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The New Deal: Regulate and Tax iPoker

As the Obama administration and the new Congress evaluate their policy priorities, they cannot ignore the significant challenge to fund these programs given our nation’s financial situation. Our new leaders have been dealt a struggling economy, and even President Barack Obama can agree that tax increases to pay for his agenda won’t reveal the winning hand, politically or practically. A possible solution, however, is not out of reach. Our new president needs only to look at his favored form of skillful avocation: poker. [IMGCAP(1)]

Yes, I said poker. While business leaders and politicians debate how much, or how little, we should regulate the business community, the online poker industry and the millions of Americans who play on the Internet have been crying out for regulation and taxation. The absence of government regulation, and in fact the quixotic efforts to ban Internet poker, has left U.S. consumers vulnerable and left billions in potential tax revenue on the virtual poker table.

Regulation of Internet poker does not equal an expansion of gambling in this country. Like it or not, that genie is already out of the bottle. The American market has spoken. There is strong demand for Internet poker and no reasonable government can or should stand in the way of adults competing in games of skill on the Internet. To the contrary, the government should step up and exercise control over the multibillion-dollar activity and respect the rights of the estimated 15 million Americans (and 100 million globally) who play and collect the revenue. This is not a new tax. It’s not politically risky tax increases. Regulation simply allows for the collection of taxes that are currently going overseas to the other countries that have already seized on the global poker phenomenon.

This idea is not lost on the American public, who made their preference known through Obama’s Citizen’s Briefing Book Web site. Regulated Internet poker was consistently in the top 10 of the most popular proposals the American people want Obama to enact while in office, and it received the most user comments by far.

The poker potential has not gone unnoticed on Capitol Hill. In the 110th Congress, several pieces of legislation were proposed that would implement regulation and licensing of Internet poker. Unfortunately, none were given full consideration, mainly because of a push by staunch anti-gambling interests who believe an outright ban of online poker is the only option. As conservative columnist George Will aptly pointed out, laws that attempt to block Internet poker are “Prohibition 2.0,” and, as Mr. Will explains, history has shown that prohibitions do not work. Rather, they exacerbate and even create problems, especially among vulnerable communities, by driving the prohibited activity underground where unscrupulous operators can easily, and without fear of prosecution, take advantage of consumers for their own gain.

While the U.S. has been asleep at the wheel, other countries have stepped up to protect their citizens, and by default ours. The vast majority of poker Web sites are highly regulated in their home jurisdictions, such as the United Kingdom, Isle of Man and Alderney. These countries’ credible regulatory regimes are complemented by sophisticated technologies, verified by independent network and software security companies that help the sites detect fraud, prevent underage access and even provide services for problem gamblers. These sites welcome the additional oversight U.S. regulation will bring to the industry.

Obama is purported to be a skillful poker player, an expertise that should be an unwritten job requirement for all would-be U.S. presidents. Poker teaches you patience, and it trains you to calculate the odds and avoid unnecessary risks. If Obama applies his poker skills to his job in the White House, he will reject politically unpopular and economically untenable tax increases and look seriously at other potential revenue streams like Internet poker.

No matter how you cut the deck, regulation is the answer.

Alfonse D’Amato is a former Republican Senator from New York and serves as chairman of the Poker Players Alliance.

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