and europe and i think they are going to need to speed up the process. but that is -- a case that needs to be made and i try to begin making it in my speech. .. >> how can we thank the fed for being as successful as they were in presenting a collapse of the financial system, and everything

i've read leads me to believe those dollars are coming back, so these were investments immediate to protect the american people. it was not made for wall street or for the banks. it was to prevent a catastrophe, and so i think it has been managed very well in terms of the impact that it's prevented. >> great. okay. we're going to start, i don't know if there's anyone back there, but here we go. [inaudible conversations] >> hank, congratulations on your institute, very important. hank, neocash carry flings the representative from treasury when you were secretary. wall street due diligence released that the new york stock exchange documented with national suggestive validated and green buildings are less

risky and preferred by investors and they'll create a trillion dollar private sector business and new wages, new job, and a 20 year business model for the investment banks. most importantly and finally, it documented that these securities will stop dangerous climate change from going irreversible and the results ongoing sis stemmatic market risks already apparent in the insurance government, fisheries, and forest sector. the u.s. starts green buildings in china. my question is is the investment bank ceos working diligently to launch these securities all got fired because of the credit crisis, and do you have thoughts on how to get their attention again at the banks? >> i'm not spending a lot of time on banks these days, and i

think what you need to ask is not so much -- i think you can assume that banks will be involved when there's a real demand and the proper incentives, and so when we start looking at green buildings or all series of other environmentally fiesht products, i think what you need to do is let's just start with government policies. i think you need proper government policy, and i think that companies need to hear from their investors, from their customers, from their employers, and i think that's why most major companies do these sorts of things they do when they do positive things that have a

beneficial impact on the environment, and they think it's good business, and i think that -- and i think markets develop when there's a demand and there's investors and clients who want them. i don't think there's banks creating a market if there's not a basis for it. >> thank you for coming back. i'm sure you remember me. [laughter] i was wondering in the next 12 months with the leadup to the election giving the ease of scoring partisan points by bashing china in taking away american jobs whether you anticipate anything agreesessive happening before that time and following the election, if you think there's a greater chance of greater integration under a second obama administration or a republican president. thanks. >> i'll say this -- elections are about choices, and the voters, you know, i don't care whether it's either party,

voters respond to or elected officials respond to the voters that put them there, so my own judgment is, although i don't want to sound without hope, and i'm still hoping that the super committee is going to positively surprise us all with some of the things they're going to do before the election, and even if it's only $1.5 trillion, and, again, that's not a heavy lift over ten years on a $40 trillion budget or deficit, at least it's a start. but my own view is that we're going to have a better chance after the election because what voters are going to have to do, they're going to have to send a message, and the message in my judgment, the right message is not let's go change government or let's just cut spending,

cutting spending is quite important. it's necessary, but not sufficient. voters are going to have to want fundamental reform, and that takes bipartisan cooperation and compromise as i said, and that's the hope -- that's what we need to make us competitive, and when you look at this -- you know, my speech was -- i mentioned in number of areas where we really need this and to make real progress in the trade area, i think it's easier to get some things done after the election, and let's not forget, china's got their own, you know, change in government, which is also a process where there's a fair amount of scrutiny, and brings attention to public sentiments so i think it's easier to do these things afterwards, but that's a long time to rate, but

discouraging. we have to hope for any progress we can get. >> last question. >> jimman, author here, i want to ask you about the subtle problem of low expectations that we have an that china encourages us to have sometimes. on trade, it's true as you say that exports have risen in percentage terms more than china's exports to the united states, but that's against a frame work where they are multiples higher than our exports to china, so the percentages are cast in a different right there. on currency values, we're in a situation where, as you say, the current currency is quite a bit in our estimation, quite a bit under valued, so that over the

past four or five years, they have made some small responses, and they get treated as, you know, as more than really they are, and not what they need to be, so do we look at china with two low expectations of what they can and should do? >> well, i sure -- maybe i failed with my speech here because i sure hoped to set the bar high and set some high expectations, and that is what we really need to do. we need to -- and i'm not -- anyone that knows me, i'm -- i fight pretty hard, and for opportunity, but i think there's a right way to go about it, and none of our expectations will be

met if the chinese economy doesn't continue to grow, and i think the first place to start off with high expectations -- when you said "low expectations" i thought you were talking about the u.s. government for a minute -- [laughter] because we need to set the bar and really are going to need strong leaders on economic issues and bipartisan major effort here in washington because no matter what china does or doesn't do, we got our work set out for us, and we have to do that, and then in terms of china, i think that is -- we need to have high expectations, and we need to be clear about what we want, and i think a lot of this is so easy to sink into the -- when you look at

u.s.-china into all the myriad issues you have on a day-to-day basis rather than stepping back and having a frame work, and when i tried to say there's a frame work to prioritize and say what are the really important things to push for and then working to get progress, but i think we take our eye off the ball and get all tied up in things that will not make as big of a difference, and so the -- so that's really what i tried to get to, but i sort of understand your comment and your frustration. >> so as we conclude, let me say that hank pallson made his impact in new york and made his impact in washington, but he left his heart in chicago. [laughter] our complements to the university of chicago which now has the pallson institute and hope this will be home away from

home. thank you very much. >> thank you. [applause] [inaudible conversations] >> thank you. [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations]

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>> former new york senator and poker player advocate was on capitol hill today testifying in support of legalizing online gambling. the house energy and commerce subcommittee held a hearing on whether to legalize internet gambling. committee member, mr. barton, introduced to legalize gambling cosponsored by frank and ron paul. the justice department views all internet gambling as illegal. this hearing is two and a half hours. [inaudible conversations] >> good morning. today, we turn our attention to a agreeing controversy in america. should it be legalized and what role should the federal government play? we have opinions on the panel

this morning, and if i were a betting person, i'd wager we'll have a very interesting hearing, and the chair recognizes herself for an opening statement. in many ways -- restart the clock. in many ways the debate of legalizing interpret gambling is like texas hold em poker. is online gambling regulated effectively, and what role should the federal government play to protect american consumers from sharks? this is the flop we've been dealt for dead's hearing. there's a turn card. with billions of dollars on the table, can congress afford not to get involved, and then the river card. what impact would legalized internet gambling have on consumers and the u.s. economy? clearly, the stakes are high, and a show down is likely on capitol hill in the months ahead. as chairman of the house subcommittee on manufacturing and trade, this is an issue that i'll be following very closely to make certain americans are

dealt a fair hand regardless of the outcome. the purpose of the hearing is to take a close look at the face up cards. the thing we know with certainty after 80 years of legalized regulated gambles in the united states. we'll hear from both sides about this important issue. one thing we know is this -- the vast majority of americans gambled at some point in their lives. according to the gam ling studies program, approximately 85% of u.s. adultings gambled once. 60% in the past year. what's more, 1078 form of gambling is legalized in 48 states and the district of columbia, the only two states without legalized gambled ling are hawaii and utah. gaming policy and regulation is handled by the state, although the federal government is involved in shaping the boundaries of what is not permissible, but the legal status of online gaming is complicated. 2341961, congress passed the interstate wire act, 20 years

before anyone heard of the internet. according to the justice department, online gambling is illegal under the interstate wire act because it prevents the use of wire transfer of wagers. in 1988, gambling in the u.s. began to proliferate after congress passed the indian gaming regulatory act addressing the jurisdiction and authority of tribes to establish gaming on their lands. since it passed, tribal gaming operations have seen growth and revenues last year exceeding $26 billion. from my own experience with seven casinos in my district, tribal games 1 a huge plus creating thousands of jobs in difficult time, and the tribes are great neighbors too contributing regularity to charities and civic events. unfortunately, illegal gambling is growing in popularity as well, so in 2006, to combat the proliferation of illegal internet gambling, congress

dpoopted the unlawful gambling enforcement act that outlawed interstate online gaming in the u.s. by preventing gambling related businesses to accept payments 234 the form check, cred cards payments, or electronic funds transfers relate the to gambling. the law establishes fines and penalties for banks and financial companies that process such payments. in april of this year, flee of the top poker websites were shut down and 11 people dieded for fraud -- indicted for fraud. the statute has not reintroduced internet gambling. legalizing interpret gambling, they argue, would awe low the government to provide greater protection for consumers. to points argue -- proponents argue the u.s. would realize revenues that are not directed to u.s. gaming

companies. americans wagers $16 billion last year on interpret poker sites alone. those who want to keep the ban on internet gambling in place argue that repealing the law exposes americans to serious problems like compulsive gambling and worried about an increase in fraud, money laundering, and organized crime. others expressed concern that state budgets could be harmed by the loss of lottery and gaming revenue and point to a hiewfnlg potential impact on existing, legitimate games operations. this raises 5 lot of questions for us to consider. how effective is current enforcement of online intrastate gaming? what, if any, forms of interstate gaming online should congress consider allowing? what consumer protections exist for online gaming today? do they need to be strengthen? how would any easing of legal restrictions on internet gaming affect american consumers and other stake holders? hopefully after today's hearing,

we'll have a better idea whether or not to hold them or fold them. with that, happy to recognize the gentleman from north carolina, mr. butterfield, ranking member of the subcommittee for five minutes 37 >> let me thank the chairman for this important hearing today. this is a topic i heard so much about since i've been in congress, and i'm just looking forward to the six witnesses in front of us, and hopefully you can brings a perspective we have not heard before or reenforce the views that we have heard. i look forward to working with you on the issue. congress is no stranger to the issue, and we grape med with how to best address it for some time now. my good friend talks about this very often, both to us privately and in our caucus meetings, and so we want to keep her involved, and try to bring tom cloture this this issue.

part of the reason why -- part of the reason why i think is because members of congress, just like all of our constituents across the country have very percent feelings. certainly in my commute, there's diverging view, and all across the country it's the same. some are strongly opposed to all gambling, while others see it merely as entertainment. the debate should not be over whether it is moral or not moral. instead, we should acknowledge that interpret gambling gaming is happening now all over the world including here in our country where online gambling has been treated as illegal by the justice department. as a result the american internet gamblers turned to foreign offshore entity to access to games. they may not provide consumer protections to those who gamble, and there's no u.s. oversight to ensure u.s. citizens are not harmed.

