enemy is never a burden. So, let's take a walk through the House of Hypocrisy and see what we can see. It's not a matter of politics or Republican versus Democrat. It's a peek inside the nature of the beast.

Anyone who has tried to navigate the corridors of the American legislative system in recent days in an attempt to figure out how Senator Frist was able to sneak one past the goalie has probably figured out that, despite being slimy and disingenuous, the effort was completely within the rules of the Senate. Unlike the House, where non-germane matters are verboten in legislative debate, the Senate can pretty much do whatever it wants.

In the House, in an effort to keep matters expeditious and orderly, Representatives are forced to adhere to germaneness standards. The Senate is a different breed of donkey. Like allowing for filibusters, the Senate also allows for un-germane topics and amendments to be inserted into legislation, provided that legislation is not an appropriation or budget bill or an issue being decided under cloture (the only procedure by which the Senate can vote to place a time limit on consideration of a bill or other matter, and thereby overcome a filibuster). It's just the way they roll.

The importance of germaneness in the Senate is viewed by some to be critical to democracy. That is, in a climate so politically charged as the U.S. Congress, it's very simple for powerful committee chairmen to refuse to allow an issue into Senate floor debate. Hence, some important bills (pick your favorite cause) may never have a chance of passage if some committee chairman doesn't like the way your hair smells. Fortunately (or, perhaps, unfortunately) you have a means to be heard. Your Senator can add your measure to some other bill, so it can at least have some chance at a debate on the floor. While that sounds good, it also acts as a political tool by which Senators with the last name Frist can stick it in you.

In the past, Senator Frist--again, within the rules--has maintained a varying view on germaneness. In September of 1997, Democrats made an effort to establish something called the National Center for Complementary and Alternative Medicine. Senator Tom Harkin, bent on getting the Center, tried to attach it as an amendment to an FDA bill. Senator Frist objected on the grounds that the subject was not germane. In 2004, Frist and his fellow Senators were debating a jobs bill. Democratic Senators were looking for a long list of amendments to be added to the measure. Frist, at the time, complained of the length of time being spent on the bill and said, "Unfortunately a number of those amendments are controversial and not germane to this legislation."

Frist, while the current enemy of poker players everywhere, is not alone. In fact, many Senators are guilty of attaching non-germane riders to must-pass legislation. In recent years, much has been made about the Senate's inability to get anything done because of partisan wrangling surrounding non-germane amendments. Senator John McCain, the Senator both parties love to hate, once said, "Why don't we just go home... rather than go through this charade of telling Americans that we are legislating."

We in the journalism community, especially those of us who have spent a significant amount of time in political circles, are painfully aware of the tools used by legislators. In the coming election season, count how many times you hear, "Congressman X voted against the Bill to Save Baby Seals," or "Congressman Y refused to vote for a bill that would've given arms to the armless and given Stevie Wonder new eyes." Nearly all of what you see there will be the result of political wrangling that is perpetuated by riders.

Furthermore, like the case of the gambling bill, Senators can use riders to pimp their pet projects. Most everyone is aware that Frist likely didn't give a damn about Internet gambling until he realized he could score political favors with Rep. Jim Leach. Then it became an all-important conservative issue on which he could hang his hat. Of course, after that, he had his press release written before the vote was even official.

To further understand how Frist works in this arena, we should also remember the 2004 election year. During debate on continuing the ban on Internet taxes, Minority Leader Tom Daschle tried to tack on a rider involving incentives for ethanol production. Republicans were beside themselves and considered Daschle's election-year gambit to be beyond the pale. At the time, many people believed Frist had brought the problem on himself. Earlier that year, Frist broke an unwritten rule in the Senate and actively campaigned and raised money for Daschle's opponent, John Thune.

