www.theppa.org

Poker Players Alliance Response to the FBI Letter to Chairman Bachus

Shawn Henry, Assistant Director of the Cyber Division of the Federal Bureau of Investigation,recently sent a response to Congressman Spencer Bachus regarding Internet poker. The PPAtakes issue with certain representations made by Mr. Henry, but believes that the larger point is

the more important one: Mr. Henry’s letter makes a compelling case for licensing and regulation

of Internet poker as proposed in H.R. 2267.

Question 1: Possibility of Cheating

Mr. Henry was asked about the possibility of players manipulating Internet poker games bycolluding. Mr. Henry replied that it would be possible for two or more players in a particulargame to collude to disadvantage and defraud the other

players. Mr. Henry says, “Technically, the

online poker vendors could detect this activity and put in place safeguards to discourage cheating,

although it is unclear what the incentive would be for the vendor.”

The largest poker sites all use software to detect collusion. If a site is subjected to allegations thatplayers are cheating, few players will play on that site. One major Internet poker site was foundto be cheating by a group of industrious poker players who reviewed hand histories to prove that

cheating was occurring. The case was featured on “60 Minutes,” and that site’s business never

recovered.

Under the sort of licensing regime envisioned by H.R. 2267, licensed operators would berequired to have the safeguards to which Mr. Henry refers.

Sites would be regularly auditedand, if fraud was discovered, they would incur severe fines or even lose their licenses. If one isconcerned that Internet poker players might be cheated, licensing and regulation are the solution.

Question 2: Possibility of Money Laundering

Mr. Henry responded to a question of whether players might be able to use Internet poker sites tolaunder money by stating that players could intentionally lose money to each other. He goes on

to say, “Once again, this activity could be detected by the vendors, but at what cost?”

Most large Internet poker sites are licensed in UK jurisdictions that require the same anti-moneylaundering measures that are required of banks. In a hearing in the House Judiciary Committee in2007, Rep. Howard Coble asked then-U.S. Attorney Catherine Hanaway about this.

Mr. COBLE: Ms. Hanaway, have any Internet gambling sites been linked to money laundering? I

don’t know the answer. I am wondering if that has come across your desk.

Ms. HANAWAY: There have been some cases, Congressman that have been linked to moneylaundering, but it has been to date within the context of laundering proceeds of Internet gambling.

House C

ommittee on the Judiciary Hearing, “Establishing Consistent Enforcement Policies in the Contextof Internet Wagers” November 14, 2007, Serial 110

-116, p. 63