there's often no legal recourse for consumers who have been wronged by bad offshore actors. there's also the small issue of money. last year alone americans wagered $16 billion just on internet poker. while some went back to players in the form of winnings, the overwhelming majority remained offshore unregulated and untasked without significant national debt, common sense solution seems clear. we need, we need a robust debate on whether internet gaming should be legalized in the u.s., and if so, we need an oversight structure put in place to ensure that consumers have the strongest possible safeguards. games like poker and bingo are as am biketous in the u.s. like baseball and football and are played by young and old alike. technology, technology has

indeed evolved permits individuals to participate in games of chance and skill in realtime and remotely. instead of embracing a new twist on an old game, our inaction allowed americans to spend their money offshore permitting internet gaming into this to operate in the u.s. could yield financial benefits to struggle, federal, and state coffers through unrealized direct and indirect tax revenues and allows for oversight of over accountability for the industry business practices. most importantly, we have the opportunity to create and implement strong consumer safeguards that each entity would follow. real money raises significant concerns. the compulsive gambler no longer has to expend the effort to drive to the casino to play the

game. a mouse click and credit card number is all he or she needs to play, but with no human interaction with the house. there's no one and no way to cut someone off if they played too much. before long, that same gambler maxed out his or her credit cards and faces the dreaded bankruptcy. worse, they turn to criminal activity to finance the habit. while my example is extreme, it's possible, and it happens daily at conventional gaming houses. people ultimately must have personal responsibility to know when enough is enough, but when the line blurs, safeguards must be in place. that is why inner legislation preventing internet gaming in the u.s. must, must have protections in place to mitigate compulsive gambling. consumer protections must be in place to ensure games are honest, fair, and randomized. economic boom that could result from legalized internet gaming

is perhaps the most compelling reason to give it serious consideration. hundreds of millions of dollars in new revenues could be realize r realized by struggling states. tens of thousands of jobs could be created all across the country in the new industry. considering the struggling state of our economy, i strongly believe that all potential remedies should be considered to return us to greater prosperity. thank you, chairman. i yield back. >> i thank the gentleman, and according to committee rules, chairman upton yielded five minutes to me, and i recognize the gentleman from texas, mr. barton, chairman of the full committee for three minutes. >> thank you, madam chairwoman, i see former congressman john porter in the audience. good to have you here. poker is the all-american game. president richard nixon financed his first congressional came pain partially from poker wins from world war ii, and our

current president, president obama, is reputed to be a very good poker player. i learned to play poker, believe it or not, in the boy scouts. [laughter] if you learn something in the boy scoit scouts, it's got to be a good thing; right? [laughter] unfortunately, because there is chance to it, while it is a game of skill, there are those who think we should not allow poker to be played for money on the internet. consequently we passed a bill several years ago that's not enforceable. it's a bad law regardless of which side of the debate that you are on. i have introduced a bill as the chief sponsor to remedy this, and two of my co-sponsors are barnny frank and ron paul. i will postulate that if you have a bill that barney frank

and ron paul and mr. barton are for it, who can be against it? we covered the spectrum. [laughter] this is a copy of a registration from yesterday a person who is in the audience today who signed up to play poker for money. he deposited $50, got a $5 bonus for making the deposit, and he got a solicitation that if he got more people to sign up too he could get an addition that $200 in poker chips. people are playing poker on the internet in the united states for money today. we think as many as 8 million players per month play poker for money online in the united states per day or per month. having said that, it's not regulated, and so these sites are offshore, overseas, and

consequently, outside the ability for us to tax the winnings, to regulate to make sure that it is a fair game and everybody has an equal chance to win based on their skill. the legislation i introduced is not perfect, but it would remedy most of the major problems we face today. i want to thank chairwoman bono mack for the hearing, and thank the ranking member, mr. butterfield, for what he said in the opening statement, and i think there should be a robust debate, and maybe an additional hearing, but some point in time in this congress, i hope we can move 2366 or something similar to it, madam chairwoman, to allow everybody in america who who wishes to play poker in the states that allow it, to do so. in the bill i introduced, it's a state option.

if the governor of the state says there's no poker to be played by the residentings of that state, did does not happen. in the states that think it's okay, we set up a regulatory scheme and a taxation seem -- scheme so there's a fair game and everybody has the equal chance in future president nixons and obama's can play on the internet for money and use the earnings to join us. with that, i yield back the balance of my time. >> i thank you, mr. barton. >> thank you for yielding, and i went to college in new york state in the 1980s, so i appreciate your service. i remember reading the new york meet ya in college and all the great work you did for the state, and i appreciate it. i'm from kentucky, and there we're faye moi's for the horses. we have two great racetracks in the world, and we breed the world's best horses that run on them, and no matter how you cut

it, internet gaming affects the horse racing business. online games resultings in less gaming dollars spent at tracks. fewer dollars in the racing business just does not affect the racing, but affects thousands of other jobs in these communities that depend on the horse industry. because of this concern, the effect on the horse racing must be considered in the expansion of online gaming, and i look forward to hearing from the witnesses and my colleagues on the underlying issue of online gaming legislation, however, as the chairman of the congressional horse caucus, i have to remind my colleagues not to overlook the impact this legislation would have on the industry. the horses and signature race, which is truly the gratest two minutes in sports, this is not a one-state issue. the horse racing industry supports over a million jobs nationwide. we cannot ignore this important industry in considering changes to online gaming. thank you, and i yield back.

>> i thank the gentleman, and now we turn the attention to our panel. we have one panel of witnesses joining us today. each of our witnesses have prepared an opening statement that will be placed into the record. each of you have five minutes to summarize that statement in your remarks. for introdiewx, one witness that's is well known to many of us, former united states senator from new york, the honorable who serves as chairman of the poker players allegiance. we welcome you, and then we have perry aftab, and also testifies is keith whyte, executive director of the national counsel on problem gambling. kurt eggert, professor of law from chaplain university, school of law. we have ernie stevens, chairman of the international games association, and then dan romer, director of the adolescent communication institute at the policy center. good morning, thank you for coming, and you're recognized

for five minutes. to keep track of the time, there's lights and timers in front of you. when the timer is yellow, you have one minute left, and please remember to turn your microphone on and bring it close to your mouth, although we might hear you, the tv audience might not at home, so it's very important to remember to do that, so senator, we are pleased to welcome you and recognize you for five minutes. >> well, madam chairman, thank you very much. i wish you a belated birthday, and yesterday, you celebrated your birthday, and i'd like to thank you again for giving us an opportunity to testify on an issue that i care very much about. indeed in my capacity of chairman of the poker player ace license, i represented 2.5 million americans who joined our organization, and who love this great american past time. they love player poker in their homes, casino, card rooms,

charitable games, and, yes, on the internet. i want to congratulate the committee for holding this hear, an opportunity to get a better understanding of what the status quo is as it relates to poker and the internet. let me say "status quo" is badly broken, and it benefits no one. although it may have been well intended, the legislation that passed four years ago, the fact of the matter is it's created many more problems than it's solved. it is endangered young people. it endawrnlged problem gamblers and endangered those who want to participate in an honest game. it's my hope this committee responds by taking up legislation similar to the bills introduced by congressman barton and congressman campbell, and at this point, let in take a moment

to congratulate the chairman on the leadership of the issue. congressman barton, you stole my speech, said it all, and said it better than any former united states senator could do because we never had time limitations. [laughter] this five minutes is difficult for me to deal with, but i'll touch on one or two points. internet poker as the congressman has just said, has not gone away and it's hard to envision a scenario where it will. it takes place under the ray dore with no regulations, with no taxation, with unscrupulous groups who can and do operate. they operate in the public, and the government can do little, if anything, and certainly doesn't safeguard the general public.

as the congressman indicated just yesterday, a young man by the name of john pappas with his federal credit union debit card, very interesting, i guess it's the right debit card, went and opened an account at bodart.com. now, he could have been anybody. he could have opened up an account, been under age, under the age of 121, because they -- 21 because they give the cards to anyone. i got one for my dog once believe it or not. [laughter] so 16 or 17-year-old can certainly do that. where's the protection for young people? there's people on this panel today who speak up for young people. perry has done a fantastic job. perry attab. one of the things congress

provides for is the verification, and the type of verification to keep youngsters under 21 from playing. that's the thing you need to do. one of the things that the congressman's legislation will see to it that you don't have unscrupulous operators who haggle the poker players' money and use it for themselves, and we've seen that situation. it's a horrible situation where people took poker player's money that should have been placed in a trust account and distributed it as dividends to the people who ran that corporation. terrible betrayal of people. let me say there are those internet sites that operate where nay have a trust account. poker stars, for example, legislation requires they have a trust account for those dollars, and that's what congressman barton's legislation does, so

that you can't have this -- you have proper supervision. again, if you want to protect young people, and i understand the genesis of this came from a genuine concern that so many young people were flocking to want poker rooms, the poker sites, tv was carrying it. i think the third most watched game on television sport was poker, online poker on television, and so you had kids getting involved. well, how do you keep them by doing it? by passing legislation that will require verifiable identification. that's how you do it. how do you keep the deadbeat dad from becoming a problem gambler? i'll tell you how. pass legislation similar to that congressman barton put forth, and you stop it because states can then post to deadbeat dads that do not permit them to go on the internet and gamble, and so

for those reasons and others time doesn't permit, and i don't want to test your patience, let me say i really hope we have an opportunity to do something to permit a great game, a game which rares skill to be played in people's homes. shouldn't be that they can just go to casinos to play. a lot of people don't have the ability to do that. it shouldn't be to go to someone else's home or be invited to their home, they may not be able to get together. it's a great past time, and this legislation created and clouded the legislation, the situation may have been well intended, but it's missed its mark. i thank the chair and the committee for giving me this opportunity, and i look forward to any questions that you might have. thank you. >> thank you, senator. now i recognize ms. aftab for five minutes.