While the previous paragraph might sound like a digression, it's more just a peek at how important action in Congress can be derailed by partisanship. It's also a look at how important legislation can be passed or not passed based on the political whim of Congress. That same year in the Senate, Republicans were working to pass a corporate tax bill. An important bill for Republicans, it was attacked by Democrats. Senator Tom Harkin tacked on a minimum wage hike. Republicans attempted to kick such amendments out based on their lack of germaneness. In short, it's all about timing. We learned that the hard way this year.

Given the right time and attention, Senators might have been able to stop Frist's end-around. In the end, the end-around was the perfect play from a seasoned political player. We got beat, not because we aren't right, but because we failed to keep on top of Frist's political aspirations and his win-at-all-costs mentality. Now, to our own chagrin, we are forced to Monday morning quarterback.

We can all long for a day when the legislative process is one that we can respect. We can wish for a day when important measures are discussed in the sunshine and are passed on their own merit. However, so long as politics and elections rule the laws that govern our lives, we have to learn how to play the game better than our opponents. It's not ideal, but it is reality.

The simple fact is, even for the political apathist, there is a time when your government can actually affect your life. Even if you don't care about abortion, taxes, war, or human rights, your life can be dramatically altered by what happens in Washington.

Perhaps it is a lesson to us all to start paying attention before the political aspirants in this country screw up something really important.

It's not a real story. We made it up. Actually, we just assigned names and a short tale to something that actually happened countless times during the era of Prohibition. Back in the 1920s, whiskey was still considered to be an acceptable medicinal liquid. As such, doctors made a killing writing prescriptions for booze. One estimate said doctors earned $40 million on booze prescriptions alone.

So, what of the grape jelly? Well, it appears the California wine industry was even more clever. It produced grape jelly that--within two weeks of purchase--could be turned into a drinkable and strong wine.

What seems very clear about the passage of the Unlawful Internet Gambling Enforcement Act of 2006 is that, if it holds up to legal challenge, it stands to make a lot of people very, very rich. Already, our comments and the poker forums are being spammed with people offering to sell quasi-legal poker accounts to American customers. Better thinkers will come up with other ways of making money. Whether it's offshore accounts, brokers for legal accounts, or services that allow for the semi-legal transfer of money, there is a new growth industry to fund online poker accounts in a way that protects the owners of online poker companies.

A little research indicates there are too many parallels with the Prohibition era to ignore. Of course, booze and poker are apples and oranges. However, the legal and legislative battles surrounding booze and poker are very similar and worth exploring.

Like the recent attempts to prohibit Internet gambling, Prohibition began as a series of failed attempts to make America constitutionally temperate. As early as 1886, a senator from Kansas managed to get his bill out of committee and onto the Senate floor. Nothing happened. In fact, Prohibition as we know it took several years to make it through Congress and several more to get ratified by the required number of states. Finally, in 1919, Congress passed the Volstead Act which, essentially, activated the constitutional amendment.

Celebrating with a mug of root beer was the Anti-Saloon League, a temperance organization that rose up out of Ohio. The celebration was as much about the validation of the group's political power as it was about forcing temperance on the country.

That fact is worth noting. The fight that led to the complete prohibition of booze was not one that was specifically aimed at improving the health or efficiency of America. It was a political battled aimed at validating the political power of a political action group.

While Up For Poker is not usually a place for political discourse (and its writers actually fill up the spectrum of political ideals), we all agree (and it can't be denied) that the far right political wing of American politics is vastly responsible for the passage of the Unlawful Internet Gambling Enforcement Act of 2006. It was the pet issue of a few members of Congress that had very little support outside of very conservative circles. What's more, Jim Leach and Bob Goodlatte's pet project wasn't getting anywhere.

The men and their supporters needed validation for their cause. They traded political favors with Senator Bill Frist and he made sure their issues made it to the President's desk. Despite the legal way in which this bill made its way toward law, even Republicans have to agree, this was a law that didn't receive the kind of Congressional consideration that a law deserves. This bill has made its way to the President's desk in more of a political coup that a legislative process. Of course, even the Democrats stepped aside and allowed it to happen with little resistance.

How did that happen? Well, that's how Congress works. How did it get that far in the first place? Well, again, let's look back to last century's booze battle.

