Frank Fahrenkopf Jr. Speaks to QuadJacks and the Online Poker Community

QuadJacks » The Gaming World

Head of the most powerful gaming industry lobby explains the view from Capitol Hill and the American Gaming Association’s vision for federal online poker legislation.

AGA President Frank Fahrenkopf Jr. talking to QuadJacks from his office in Washington D.C.

In 1995, in response to a proposed tax increase for casino revenue nationwide, the imperiled operators opted to momentarily put competition aside and band together to form the American Gaming Association and defend their interests. Its founder, Frank Fahrenkopf Jr., a seasoned gaming attorney who had also been Republican National Committee chairman for most of the 1980′s, volunteered to serve as the CEO of the trade organization for a period of one year. In 2012, he is entering his 17th consecutive year.

The AGA’s position on online gaming, which for years has mirrored the one taken by most of the casino industry, has gone from one of explicit disapproval (“The AGA is opposed to all forms of Internet gaming because we do not believe the technology exists to properly regulate it with appropriate law enforcement oversight.”) to one of active support and lobbying for federal online poker legislation today.

Although much of the work it is doing is ultimately for the benefit of American poker players, the AGA is primarily a lobby for gaming companies (it represents over fifty of them), without a grassroots element. Mr. Fahrenkopf’s appearance on The Gaming World on March 21, 2012, marks the first time the American Gaming Association has addressed the online poker community so directly and extensively since the events of Black Friday.

Listen to Frank Fahrenkopf Jr.’s 3/21 interview on The Gaming World

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A FEDERAL MODEL WHICH RESPECTS STATES’ RIGHTS IS THE BEST SOLUTION

The perception that the American Gaming Association, along with its mainstream casino clients, wants a fully nationalized regulatory framework is false, says Fahrenkopf. As a lifelong Republican, Fahrenkopf says he is a strong supporter of the 10th amendment and states’ rights, and under an ideal federal model, licensing and regulation would and should be the responsibility of the states almost entirely.

Why, then, is there a need for a federal presence? A very important reason, says Fahrenkopf, has to do with tribal support, which is necessary for the success of any legislative step forward. “There has to be a federal involvement for a number of reasons. We must remember that we’re talking about all aspects of the legal gaming community in our country. This involves Native Americans. Tribes, in their just defense of sovereignty, will never agree to be subject to a state for licensing and regulation.”

As for interstate compacts, Fahrenkopf reminds us that even these require federal approval, and he is concerned with “whether or not the Commerce Clause is broad enough in its scope, because these signals cross state lines, regardless of the Justice Department’s opinion.”

Could the federal government and the states co-exist on online poker? Fahrenkopf thinks so. “The federal system would be primarily for the licensing and regulation of Native American gaming. The federal government would then delegate to states the right to license, regulate and tax those companies that apply and meet minimum requirements. So the actual licensing and regulation, with the exception of Native Americans, would be done at the state level.”

THE PRE-BLACK FRIDAY WORLD AND CONFUSION OVER THE WIRE ACT

When asked about what he thought of PokerStars, Full Tilt Poker and UB, the former U.S.-facing industry leaders, Fahrenkopf chose not to mask his contempt.

“I had met the operators of PokerStars, Full Tilt, et cetera, To be very candid with you, I thought they were extremely arrogant about violating U.S. law. They were, in effect, saying they didn’t care that they were violating it, that they would continue to do so, and if they had to pay a fine later on, so be it.”

Fahrenkopf concedes that the Justice Department had been wrong about the Wire Act for years, but this was no excuse, he says, for operators like Full Tilt and PokerStars to ignore the legal reality and operate without American regulation. “What they should have done was challenge the law, not violate it just because they thought they were going to be in good shape legally if something happened.”

As for the DOJ memo, Fahrenkopf applauds its correctness, but he worries that “it has created more confusion than clarification.”

“It raises questions about what the impacts are, for example, on the Native American tribes. If a state were to legalize online poker, would the Indians who do business legally in that state also be entitled? Would they have to amend their compact with the state? Would it be covered by IGRA [Indian Gaming Regulatory Act]? Would the online poker player have to be on reservation land? Then there are the lotteries. Do they now have the right to create other online games, other than the lottery games? Do they have the right to enter interstate compacts? And where is the pari-mutuel industry? The pari-mutuel industry has been doing Internet wagering in this country for a long, long time, via the Interstate Horse Racing Act which exempted it from the Wire Act, despite the Justice Department’s protest. The Justice Department said nothing about this in the Wire Act opinion, which they could have, so there continues to be conflict over whether what the horse racing industry is doing is legal.”

“There are a lot of unanswered questions that were set forth by the Justice Department’s opinion, although I do think it is the correct opinion.”

THE CHALLENGE AHEAD

When asked to what he attributes the DOJ’s schizophrenic attitude on online gaming, Fahrenkopf once again chose to be blunt. “I’ve thought for a long time, and my staff knows I’ve been saying it for seventeen years, that buried in the bowels of the Justice Department and the Treasury Department are career people who hate the gaming industry. They are always coming up with ways to try to put roadblocks in front of us.”

With respect to Congress, Fahrenkopf identifies and describes the “strange marriage” that exists between otherwise radically distant ideologues. “In the Republican party, the most conservative members, who are normally libertarians and don’t want the government involved in anyone’s life, are the ones who oppose gaming because of their religious or moral beliefs that gaming is a sin, and they have to protect people from sinning.”

“In the Democratic party, you have the ones on the far left, who are not that much concerned about the sinning, but they don’t think people are smart enough to make their own decisions about how to spend their own money, and so they also believe that the government has to protect them from themselves.”

Fahrenkopf could not provide the quenching forecast of success which he’s probably asked about all the time. “I had my board meeting in Las Vegas last week, and as you can imagine, my CEO’s were wondering the same thing. But I don’t give odds. I told them that our business depends on luck, and we’ve got to have some luck in this Congress. It’s a tough environment. We’re in a presidential election year. It’s going to be a heated fight over control of the Senate and the House, and not a lot is going to get done on any subject, let alone on gaming legislation.”

“It’s a long shot, but I have not given up hope. The effort is still ongoing. There’s still an opportunity, we hope, to do something in this Congress. Those in the community who care about this should pray for a little luck. But, they should also continue to write to members of Congress, and follow the efforts by FairPlayUSA and the Poker Players Alliance.”

The American Gaming Association’s website can be visited at www.americangaming.org. You can follow the AGA on Twitter @AGAupdate.

QuadJacks – Wednesday, March 21, 2012