>> good morning, and thank you very much and ranking member and other members of the subcommittee for enabling me to speak today. i'm representing fair play usa as a member of their advisory board. i'm joined in that advisory board by louis free, director of the fbi, and the first secretary of homeland security, governor ridge, who are unable to testify today. as we look at the issues, we need to recognize they have a lot in common with the issues that this subcommittee has been working on, privacy, security, authentication, protecting the consumers. it's a matter of protecting our kids and families as well, so i've been to the extent any of you know my work, i've been best known for protecting kids and families online as the unpaid directer of wire safety, and we handle all issues, and in that

capacity, i received phone calls and e-mails from people who gambled online, won, and not retrieved winnings, people who are confused whether or not it's legal for them to play poker online. i'm a lawyer, and i have to part the law to really understand it. if you walk up and down the street, a lot of people don't. they don't understand the difference between online poker fun games that are just part of computer games, and those where there's wagering that takes place. a lot of the other countries around the world looked at this and found the solution for the problems that we've identified with online gambling. identity theft, money laundering, underage gambling, problem gambling, fraud, identity theft, privacy security breaches, all of these issues can be dealt with the ironic position of legalizing certain aspects of online gambling,

regulating it, and being able to enforce it. the benefits of this allow us to help people who are defrauds, safeguards put in brick and mortar gambling situations. as we look at this, it's not a matter of whether it's moral or not. this issue was dealt with years ago when state lotteries were put in place, when we looked at tribal gambling and saw how many schools are funded with this, but we can put safeguards in effect that are not in effect now. what's happening now is not working. there are millions of people gambling billions of dollars online without any protection at all, and because of the laws we have, it's a hear no evil, see no evil, speak no evil situation, and these people find themselves with no place to go other than calling my cell phone at three o'clock in the morning. so i have a group of teenagers, and some of the representatives on this committee have them in their districts, and they are

familiar with them, and they knew i was testifying here today, and they are steen safety experts, and so they said, well, it's really easy for us to find ob line poker sites in particular, and they went to several of them, and one they went to, i have here, it's pokersites.com. it took them twa and a half seconds to find that one with top lists of places the best legal u.s. poker site, 2011, bet online, bodog again. they called me. i knew they did this because they called and asked for my credit number to put it in place or permission to use one of theirs, and one was 16 years old with her own credit card her parents gave her to shop at the mall with. it is easy. it's too easy, and there's nothing we can do right now to keep underage gamblers out and protect them with the kinds of things we can do. there's many things we can do to address online gambling as it

relates to horse racing, although i don't know anyone who would rather go to the interpret rather than the beautiful state of kentucky. did -- instead of something that's unique because there's a lot more in common with the other things we are looking at than there are differences, so i am happy to discuss any of those issues with anyone on the committee in you have questions and help in any way i can. thank you. >> thank you very much. mr. stevens, you are recognized for five minutes. >> thank you. good morning -- >> excuse me, pull the microphone a little bit closer. >> oh, okay. i'm sorry. >> thank you. >> good morning chairman, ranking member butter field and members of the subcommittee, thank you for the opportunity to provide the views of the gaming association on the important issue of internet gaming. to place our views in context, start with the constitution.

in return indian tribes are recognized in the united states constitution as governments through treaties with the united states, tribal governments seated hundreds of millions of acres of their homelands to help build this great nation, and in return, the u.s. promised lands and sovereignty to provide for the health, education, and general welfare of indian people. unfortunately, the united states broke many of these treaty promises. after suffering generations of failed policies, the feds took matter into their own hands when theygan to use gaming as a mean to generate revenue to meet tribal needs, and that's when president johnson and nixon adopted the i indian self-determination. in 1988, after more than a decade of legal challenges by states and commercial gaming interests, congress stepped in and established the federal law through the indian gaming regulatory act or igra. it acknowledges indian tribes as

government with the right to operate gaming. it provides tribal gaming revenues are used for government purposes and provides that tribal revenues are not subject to taxation. finally, the act established a comprehensive regulatory system involving three levels of government regulation, tribal, federal, and state. twenty-three years later, tribes makes this work to rebuild their communities. they are working to ill prove education, health, elder care, and rebuilding tribal infrastructure and so much more. for many tribes, gaming is about jobs. in 2010, madam chairwoman, indian gaming created more than 600,000 american jobs, without question, indian gaming is putting people to work. they realized the games were not possible without regulation. the system employed more than 3400 regulators along with state of the art technology to protect tribal revenues. in 2010, tribes spent $375

million in regulation. it's costly and comprehensive, and our record of experience shows it's working. because of indian gaming, tribal governments are stronger, people are healthier, and entire generation of indian youth have hope for a better future. as a result of these gains, all tribes are weary when congress considers changing the playing field with regards to gambling. legalized internet gaming raises significant concerns. in 2010, leaders conducted more than a dozen meetings to discuss the issues of interpret gaming. from these meetings, tribal leaders nationwide have unified behind a set of general principles regarding federal internet gaming legislation. these principles are listed in my written testimony, and aisle try to -- i'll try to summarize them. first, our principles require the federal legislation provide similar authorizations and protections for tribal internet gaming that igra provides for indian gaming. to accomplish this goal, indian

gaming legislation have to acknowledge tribes are allowed to operate gaming. if regulatory system is required, we ask they are vested with authority to regulate tribal internet gaming. the commission is # only federal agency with experience in regulating any form of gaming in the united states. there are four principle states that the federal legislation must acknowledge that customers may access tribal internet sites as long as such gaming 1 not prohibited where the customer is located. five, legislation must acknowledge that tribal internet gaming revenues are not subject to taxation. tribal gaming revenues are 100% tax. they go to serve the public purpose of tribal and nearby communities. there's no room for federal and state taxation. our final principle is based on the fact that tribes have invested significant resources on the current law, thus, legislation must fully protect rights under the regulatory act and existing tribal state gaming compacts. internet gaming bills introduced

in 112th congress violate these principles, and we oppose their passage as currentsly written. in addition, there's stake holders yet to be heard from, for example, neither the department of justice, interior, commerce, treasury, or the gaming commission have been heard. i'll conclude. gaming proved to be the most effective tool to help indian tribes address more than a searching ri of federal policy failures. tribes are concerned that legalized internet gaming with threaten the gains. the dialogue with congress on internet gaming for close to 15 years, and on the most recent discussions, tribes met and unified behind these set of core principles. we look forward to working with you and congress that we add leer to the principles and are established by the tribes across the united states, and i thank you again for this opportunity to testify, and i'm here to answer questions you may have. >> thank you, mr. foreman --

mr. stevens, and happy to recognize mr. whyte for five minutes. >> thank you. i'm keith whyte, the executive director of the national counsel of problem gambling. this is my 12th year an anniversary with the counsel, started 12 years ago this week. it's the national advocate for programs and services to assist problem gamblers and their families. we have a 39-year-old record dealing with the controversial issue of gaming. we are neutral taking no position for or against it. our concern is advocacy for problem gamblers and their families. we believe strongly the most ethical and coast -- cost effective is a public health approach. like other addictions, it will never be eliminated, but we have to make better efforts to protect consumers, prevent addiction, and mitigate the damage. it is inconceivable that

internet gambling to be legalized without dedicating a portion of the new revenue to address the knowing social costs of gambling addiction. as said in the ohm statements, at least 85% of adults gambled in the last year, 15% in the last week. that's $95 billion generated by casinos, tracks, and lotteries that does not include sport gambling and interpret gambling of today. $6 billion a year comes from the special federal withholing tax on legalized winnings. yet, unlike the federal excise tax ton tobacco and alcohol, not a single penny of this taxed revenue is returned back to prevent and treat the social cost of gambling addiction. between 6-8 million adults and 500,000 addless sents meet criteria for addiction in a given year. in high risk groups including members of racial minority groups, young males, and

veterans. the associated cost to families, businesses, and communities tops $7 billion per year from addiction, bankruptcy, and crime. problem gambling is therefore an important health concern. gambling problems are significantly correlated with other abuse problems we know are extremely costly to the state governments, family, and individuals. gambling problems are significantly correlated with higher rates of unemployment, bankruptcy, arrest, incarceration, and poor physical health. in addition, millions of spouses, childrens, families, parents, and employers are negatively affected by gambling addiction. it's not clear what the legalization of internet gambling will be on problem gambling. the available research does consistently show that internet gambling has the lowest participation rates of any form of gambling regardless of legality of gambling in that jurisdiction. the rates of participation do not vary significantly whether

it's legal or illegal, and as we've heard this morning already, there's massive number of americans gambling online currently. yet studies throughout the world find high rays of gambling problems of those who gamble online. of course, those gambling online are likely to gamble in traditional forms to the extent internet gambling is an adjunct to people who are already gambling online or gamble in traditional forms. it's also possible people who gamble online are exacerbating their problems due to the unlimited access, the high speed of play, use of credit and non-cash instruments, all which are known risk factors in the brick world. since online gamblers have high rates of reefings, it's important to have -- we have to create and inform consumers with a variety of -- to provide

informed consumers with a variety of safe choices and discourage unsafe behavior. the technology exists to allow players to set limits on the amount of money gambled, the amount of time, and the deposits they make. dr. romer will speak on the policies. strong regulation is important, but it cannot be effective alone. it has to be accompanied by education, treatment, and research services. a portion of legalized gambling, not less than $50 million annually, must be set aside for such programs. this need is magnified by the disperty of services in the state. more than one-third of the states provide absolutely no public funds whatsoever to treat gambling problems. this is neither cost effective nor ethical to responding to a known public health concern. an important cost free first step is to cut social costs by

the federal agency on gambling. we heard a lot of testimony that gambling is around and certainly present in most states, there's no single federal agency coordinating efforts. there's the attention to hr234 # 4 the comprehensive gambling act introduced for the fourth time in the house designating the substance abuse administration as the lead agency on problem gambling to address the public health concerns for this issue. i thank representatives barton, pitts, whitfield, campbell, frank, and others who are current or former sponsors of the legislation, and as a member said, we appreciate the broad spoon sonship on -- sponsorship on our bill as well. millions of americans experience gambling problems today like my friend mike. he gambled away his money losing