Times of war apparently make the destruction of rights an easier proposition. In the years leading up to World War I, American brewers made a mistake and associated themselves with the German-American Alliance. The initial intention was to defend German culture in the United States. The result could not have been worse. Prohibition advocates seized on wartime anti-German sentiment and used it to attack brewers as anti-American and anti-soldier. Brewers were even accused of wasting grain and molasses. In short, prohibition advocates did their best to accuse anyone who supported the beer and liquor industry of being un-American.

Sound familiar?

Regardless of your opinion on the American situation overseas, it's sure that politicians have used patriotism as a propaganda pry bar in efforts to fund support for their pet projects. As lawmakers sought to end Internet poker, they called on America's duty to stop terrorists from funding American terror cells through the use of wire transfers and offshore accounts. While the red herring nature of the argument was evident, that didn't stop politicos from implying that the online gambling industry was complicit in the aiding and abetting of terrorism--no matter that there is not an atom of evidence to suggest that statement is anywhere near true. And, in fact, greater evidence exists that terrorists are using less disguised means to fund whatever they want whenever they want.

One of the greatest foes to Internet gambling, Rep. Jim Leach, a Republican from Iowa with extreme power in the Iowa caucuses, once, in reference to online gaming and it possible uses in the funding for terrorism, called online casinos "the greatest potential for money laundering that exists in the world."

There will be time, someday, to examine and debate the current wars in Iraq and against terrorists. In fact, those debates will be a lot more important. Regardless, in terms of the current situation in the poker industry, online poker companies and American poker players did not do enough to stand up to the baseless accusations of a Midwestern political and propaganda animal. It is a lesson. Never underestimate the abilities of a zealot in search of power.

In the years leading up to Prohibition, brewers and drinkers underestimated the reality and the political climate. In turn, the government underestimated the power of a public's refusal to accept governance.

Federal courts were overwhelmed with new cases. There simply wasn't enough space or time to handle all the people being charged with liquor violations. People began stealing liquor from government warehouses. The prohibition cops, charged with enforcing the law, faced worse than being too busy. In the first three years of prohibition, 30 agents were killed in the line of duty. Also, as we all know, the production of illegal booze went through the roof. From 1921 to 1930, the number of seized illegal stills or distillers trebled.

While the number of drinkers in America likely outnumbers the number of poker players, there is little denying the desire of the American populace to play poker. Last night, 95,000 people were playing on the world's biggest online poker site. Estimates say the Unites States makes up 80% of that playing base. That means 76,000 Americans were playing at the same time on one site--one site out of what was an ever-growing number of online playing sites. Some surveys suggest there are between 50-80 million Americans who play poker. Even if ten percent of that number play online and vote, it's a voting block that can't be ignored.

Regardless of whether this is an issue with political juice, if it stands up to judicial review, the true effectiveness of the law will be determined by enforcement.

The Volstead Act ended up receiving selective enforcement. Where it had support (small conservative communities), it was enforced. In big cities, so many people were ignoring that law that cops couldn't keep up. In mining towns, everyone was working too hard to care about enforcing a law nobody really cared about. Trying to enforce a law nobody cares much about is harder to enforce than a law the nation supports.

To wit: Finally, a government study and the Wickersham Commission determined what most people already knew. The public at large was ignoring the Prohibition laws and the enforcement of it was too expensive and dangerous for government agents to justify the law's continued existence. Perhaps most telling, the Commission found that the government had a much easier time stopping the trafficking of drugs than it did stopping the trafficking of alcohol. Why? According to the Commission, "there are no difficulties in the case of narcotics beyond those involved in the nature of the traffic because the laws against them are supported everywhere by a general and determined public sentiment."

