Marketing

Senators See Red Over Online Gambling

Consumer Protection Subcommittee Talks about Possible Federal Standards 7/17/2013 10:37 AM Eastern
 
The Senate Commerce Subcommittee on Consumer Protection held a hearing on Internet gambling, but as with anything Internet related in Washington these days, the discussion ranged from cybersecurity and advertising to online privacy and protecting kids.

The hearing, "The Expansion of Internet Gambling: Assessing Consumer Protection Concerns," made it clear that the issue went far beyond who was putting their money on red or black from the comfort of their laptops or smartphones.

Full committee chairman Jay Rockefeller (D-W. Va.) made that clear in his opening statement, in which he pointed to the using gaming sites to launder money for terrorist groups. In addition, he said, "We've also got to take a hard look at consumer protections, and how we're going to fix any existing gaps that allow underage gambling or otherwise leave consumers vulnerable to fraud and abuse."

Subcommittee ranking member Dean Heller (R-Nev.), from a state that knows a little about gambling on and offline, relayed the story of a friend whose child had gambled away their college tuition on an online site. He said that his phone had rung off the hook from both sides of the issue of online gaming. He said it was an important issue, and preventing problems -- like access by minors and potential for money laundering to fund terrorism -- "should be a priority of this Congress."

At the hearing, Sen. Mark Pryor (D-Ark.), chair of the Communications Subcommittee, briefly pointed out that his subcommittee had struggled with the tech issues of whether parents should have a blocking mechanism to control access to the Web and that he was interested in the gaming issue as well and wanted to work with his colleagues on the subcommittee.

Sen. Richard Blumenthal (D-Conn.) focused on the data protection issues of gambling sites having info on site users and his concern over the opportunity to steal that online info. Attorney Jack Blum, a witness at the hearing, shared that concern. He said it was a huge problem and suggested that if he were a Russian "crook" he would open a casino, collect credit card info, then close down a week later.

Blumenthal said that Congress had "a clear moral and economic imperative to prevent abuses and wrongdoing that are inherent, almost inescapable, in this form or gambling."

Chuck Canterbury, president of the Fraternal Order of Police, said he was not anti-gambling, particularly state or local governments getting into the online lottery business since that could help pay his members paychecks. But he did say the feds needed to come up with standards for enforcing protections for children and others, saying local law enforcement did not have the resources to monitor offshore sites.

He conceded that local law enforcement is going to prioritize armed robberies and burglaries over offshore gambling sites.

Blum agreed that localities did not have the resource to police Internet gambling. He called for creating federal oversight through a new entity -- a sort of FGC, or Federal Gaming Commission -- rather than through any existing agency. He pointed out that the IRS is "deep in its own trouble," with not enough resources. He said his model would be some type of federal entity, financed by the people who seek licenses and with industry expertise.

Blum said the money laundering potential in gaming sites was obvious, citing a Bermuda service provider that also provides turnkey gaming sites, with such sites also linked to porn sites as another way to move and shield money and owned by companies nobody can identify. That is "guaranteed trouble," he said.

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