his job, house, and family. he sat in a parking lot in hears in virginia contemplating suicide. he was able to get treatment, but today works to make sure hope and resources are available for families. simply put -- treatment works. it pays for itself many times overment those who legalize promote, and profit in gambling, they have a responsibility to minimize the effect of gambling addiction. >> thank you. >> good morning, and thank you chairman and ranking member butterfield and other memberrings. i appreciate you're inviting me to talk about this important issue. i come at this from a different angle than most. i come from a consumer protection angle where i've worked most of my career. i was an adviser to the federal reserve board on consumer financial issues on their

consumer advisory council, and you can imagine what fun that was in recent years, and so when i think about gambling, the question i have is what consumer protections should be in place? i'm very happy to hear many of you talk about the importance of consumer protection in gambling because it is, in fact, a crucial issue. gamblers used to be looked down on, but now they are just consumers, and it's just another industry, and we should treat them as such and think what consumer protections are important in this industry. the purpose of consumer protection is to make consumers good shoppers, to give them the tools they need to make smart decisions when they purr -- purchase, when they go to a casino, gamble online, whatever they do, we want them to be good

shoppers and protect them from short practices because the engine of the consumer economy is the consumers drive it, and as long as they have the information they need to make good decisions, that then companies have to competes based on quality of product and price, which is what makes our economy run. now, in the gambling industry they talk about consumer protection as honesty, fairness, and making sure that the gambler gets paid. that's very important, but equally important is that the gambling industry provides accurate price disclosure to consumers who are gambling. ..

exactly what the average hold percentage of the slot machine is. they can order a slot machine with a 5% polled deutsch, 15% hold percentage, and they know that on average with that machine will cost. the problem is that information is not disclosed campbell worse one. they may be sitting in a 2% polled table or not know the difference. they could be sitting at work and more expensive for cheaper and not be given that information. the gamblers have this

information so they can make smart decisions and so that they can shop based on price. any internet gambling should include that. and so any legislation for internet gambling should require disclosure of the percentage of every slot machine on the system. for internet poker it's a different proposition because the price paid by the borrower is based more on competition than other players and than any setting of the site. here the problem is that professional players have new tools to use against recreational gamblers that far exceed anything they could do in a casino poker table. there is the computer boost that they have, computer box that's increasingly effective and so recreational gamblers may find themselves playing against professionals who far exceed

their ability to play and the recreational gambler may have no idea what they are getting into. there's even computer tracking software using data mining that helps strong gambler's identify who the week gamblers are so they can follow them to tables and play against them. this is a problem for the internet poker industry because the industry doesn't want all of its recreational gamblers money to be drained out by professionals using bots or other tools and so any legislation has to think about how to have a level playing field in internet poker and i have some ideas on that but my time is it so i appreciate any questions. thank you. >> thank you professor. romer your recognized for five minutes. spriggs before drinking member butterfield and other members of the committee. thanks for inviting me this

morning. it's a pleasure to be here and hear the different points of view about this but i think it's difficult issue for you to deal with. i've been doing research on gambling, adolescent gambling since 2002 at the end of the public policy center and trauner team to understand both the prevalence and the harm that might occur to young people as a result of all kind of gambling not just on the internet. now we found with a lot of research we've been doing that young people at a very early age are starting to gamble and this puts them at risk potentially for gambling dependence as they get older. so it's very important for the committee and for the congress to think about what the impact will be on young people and their families as a result of any action taken with regard to online gambling. one of the things we've done over the last since 2002 is conducting national study of youth which studies young people

ages 14 to 22 and we found from the survey is that most of the attempt to restrict online gambling haven't been particularly effective as we have already heard. we found in the last survey in 2010 that more than 400,000 in the college age gamble lunsford reza week and 100.17 million more or so a month. is the same is true of high school kids. a very high rates but we think that age restrictions and the promotion of laws that would encourage eight restricted responsible gambling which is what we have seen in some of these other countries that have allowed online gambling may be an approach would work, but we are still very much in the early phases of understanding how on-line gambling will work and i think we need research to understand it better. but if we have legislation that can provide some safeguards that

could potentially restrict underage gamblers and also to the extent they do go on line make it harder for them to lose control while they are on line would be excellent safeguards to include in any legislation coming into a principle that i see when i look at what is going on in europe is this idea of responsible gambling. and so one idea that i think is particularly helpful is that gambling operators should not receive disproportionate and come from users who are unable to control their habit, and i think the bill that's been put forth by mr. martin and others might have a mechanism in it for the public to observe, monitor how funds are being made on the internet gambling so that you can see the certain gamblers are disproportionately contributing to profits. as some of the other ideas we have heard about come age restrictions and so forth we are

very important the myth of the payment is important. we don't know how well they work. we need research its weight behind the u.k. and countries in europe understanding what happens when young people go on line and gamble what we really need to find that out is to that question the money and time limits we've already heard and you mentioned this is a good idea and should be running clock online. this should be a win or loss total online said that the young person knows how much they are wagering and this is true whether they are 21 or 51. this is something i think is straightforward, but we really don't know how many of these kinds of restrictions would work. we also need prevention messages become the online. it's easier to put these on line as it is for example and to

attract people. we don't want to advertise or the target young people disproportionately for the gamblers disproportionately. and so if you legalize this would be to put in place but also a program of research to figure out our restrictions to put in place working what makes the restrictions work best and what can we do in the future to maximize the chance that this kind of activity will not produce harm for young people and their families. and i include a bunch of other ideas in my testimony, and on things you for this opportunity to save these thanks. >> thank you, dr. romer. i'm going to begin the questioning and i thank all of the panel for your testimony and recognize myself for five minutes for questions.

mr. whyte, like to begin with you. dr. romer spoke about this, to lead but use did the problem gamblers could exacerbate by gambling on line because the use of credit and 24-hour availability. with restrictions on those reduce the problem, for example limited time and credit to other countries offering internet gambling currently have restrictions to limit the use of credit and the ability and if so, can you talk about the result? >> yes i can. there's some evidence from canada and europe that were supposed to be in restrictions put into place which generally include, as you say, limits on the use of certain types of payment processing, limits on the time and money spent candling. they seem to be able to not necessarily intervene with pathological gamblers who will keep gambling despite the barriers for the way. they seem rather to be better targeted at risk for gambling problems or moderate problem

gamblers. these restrictions properly taylor can be and have shown to be effective at some studies at reducing in helping people come stopping them from stepping over the edge and developing severe gambling problems. as dan said, we are not entirely sure exactly what works best but we believe there is enough evidence to show these interventions can be effective and in fact some of them can be much more successfully implemented on the internet with the wagering in the traditional gambling forum. >> mr. stevens, you suggest that any legislation authorizing online gambling should allow the tribal government early entry with a period of exclusivity. can you explain the rationale for your position? >> yes i can. i think that it's important to understand and appreciate with the tribes have been through in the history of the united states government. i could even -- i speak quickly about my grandmother. she's 101-years-old and lives in

her own apartment independently in an apartment that is assisted but not a nursing home and she lives in the department at 101 independently so she started her life going to boarding schools and working in discipline for being left-handed like my friend next to me and speaking her language. you know, leaving her family, the family would go by the boarding school and not even be be able to waive or visit or look at her children, and again, and as we approach emotional to bring that up because even though my grandmother is doing fine and if you call her apartment you'd probably find that she's not home so she's involved in activities which she's a retired school teacher, she spent her whole life

teaching the language and culture that was attempted to be taken from her. again, that's just a success story, but really if you look at the way her life was, her grandfather who raised her committee civil war veteran and used to ride by of boarding school and throw candy peak but it would because the government said you can't even look at your kids. so that is a mild story about what our people have been through. millions and millions of folks when the first european contact and so in spite of all of those struggles and challenges that we've been through we've been able to persevere and survive and fight back and if anybody deserves to be at the front line in this industry is needed american people. and at the very least equal footing. >> you figure why is it important legislation permit the tribes to operate internet gaming without renegotiating the tribal seat compact, what is the concern?

>> i believe that that is a new industry, and i believe that they shouldn't undo or attempt to mandate the current law and order to accomplish that. >> can you please clarify your principal regarding the preservation of the tribal regulatory authorities? shettle legislation -- should we have to legalize online gaming; can you speak to that, and how you see that authority affected by federal legislation to legalize online gaming? >> sorry, madam chair. i misunderstood. >> i think i missed a comment in there. but could you please clarify your principal regarding the preservation of tribal regulatory authority should federal legislation legalize online gaming? >> i think that i spoke -- i think i spoke briefly to that in my testimony and quite extensively on it in my written testimony. the regulators in indian country have analyzed this and they are

the ones responsible in the gaming commission is the only federal authority that has experience in have gaming so we feel like in order to oversee this element we should utilize the experienced folks to read just by coincidence i have my -- it's the nicest when i've got but it's the national tribal gaming permission and regulators it's a national association of independent of the tribes that have worked to analyze the expertise and the important aspects of the tribal regulation to make this stronger and be able to adhere to their responsibilities to our constituents. >> i'm sorry, i hate to cut you off but my time is up to could wrap up in five seconds. >> my bottom line is that we've asked these regulators nationwide of the are prepared to handle -- to regulate this

industry they assure us they are in strong preparation to do so. >> thank you. again, my time is expired and i am pleased to recognize mr. butterfield for five minutes. >> i thank the chairman. madam chairman, i am among those who is beginning to understand, i would say, online gambling. i'm beginning to understand that it could provide a great boost to our national economy and could provide a boost for federal and state conference. so i am beginning to connect the dots and understand what this is about. today should be the beginning of a robust discussion, and this conversation certainly should be expanded as we go forward. as the chair pointed out, online gambling is a very complicated issue. i am beginning to see that. other issues still weren't discussion, for a sample of the great state of california with 53 representatives and the district of columbia with a