With regard to the new online poker prohibitions, there is still a long way to go before anything will happen. Government regulators will soon be charged with deciding how tough the law will really be. It will be a hard job. If they make the law too light, it will be toothless and indicative of the lip service many laws offer the American public in terms of legislation. However, if regulators make the law too tough, they will face the wrath of business interests that aren't used to being told what to do. Primarily, if the onus falls too hard on the American banking industry--under the bill's language, one of a few arms of effective enforcement--the banking industry will balk. If the banks aren't on board, the job will be left to an already overburdened American law enforcement system. American citizens likely won't be too happy if their government law enforcers spend time going after online poker companies when they could and should be stopping terrorism, foreign and domestic.

The deed in Washington is done. It's been made clear too many times that we can't trust Congress on this issue and others. Further, when Congress manipulates its own rules to force any President of any party to sign a law, we can't count on a veto. Now, we are left with the hope of the judicial system and the Constitution. If we are failed by the courts, we are left with what hopefully is still the most powerful voice: the people. We are left to count on business interests and the American sentiment to restore our right to play poker online.

That means it's up to us.

Sources:

http://mojo.calyx.net/~schaffer/LIBRARY/studies/nc/nc2a.html
http://gaming.unlv.edu/reading/rose79.html
http://prohibition.osu.edu/

As we already know, Party Poker is a publicly traded company (Party Gaming) on the London Exchange. Along with 888.com (Pacific Poker), Party Poker announced it will pull out of the U.S. market once President Bush signs the bill into law. This is the business equivalent of sticking a gun (like the Desert Eagle) in your mouth and then jumping off the rim of the Grand Canyon into a swimming pool full of jello. That is, it looks like suicide, then it looks like suicide again, and then it looks pretty silly and messy. There is a lot of speculation that Party is positioning itself to get absorbed into a smaller online poker company (like William Hill) and get out while it can. Killing 80% of its market and losing more than 60% of its market value is the perfect way to do this. Of course, it would also save the stockholders a lot of money. However, all of this is speculation. Here's Party's only public statement to date:

Party Poker's Statement to the London Stock Exchange

In poker, the good players are playing Level Three cards at all time. On the face of the poker rooms' response, it appears there is a lot of Level 1 thinking going on. That said, we would all be smart to realize that these companies were formed in most part by poker players. They didn't get where they were by just playing their own cards. It seems there is likely more Level 3 going on that we realize. Even if it's true that Party is giving up on the first business day after the bill passed, other poker rooms don't seem to be giving in so easy. And why not? If the biggest poker room in the world pulls 80% of its business from the United States and then pulls out... well, that's a lot more business for everybody else.

Full Tilt has already made a public statement indicating it isn't going anywhere right now. Bodog and Ultimate Bet have done the same. PokerStars, despite reports that it had already made a decision to pull out, is remaining quiet except to assure their customers that their money is safe (PokerStars was the first poker room to sign up with the Royal Bank of Scotland to house players money in segregated accounts, thus making sure that a total company collapse wouldn't result in players' money being lost). Ever played with a really quiet player? Yeah, we have too.

Full Tilt Poker Statement on Gambling Bill

PokerStars Official Gambling Bill reaction

One of the worst things you can do when playing poker is take your eye off the ball. When the table villain bad beats you for your stack, the natural reaction is to get him back. You lay in wait and do everything you can to repay the injustice. While this can be emotionally satisfying, it also takes your eye off the ball and leaves you vulnerable to other people who want to take you out. That's a too-long preamble to the following: Frist got lucky once. He's not a good player. Indeed, there would be a lot of emotional satisfaction in making sure the man has no future successes. However, taking our eyes off the real issue here will only serve to make us more vulnerable in the future. Hence, let's make sure we continue to focus on making sure the pet legislation doesn't turn into the end of our poker experience. There will be time to make sure Frist never takes on a greater leadership role. However, if you need to vent, get it out of your system now. Here's where you can contact Frist:

Bill Frist Contact infomation

Office of Senator Bill Frist
509 Hart Senate Office Building
Washington DC 20510
202-224-3344

Office of Senator Bill Frist
28 White Bridge Road
Suite 211
Nashville, TN 37205
615-252-9411