non-voting representative are already moving forward with interstate online gaming even though it's legal status is unclear and given that the u.s. justice department believes the act prohibits all online gambling whether the current state of play is going to shut the operations down once they are up and running and there are other critical questions that need to be answered. we need to hear from california and d.c. we need to hear from the justice department and from other state and federal regulators who would be tasked with implementing and enforcing the regulatory framework regarding online gaming to read this is an issue that warrants for their review before the subcommittee. we have jurisdiction and we need to certainly inquire into that. in his testimony, mr. whyte notes that among the group in

the high risk for gambling addiction are racial and ethnic minorities. we will talk about that for a minute. he specifically identifies african-american among others as being at high risk. earlier this month, the subcommittee held a hearing on the revisions to the children's online privacy protection act rule. the testimony of one of the witnesses for that hearing contained references to a study by the workshop included insights into the online habit of minority children african-americans and hispanic children have less home internet access than those that have access use the internet more than white children. african american children between the ages of five and nine spend 41 minutes online per session. white children in contrast spent 27 minutes online per session. hispanic children, between ages

eight and 14 spend almost two hours on line each day, 40 minutes more than white children. the study also pointed out that children from low-income and ethnic minority homes were less likely to have adult guidance when accessing the internet. as a result, they were spending more time on the low work with the websites or on activities that wouldn't help them develop school based skills. dr. romer, let me try you, sir. i know that you're own work has focused on the prevalence of gambling among high school and college youth. however, i don't think that it would be too much of a elite to assume the tendency by the younger minority children to use the internet more and to spend more time on lower websites to persistent high school and college. given all of this i'm wondering whether you could speak to whether you have the same differences along the racial and ethnic lines. >> there are racial and ethnic

differences in gambling. we haven't seen it in terms of internet use probably because it has still been small in our survey so why can't really talk to it, but from what you've said if there are these disparities that occur for kids who are online i would fully expect those kids to them -- >> the data seems to suggest that. do you have any thoughts about whether they would be particular implications for the young minorities that should be taken into account in the discussion about whether and how to go about recognizing some forms of online gambling as a legal? >> is their anything particular that we get right into the law that would try to safeguard against this? >> i don't know that you could write a law that would safeguard against particular people other than people who are prone to lack of control so the vignette to prevent his people from using

on-line gambling sites can't control the gambling to remind them to keep them aware of the fact they may be spending more than they have a thing could be delegable and you need to explain a thing as curt said people need to know what they are going to win on the side that is a valuable thing to tell people that any age but we don't want kids on their at all. that is the goal. >> another important aspect is to make sure that there are services available if kids to get into trouble, and i think that is where in the intent on the minority community is disproportionate. there is less access to the services. we also understand there is less access to the services in spanish and others for native americans, asian americans and others. so, on the health side regulation alone cannot adequately protect people from the introduction. as we know from drugs and alcohol and tobacco you must have the resources, we must have within the resources dedicated cultural specific services

available for both youth and adults to prevent educate country and research. that is the way we are going to make the progress against the public -- >> thank you. >> i thank the gentleman and the chair would remind people we have a five minute rule one questioning and answering as well if we can try to stick close to it. we will have a second round of questions that we. the chair is happy to recognize mr. bass for five minute. >> i thank the chair and my friend from texas mr. bartlett for his courtesy. i have to preside at noon and the house is not in session now and when you don't show up at noon, people get uptight very quickly. i am also quite perplexed by the discussion about all of this money that could be lost in internet poker. i know quite the few people that play poker and don't admit to losing. [laughter] i will also point out that new hampshire is as we all know first in the nation presidential primary and will remain so.

it also happens to be the first state to adopt a statewide lottery in 1964. it's raised over $4 billion provided about $1.3 billion for public education and the state. my question and only question is for my former colleague from new york, senator d'amato. the senator representing the poker players coming in your organization's opinion, what impact with the passage of legislation permitting internet gambling have on the state lottery? second, would your organization have any objection to allowing were giving the state lottery the opportunity to also compete, if you will, on the internet poker business? >> congressman, let me answer the second question first because that's an easy one to answer. we would have no objection whatsoever. as it relates to whether or not there has been an impact, we

believe that people who buy lottery tickets are generally not the same people coming and we don't believe they really compete. we believe that many will continue if you look at the lottery tickets you will find that while the internet does play a role, most of it is that your commercial the establishment's so we don't see a conflict and we certainly have no objection to a lottery tickets and scratch off tickets the states put out there having that ability. i would also note in new york you have a situation where the revenue from the lottery so i'm very conscious of this plays

very substantial part in the state economy and budget and we want to protect that and i'm certainly not advocating the we cut into that. but i make one other point. the ranking member brought up the fact there's a disparate impact and would seem that the young minority children are addictive to the internet and to programs which are not those kind that you would generally want to encourage them trying to help them in school and i hope i'm paraphrasing your sentiments correctly. more reason to see to it that there's a good tight regulation as it relates to using the internet and poker in particular. there is no regulation now. there's nothing to stop these kids from getting on. if we want to eliminate those

who are unfortunately becoming involved in gambling at a young age there is no verification required by these offsite groups. there is no way to stop or prevent them. so i think it makes abundant sense if we want to do something to curtail this misuse by youngsters to have strong regulations protecting the consumers, protecting the young people, seeing to it i would like to hear from mr. eggert's suggestions because we certainly are not opposed how do we give the kind of information so that players have a better playing field? so, i think for all of those reasons it's important that we move forward with this kind of legislation. >> thank you, senator. i appreciate you addressing my question as well as mr. butterfield and i yield back to the chairlady. >> the chair is recognized as

mr. towns for five minutes. >> thank you very much madame chair and the ranking member mr. butterfield for having this hearing. i think this is a very important hearing. the question before this committee is what if any forms of online gaming should congress consider? over the course of the next several weeks, the congress will decide on how the nation will begin to put its fiscal house in order. this seems to be a way to get revenue. one of the many proposals that congress will consider is easing the current restriction of online gaming. currently under the wire, online gaming is illegal, however, that hasn't stopped offshore gaming websites from profiting off of the united states. the gaming industry experts have estimated that the united states

spent over $16 billion, be as in boy who, in the the 2010 online poker alone. some experts suggest revenue generated in online gaming would bring a significant tax revenue to the government directed the dimond u.s. gaming companies. this additional revenue could be used to help balance our growing federal deficit without causing drastic cuts to entitlement programs that so many americans rely on. weigel i am sympathetic to the view that more revenue is needed to help balance the federal budget, i am concerned with the unintended consequences of this proposal. so first one to begin by asking you, mr. stevens, juneau, i'm not sure in terms of your real

reasons for opposing any kind of change what are your real reasons? could you be very specific? >> ayaan understand that you oppose this, right? you mention the fact that there is certain agencies that would not involved. what other reasons as to why you might suppose it? >> representative towns, we have several, as much as 12 plus meetings on this issue and the tribes proposed -- are opposed to this discussion based on several or six points. indian tribes are sovereign governments the right to operate, regulate, tax and license internet gaming and the rights must not be subordinated to any non-federal authority. internet gaming is authorized by any tribes must be available to customers in any locale where internet gaming is not criminally prohibited. consistent with long-haul federal policy and lot of trouble revenues must not be

subject to tax to the existing tribal government rights under the troubles to contact with any given regulatory act must be respected. the legislation must not open up in beginning regulatory act and federal of legislation must provide positive atomic benefits for in the country. those are the six points that developed in the series of meetings with tribal leaders from throughout the country. >> this committee must ensure that all the stakeholders involved would benefit from any legislation that may take shape over the coming weeks and months. so, we are very sensitive to that as well. but my concern would be the fact that the oversight and the fact that we make certain that it is being done fairly and of course that would be a concern because i think that we have to look at ways to be able to deal with the

deficit and based on what everybody is saying, this is the way to attract revenue. i am also concerned about the use and all of that but i think that based on programs that are in place we can look at that and be able to make certain that they are safe and not involved. anytime you have anything you always have some folks that ticket to the extreme. i think what we need to do is make certain that if they do there is something in place for them. you can name almost anything and i can tell you how someone has taken it to the extreme. i think the main thing was to try to put safeguards in place and that is an issue we need to talk about as to safeguards we can put in place, programs we can put in place that will make possible for people to continue

to function without destroying families. i want to think of you for your testimony and i'm going to respect the five minutes. thank you for a much, madame chair. .. >> the written testimony he was prepared to give had there been room on the panel. i'm told this was cleared by the staff and that's it's not a problem. >> hearing no objection, so ordered.

>> thank you. the first question to the distinguished panel is there any one of you who believes that millions of americans are not playing poker for money on the internet right now? let et record show they all -- yeah, they -- so is there any of you that believe it would be possible to prevent the american citizens who wish to play poker for money on the internet from doing so? the gentle lady from fair play. >> underage gamblers we can deal with. i was part of the harvard center age verification group, the age technology safety task force, and although you can't prove who is under the age of 13, you can prove who is over the age of 21, so we would be able with the right -- >> i will stipulate that whatever we can do, if the bill

moves, to prevent underage poker playerings, you tell me how to do it, and we'll put it in the bill. >> we had a study down at the kennedy school at harvard with dr. spar row, and it was presented last year at the heaverrings with -- hearings with barney frank. >> i can assure you i don't want under age pokers players. we'll work with you on that. i want to ask the gentleman representing the indian tribes under the proposed legislation that i've introduced, a state that wishes not to allow its citizens not to play poker on the intender on opts out, and we give that options to the tribes, why would that not protect your sovereignty? if you don't want your citizens in the indian nations to play, all you have to do is send a

letter to the secretary of commerce that you don't want them to play. >> i'm sorry, restate that question, sir. >> well, we respect sovereignty and respect state sovereignty and the indian nation sovereignty, so the bill introduced gives the governor of the state, i have to check what it does for the indian tribes, but gives the chief and tribal counsel the same right we give the governor. if you don't want citizens within your boundaries play poker for money on the internet, opt out so they can't play. we treat the indian tribes like the states. that seems fair to me. on the other hand, if you think it's fair for them to play, you play by the rules everybody else plays by in terms of regulating poker players for money on the

interpret. that seems to me to be a very fair position. we're not anti-indian or pro-indian. we're fair to all concerned. >> i think, you know, in the states on behalf of the tribes, i think that covers it, but if we want to be recognized as tribal governments appropriately under the law. >> that's beyond the scope of the poker bill, i think. i play poker at indian casino in oklahoma, so i'm with you, and i'm 132ndcher key, so i'm 132ndwith you there on that. [laughter] >> well, sure, i'm a full blood from wisconsin who used to engage in new york state and, you know, under the jay treaty,

we're encouraged to do commerce to the just with other indian tribes, but other regions and across into our friends in the first nations from canada. >> they may be larger than the scope of this bill, but we're not trying to treat indian tribes for poker playing any differently than anybody else. senator, do you think there's any technical issues in terms of addressing andrew age poker players in this situation. we have the technology now, mr. congressman, to deal certainly with underage, certainly with problem gamblers when there's nothing now restraining them. there's no impact, no one out there looking, and we can build into the system the kind of program that can identify, or they can be placed on the list, where they will not be allowed then if they go over a certain amount of money to participate.

is this going to solve all the problems? no, but eliminatings and curtails what's taking place now. no protection for the kids or problem gamblers. >> my time expired, but before i yield back, this issue of the bots, these mechanical or automatic players, whatever needs to be done to prohibit that and outlaw it, if you've got proposed language, if you give it to the committee staff, we absolutely don't want to set up a system where somebody in this audience can play poker online for money if their governor says it's okay and play against the computer. that's not what we're trying to do. if you have a program to prevent it or lang to prohibit it, we'll look at it. with that, i yield back. >> i thank the gentleman, and the chair recognizes mr. lance for five minutes. >> thank you, madam chair, and

good morning to you all. this subject interests me greatly. last term on the financial services committee, and this term on the energy and commerce committee. luois could not be here today, madam chair, and he has a statement that states in part or addressing a growing threat that can mutate as rapidly as illegal interpret base gambling outside of the country that's challenging in and of itself of federal law enforcement, but online poker stands apart because it's a game that millions of americans play at home with friends and family or even a charity fundraisers. unlike most games, it's played against other players rather than against the house relying on a set of practiced skills. unlike most other games, it's not defined as illegal in other statutes clarifying an opportunity to establish a

strict and transparent regulatory regime for online pokers allowing adult consumers to play safely and securely while ensuring accountability to tax and law enforcement authorities. madam chair, i would request unanimous consent to introduce mr. freed's statement into the record. >> without objection, so ordered. >> thank you very much, madam chair. ms. aftab referenced a wonderful story from sparrow from harvard titled "can internet gambling be effectively regulated managing the risks?" while i ask the whole study is not placed into record, but i read an important part that notwithstanding the current regulatory approach, millions of u.s. residents gamble online through offshore gambling sites. the establishment of a well regulated industry under u.s.

jurisdiction offers far better protection against online social harms than outright prohibition. that's my considered view, and certainly those interested in reviewing the full study can contact my office or i'm sure ms. aftab. to mr. stevens, good morning to you, and sir, i respect your opinions, and i recognize your sovereignty and honor your sovereignty. you mentioned tribes should not be subject to tax or third party regulation based on sovereign status. i republic the status of indian tribes, but isn't it true tribes and games in other businesses can make a sovereign decision to do business in the 50 states outside of their reservation lands and subject themselves to state and federal regulation? for example, licensed in pennsylvania and located in connecticut, and the florida

seminals purchased hard rock. if gaming is expanded beyond the borders of the reservation through the internet, isn't it inevitable they have to summit to some regulation other than that of their own tribal governments? you know, and i think our -- >> you know, our establishments is ready to deal with this. sovereign governments doing business from their sovereign territories are different than areas where they branched out and again, appropriately engaged in other endeavors to benefit our future. >> some push the idea of regular -- regulating internet gaming at the state level. i think that this mights mean a challenge for tribes in small states, in poker, for example, where you need a critical mass of players to operate a site,

how could a tribe in south dakota or even connecticut hope to participate? it seems to me this benefits a small number of tribes in california and the other larger states. >> yeah, i think that we're -- i think that we try to analyze tribes that work through coalition and coalitions working within their state organizations, and so we've yielded to the state tribal authorities to handle those types of situations. >> thank you for your response, and timely, and my time is about to expire, it's an honor to be in the same room as the senator, and i was righting for his election as a student in princeton in 1980, and i wagered $10 you'd win, and another $10 that you would win the general election. this was not on the interpret

because, of course, it was not -- >> you should have gotten gooded odds. [laughter] >> i was confident in your public service, sir. >> i thank the gentleman and now recognize mr. harper for five minutes. >> thank you, madam chair, and i welcome each of you here today and appreciate you taking time out of your schedule, and it's been interesting to hear the input from each of you and the concerns that are well-noted about what do you about reducing or preventing the possibility of problem gamblers. that's something we'd all agree that's there's certainly people that should not gamble. there's some that gamble that maybe need to have limits on them, and it's one thing with the physical location where you can do that, but to have it online with the anonymity with all the concerns that can go on is that i've not been given any

real comfort here that since it can't be regulated offshore or from illegal sites, how we're going to be able to do that, if this takes what appears to be an interest in another step, so i -- i know we heard different opinions here, some that are trying to decide that the idea of online gambling, legal or illegal gives me great concern. with that, i do thank you for your time here, and i guess one question i'd have for each of you is do any of your organizations receive any money from offshore casinos? does your organization receive any funds or contributions from offshore casinos? i'll start with ms. aftab. >> fair play does not accept

money from offline casino, and if i could address for a moment unlike other as pelgts of the internet where you look for anonymity, but with online gambling, you have to look for verification of identification, and given your expertise, you can track gamblers and allow them to have programs to protect them. fair play usa does not accept money, to my knowledge, from anyone offshore. >> not to my knowledge, sir. >> we have received a donation from companies that operate goaf shore. there's no restrictions, but, yes, we have received some money. >> how many different entities 1234 >> i think just one. we have a long tradition of encouraging that anybody that operates gambling should contribute to responsible gambling. we accept no restrictions on any money from my source, especially from the gaming industry. >> but you have received funds

from gore shore sources? >> yes. >> okay. >> senator? >> yes, we have, but i note, though, we encourage in this legislation so that we will permit on shore activities, and we say it should not be just offshore. >> okay. >> and to your question, congressman, as it relates to being able to ensure the age, right now there's nothing that restricts youngsters basically and requires age identification. we say we have the technology that's developed used today in banking, online banking, as it relates to the kinds of proofs necessary for people to conduct banking activities, and it's that same process that we utilize here. >> thank you. professor eggert? >> i work for chaplain university, i don't know who their donors are, but i hope

there's many. [laughter] >> so, the public policy center does not accept money from any commercial -- >> okay. i thank each of you, and it's important to know where we are on this, but it's not appearing to me that there's any real steps taken that are being used to block -- perhaps a way to deal with the offshore or the illegal coscene knows -- casinos is to have ways to block payment to those sites. that's something i think we can develop more, but we have some that have argued that we should develop legalized online gambling in this country much the same way we heard others argue that we should legalize certain drugs, so i think, you know, this is something i think we need much more to look at. i'm not confident at all that we have the tools in place to do

what we need to do. this -- here's -- the question in looking back and preparing for this, and this senator alan, i know the attorney in new york looked to full tilt poker as a global ponzi scheme, and then there's apparently thousands of online poker players out about $300 million, ultimate bet, another organization that i believe you represent. do -- does poker players alliance receive dues or contributions from either full tilt poker or ultimate bets? >> no, no, we don't, and, again, congressman, i don't mean to beat a dead horse to death that's already killed, but the one way to deal with full tilt and people like that who have

taken advantage to the system is to provide a tough, strong, enforceable licensing bill, and i mean, tough. there should be a requirement as there has been for poker stars. i mentioned them because they are the largest offshore. where those dollars are segregated and placed in a special account so that these kinds of things can't take place, had we had legislation, we could have prevented players from being taken advantage of, and that's why it cries out for regulation. >> and senator, with all do respect, perhaps it's better not to go down the road to protect people against offshore site. i yield back. >> thank you, all, for being here. i will have to admit this is a fiesy debate, and a wonderful

conversation, and i think many of our members are like me. we've got friends for it and friends. against it, and it's good to have you all here and listen to what you have to say. mr. whyte, i want to come to you, and senator, i'm glad the two of you are sitting there in the center, kind of like the debates, two people i want to talk to right in the middle. mr. whyte, you said you didn't think that having online poker would expand the use, and that's curious to me. i'd like for you to talk about what -- if there ising? -- if there is something in the american culture that's different about our addictive behavior, and then i would like to know if it's not going to increase participation, then why

are entities so anxious to offer online gambling? mr. whyte first. >> thank you very much. that is a great question. it does seem that right now that the participation in poker's generally very low. you know, whether or not legalization would dray gnatically -- dramatically increase that is an open question. in the u.k., for example, it has not other than young men who show in rep cation surveys in the united kingdom more capacity to gamble online. >> okay. let me interrupt you there, and senator, i want you to weigh in on this. you mentioned the u.k., so what are the successes of the european jurisdictions that have licensed and regulate interpret gambling, and what are the mistakes, so the lessons learned basically? >> sure, the lessons we take away is you have to have a balanced approach with both regulation and public health

protections. in a country like the u.k., there's a social welfare, a health system to make sure if people do get into trouble, they have resources to go. >> there's a safety net? >> yes, ma'am. >> senator? >> i think mr. whyte touched on it. number of one, we can and should provide revenues, and i think $50 million that he's mentioned that should be there to treat youngsters, to treat addict the people, -- addicted people, to deal with their problem easily could be made available with the revenues that would be generated from online poker players. robust verification, we can do that today so that we know who it is that's playing, and we can keep that youngster off. we learned that. seeing to it that funds are utilized and segregated as they have in europe to keep the kind of thing that full tilt engaged

in where they took moneys that belonged to the players and districted them -- distributed them out so there are those things that we have learned that they have done well, and we can expand upon them. we can build upon them and bring those protections here. >> if i may interrupt you there with the one and a half minutes left, and i want to start with ms. aftab and work down, i want each of you to answer. looking at brick and moe tar gambling and the rules that apply, should those same rules and regulations apply in the online sense and should those two be paired up and just one right after the other. >> yes, plus more. because of the nature of the technology, we can do more with awe thept cation, -- authentication, controls, so at least that much. >> yes, we believe now two

completely different forms of gaming, and we are working on that, the regulators. >> okay. mr. whyte? >> yes, but more. >> senator? >> i think there's the opportunity to be more vigilant, relates to technology, who the people are, ect., it's easier to do. >> okay. >> you need more in the internet sense especially given the problem of bots which you just can't ban, and if that's not dealt with, the internet poker is going to have huge problems. >> okay. doctor? >> yeah, i think i mentioned some thoughts about how you can put things online that ewe typically would not have in a casino, a clock, wins, losses, that thing that reminds people they are going over their limit. >> thank you. my time expiredded. i yield back. thank you. >> i thank you, and the chair recognizes mr. sterns for five minutes. >> thank you, madam chair.

mr. whyte, is internet gambling allowed for blackjack, poker, roulette, and other things in europe? in the european union? >> it depends on the state. regulation is quite broad, but in general there's poker and sports gambling, and sports gambling in particular is a big driver of the internet in europe. >> but they also have poker? >> yes, yes, sir. >> if i go to the 27 countries in the european union, do all of them have poker? >> the law is complex. they are trying to harmonize that now. it's not my understanding that poker's universally available. >> is blackjack? >> i believe there's that's far less vail. >> what about roulette or slot machines? >> they certainly exist in the legalized regulated frame work in the e.u., and always the second tier of other websites

that flow regardless of legality. .. guinn they may be holding jobs, there are many other ways they are authenticated. >> how would you authenticate in this case if we meet poker

legal? >> i would set a goal and it is the authenticate they are 21 and older using the best methods available at that time as opposed to walking into a technology that's improving. >> so the voter i.d.? >> you may use a variety come home ownership, rental records. >> who would keep that and fairer fight? >> there be a third party verification system built in and required at least the standards that are applied, and the benefit of this is once you get the professionals who have a financial stake in this you are going to get the best practices and the best you can get because they don't want kids on their. >> just like the of e-verify program that took a long time to get that working and in some cases it hasn't been accurate you have confidence we could set up a third party verification for children? >> not for children, of the adults absolutely and there is a

large federal -- >> for 17 or 19-year-olds working -- we know that there 17 so we would require whatever technology of the time would let us know that that person has been verified being 21 and older not just a credit card. this is something far more than would require several levels of authentication that this person is 21 or older and there are a lot of those technologies out here now and the federal government is now looking at in addition to congress we are seeing in the white house and other departments that are looking at vinification authentication methods to identify who people are and where they are from. >> i understand that you can't do an internet gambling because we passed law in congress but is event nevado they are doing it on blackberrys that you can right now gamble intrastate and in other words if i mnf that they can't i gamble off my blackberry?

>> this search it's called remote gambling. it's almost a wireless form of gambling. >> since you can't use your credit card, you can't use deposits coming you can't use money transfer -- >> it's a little bit, think of it like off-track betting or even more so you have your telephone account for states this is the same sort of system where it's regulated within the state your property but you were able to use a wireless device to access your account from within the property. >> how do the authorities in nevada protect children from picking up their parents blackberry and gamble? >> it's a specific custom devices available and treated almost like a gaming device. >> unless the parents have the device on the dining room table, but she indicated is the lead in the vacation program do they have that in place?

>> i'm not an expert on this but -- >> used with enforcement and prevention. >> to my knowledge they do not have an age verification system which is one of the reasons we need this. we have a problem that i believe only you can salt because there's nothing out there now there are no systems are best practices, there is no baseline to keep kids off to help parents with this to deal with senior citizens and helping law enforcement do with the need to do. right now there is nothing. we need to do something and with due respect when we are looking at ways to control what money is being spent that is what it is all about coming and unfortunately on less busy we kids can get enough of these issues a lot of people are trying to gamble and pretend they buy towels and they are able to use a financial system to do this. -- before madame chair. >> i now recognize dr. cassidy for five minutes. >> may i begin by wishing madam

chair a happy 29th birthday. [laughter] >> i thank the chair very much. >> mr. whyte, did i hear you say that you don't think if the law passes that there would be an increase in internet gambling in the united states? >> offices hooley significant increase. >> i have to wonder why the google ads are purchased i was looking at the minnesota vikings versus the football team and all of a sudden on the sidebar i have all sorts of things about minnesota, did i want to get vacation, and i want to do this or that, now why is somebody buying that, number one, and number two, my intuition i think you're wrong there's a large settlement recently on which google is paying the federal government for running advertisements for overseas pharmacies so that tells me somebody thought google was an effective enough advertiser to purchase the overseas pharmacies. why would that not yield a significant increase in gambling? >> certainly we may very well be

wrong and i think that's one of the reasons we are calling certainly for the health based research because it is very unclear but the experience and other jurisdictions seemed to suggest that the people that campbell online and what are already doing so regardless but certainly, yes we have great concerns. >> because i have limited time i think i know from my medical training that accounting has a blue law it still has alcohol but few were drinkers and therefore fewer alcoholics. in fact this is a blue law, correct? >> yes, sir. >> ms. aftab, do we have data on the prevalence of underage gambling in the countryside don't know i'm asking i'm not advocating more challenging prevalence of underage gambling in jurisdictions in which they do require the sort of verification that you're describing. >> it's in the report we put

together the doctor to the extent that entered into the record we have it there. there's certain countries particularly in the u.k. that have looked at the case of locking kids out by requiring the age verification systems that work and they have been very effective. so it's out there and it's getting better by the minute. >> mr. eggert, i like your testimony. i kept reading your testimony thinking if we could restrict any sort of super bot were kid from gaming the system we can not. there's granted be some kid that's going to be typing in and the body is going to be tied in with all the cards so even if not resident on the computer access in the internet this is nonetheless telling them what bet to place, reasonably speaking is there any way to restrict data or super bots to

play etc? >> the rethinking american gambling association addresses that question and in the text of the paper it says we can ban bots but if you look there's a footnote that says if somebody is using a bot so they aren't playing that if somebody is playing with the bot giving them gets to place there is no way to prevent somebody from having bot on one computer telling them what to play on another computer. and so, this is a huge problem for the industry, in the extent legal or illegal in that recreational gamblers don't want to go on the poker site and get killed by somebody using a bot and that's going to happen more and more as the bots get smarter and smarter. this international competition to design the best poker playing bot and deer doing a good job and they are just going to get better and better until they can beat anybody in this room or --

>> and joe barton? >> evin him. >> once we put in that this is an okay activity and therefore google runs a sidebar when i say i'm going to visit nevada to see yucca mountain and instead i have a lot of places to go gamble how would you address what mr. eggert spoke of how they are going to be basically ripping people off legally? >> right now you have card counters. simic but the house watches for those. >> but the online sites if they are done correctly can watch for a lot of that. >> if i redesigning i would get it so it would win only 90% of the time and sold on a full house. spec once you're dealing with the full authentication it allows you to start tracking

patterns and what will happen part of what we are doing now on the homeland security garate we start sharing the information on where the problem occurred with other companies across so you can improve your skills. >> before we pass the bill to we need to have the legislation to allow that data sharing? >> title the genie permissive legislation. i think it's a matter of the privacy policies say and what the expectations are and if you say that it scrubbed certain things you are looking at people violating the law or the term i think it could be done with privacy policies. >> a lot of times i love mr. eggert's above the on that but i yield back. >> with the gentleman yield? >> we will have a second round of questions if we can do it through that means. with that i'm happy to recognize myself for five minutes. >> let me just say as i listen to the testimony i am reminded a lot about what we saw with the

content industry music and film and television that we are boiled over by yet not exclusive to the content and if we're going to do that we have to look at the indian country. senator d'amato to you take any issue with the principle that financed by mr. stevens on behalf of the national gaming association? more specifically do you agree the government should be allowed early entrance and work with exclusivity and do you agree that the internet operations should be open to customers wherever legal? >> mechem chair i think we want a competitive marketplace for everyone, for casinos, indian brothers. the fact of the matter is that doesn't exist today. the fact of the matter is what we have is rogue operators, none

of the legitimate houses are going to go forward and risk the loss of their license etc until or unless we change law so we are going to continue to of all of the problems the we have heard about. they will be exacerbated as it relates to young people and to having a fair game so people have a fair opportunity whether they use the bots or not. there will be no opportunity to control the and we are not going to be able to stop the advertising. they will still advertise on do google. the problem we have now is one that seems to me is very parallel to what we had provision. we know people that overindulge it was terrible. we know the cost of the society was ruinous so with all good intent we passed the act and what happened?

we had the people we didn't want to get into the distribution and sale of alcohol some that was killing people not in the government lost revenue it didn't cut down on all of the problems to the drunken as its data and i would suggest to the or 50 years later well beyond the times to say you shouldn't use the internet for commerce whether you like it or not that's nonsense. did we ever hear about parental responsibility as well? what we tell you there did come a time when the youngsters wanted to play texas hold 'em. why? and became famous because of television. the third most watched sport

first, nfl, then nascar, and then poker on television. are we going to ban that at casinos? the huge surgeon that came in particular -- >> let me jump in here if i might because as you know better than anybody here our problem is as you try to advance technological problems at the same time as legislative hurdles and professor eggert spoke eloquently and think about bots as dr. cassidy and the fear can we actually protect some people is a new version of wild wild west and buyer beware. professor eggert and his testimony talk about artificial intelligence and i feel like i should ask capable of gambling. >> if we do nothing that problem will grow with no opportunity to

interdict, no opportunity of having people who will have the skills and the wherewithal because they want to protect their business. as the professor indicated, one of the things they are going to be looking to do is to reduce that, no system to eliminate but -- >> i don't know if you all can answer and i have 30 seconds left. how you handle something as simple as losing internet service at a hand? >> you're internet service goes out and you are in the middle of a big hand and lose internet connectivity. what happens? >> you know, congressman -- >> if i just flip off my modem to why win? >> i have to tell you this legislation cannot protect

everybody at every time in every instance but it can go a long way to protect people who have no protection at all whether it is the box, the problem gambling, whether it's the youngsters no one can promise 100% certainty when it comes to identification and verification, certainly we should be able to use the most robust technologies that have been developed and will continue to be developed. but there is nothing perfect but this legislation. it will be in perfect but the heck of a lot better than doing nothing. >> thank you. i'm pleased to recognize mr. butterfield. >> thank you. technological advances have allowed manufacturers to create an ever more enticing products but i'm not concerned about the flashing light and funny noises or the games. i'm only interested in the games come attributes or marketing practices that have the potential to mislead and deceive

or confuse. mr. eggert, i think we will try you on this. you discuss slot machines that intentionally give a large number of near misses complete with a counter on the side of the screen letting them know exactly how many they have had. this is a manipulation of consumers that inhibits their ability to understand how the game works and makes it seem easier to win in than it actually is. you may agree or disagree with that but briefly what are the most egregious -- what are the most that examples -- i can't pronounce the word -- bad examples of misleading tactics we should be aware of in the online gambling world? the worst practices that should be carefully monitored work restricted? >> and the online world we have heard about some of the worst practices are online poker sites

not having the money that they've trained the money out of the gambler's try to get the money out they can that's a very bad practice. another bad practice is insiders been able to see the cards of their opponent so that they can win a much more easily because they know what they're playing. that's another bad thing. but another really bad thing is not being able to tell what the whole percentage of a slot machine you are playing is. i think it's an important thing for any player is to say in my going to lose on average 2% which is a good machine or am i going to lose 15% which is a much more expensive and much worse machine? that is an incredibly bad practice, and it exists in internet slots and land-based slots and that's something that should be addressed as an important part of consumer protection. >> what kind of expertise should and forcing agencies have in order to keep up with the

misleading of the tactics of an industry? >> that's an interesting question. i do love of work in the financial services committee, and regulators are doing a better job now of experimenting to see what consumers understand and don't understand, and so what we should have is a regulatory agency that focuses on consumer protection and tries to figure out what do consumers, what can they understand as far as disclosure, what do they want, what information do they want? how much information can they use? linwood assert that we should have a federal regulator that does that kind of investigation to see what works best for gambling consumers? >> can you tell me how they describe their games when they do it in writing to the consumers? >> typically for slot machines they say that they are either

loose or looser were the loosest but often they don't give much detail as to what that means. >> is there room for improvement? >> there is incredible room for improvement. >> what about misleading tactics or deception by other players for a sample with a poker game is infiltrated by predatory professional players or algorithm but then would bots that are impossible to beat in a case like this as an in power and knowledgeable consumer even he not? >> the problem consumers have this the often don't know if they are playing against somebody using a computer system to help drive to the game so you might have a 21-year-old playing their first game of poker online facing somebody with the computer algorithm is a top

poker player. it would be as if you go to the neighborhood to have a pickup game and unbeknownst to you you're playing against an nba player. i think the solution to this, i don't think you can prevent people from misusing bots because i think it is just impossible. for me the solution would be to have a rating system whereby if you want to play against people know whether they are good or bad and nobody has a reading light in the chess world better players have higher ratings and the worst players have worse live ratings. if a plea against somebody with a thousand point higher rating than the i going to get beat but it might be fun. the same should happen in the gambling world if you go on-line playing poker and have a 1400 reading playing against somebody with a 2100 reading most likely they are going to beat you but you might learn something. the chair recognizes mr. barton for five minutes.

>> thank you madame chairwoman. i was going to leave and then we were told we were going to have a second round so i decided to stick around but my stomach is starting to grow so let's not have three rounds even though i asked for the hearing. i want to refocus. we are kind of letting the tail wag the dog. we are having a hearing whether it is acceptable, appropriate to allow those citizens of the united states that live in the states of the states want them to play poker for the money on one to do so and we are getting into some pretty esoteric areas about underage and problem gambling, and now we are into this issue of computer gamblers. i would acknowledge that it's technically possible to setup some elaborate scheme using these computer bots against people, but we can't always

guarantee that somebody is live body of the table, right, even if they have a computer? that is doable, and if you have that, you know, you're not going to set up in a moderate computer scheme to play in a 1 cent, to send online poker game. there's not enough money. and the higher you go in these games -- i've never played money online. i've played poker online and i've got ten or $15 million of placing money but that and 75 cents gets you a coke. it just doesn't help you lot. but when i look at the for money sites, most of them are less than $100. you can get 1,000, to toss and, so anybody with any sense at all to use your term, professor, is a recreational poker player you

are going to be an absolute idiot to go online and get into a high dollar poker game. you just go into the game knowing that it reveals that the table was really good, and unless you are an heir to the rockefeller family or the pro-family or bill gates or somebody like that, you don't in your wildest dreams want to be playing poker in that game you just don't want to do it. so, if we can verify that they are adults and maybe even require people to stipulate they are not using computer ability when they play even though they can sheet if you cheat you can catch them to you agree with that, professor? >> i don't think you can catch

poker players who are using a computer to guide them. i think as long as they make sure that they don't win too often that they screwup once in awhile that they can fly a under the radar and make good money. you don't have to be paying 300-dollar games, 300-dollar bets and make a decent living. if people can make 60, $100,000 playing professional poker with bots. >> all of the information in your written testimony about data and manipulation and fiscal analysis i can get myself right now if i want to take the time to do it. doesn't mean by a understand it or that will benefit by it but i have the ability if i want to really find out what's out there i can do that without much trouble. that information is fairly transparent.

we want to prevent somebody from using it on fairly and in the real world situation when you walk into a casino you can't take a pocket computer with you. you can't have somebody behind you saying the public on the sand as 32% and that one over there has a pocket ase or whatever you've got to know it. on the computer you can get access to it but there should be ways to verify with a current technology if somebody is beating the system we can outlaw them and put penalties into the bill that if i use computer analysis routinely i can be banned from that site and be penalized and if the committee wants to we can throw them in jail. so, i mean, that's not a reason not to do it. it's something we need to work

on and something we need to be aware of, but because some computer whiz kid at mit develops a program that they think can beat the system if we are aware that they have cut that program eventually we are going to catch them. do you agree or disagree? >> i agree. i'm sick of the chess world. >> chess is perfect knowledge. everybody knows where the pieces are. when i sit down at a poker table i know why cards and the cards on the table, and if i'm really, really smart, i might be able to infer what senator d'amato has and what you have based on the way i did but i don't have perfect knowledge. it's a game of skill and bluffing and probability of reading people, but it's not poker knowledge. this isn't chess. >> if you have a poker program that plays as well as some of the best in the world come and i

use it, how do you tell if ibm -- everybody at the table was going to know that. the people that are monitoring if it is legalized and regulated they are going to know it and you are going to be paying. >> how would you distinguish between me and a good player who isn't using the program? >> i would talk to you about 15 minutes on the phone to find the regulator and as if the basic question. i kind of quick what kind of a poker player you are i could do that now actually. >> i think that -- >> i yield back. >> i thank the gentleman and recognize mr. can venture for five minutes. >> thank you madam chair putting this on. just a few questions to start with ms. aftab, let's talk of the offshore gambling industry i

apologize if he's been asked already but specifically where is most of it located at, what kind of gambling for the most part is occurring on the offshore sites and what kind of protections to these offshore sites have for players and miners? if you want to talk in general about it and then we will go from there. >> thank you for a much. i hate to keep referring to the report from the kennedy center but it does address these things. of sure we are dealing with sites that are legal under the jurisdiction where they are regulated to the u.k. is one of the different for interest actions have regulatory schemes that allow online gambling the checks and balances and then the majority of the sites we are seeing are on a regulated in places that have no regulation were no checks and balances. so, when you are looking at a well regulated scheme, they keep

kids out by requiring adel to verification and the syndication. they have trust systems that money needs to be put into the accounts so that a payment is made. on the winning when they have checks and balances on money laundering to know who they are deal with and you are seeing patterns of behavior they are using artificial intelligence, semantic web the representative barton was talking about in his perspective. the good side of the d'amato team to look a certain patterns of behavior. they have audits of who is employed, where the money came from. estimate that we are talking about the sites right now, correct? >> the regulated sites as opposed to the others that may be run by a terrorist organizations or by underworld criminal activity. they could be run by somebody out of their garage. you don't know, and everyone -- you don't know who's the dog on

the internet and it's hard to figure out. so there are ways of doing this. and i think what we need to do is cherry pick the best we see out there and then americanize it and make it even better. >> on the regulated sites, basically if really if anything -- anything can go. you could have 12-year-olds, stephen buell of collusion of gamblers, you are going to have people who aren't paying, they are taking your money and it's not even real, anything that can possibly go wrong does go wrong. >> to we have any idea approximately how much american money is being done on the sites? >> the numbers are huge. the r4 to $6 billion a year of u.s. gambling as the estimate that we are seeing offshore. that's a lot of money that people are spending not in the united states maybe they shouldn't be spending it and they aren't spending and fairly so that is money that can be brought back here and help us and to be done better. >> ultimately if it is on

regulated is almost impossible to put them out of business. consumers don't know where to go because of the things they're doing is illegal because the gambling online and they are skimmed their fair to call the police because they think they might be arrested so we are finding consumers who have no place to go, no recourse in law enforcement that doesn't know what to do or how to do it effectively. >> one more question for you, too. operator fraud and theft from players, you touch on that with these companies has any of this happened in the company's regulated in the e.u. member states? have you seen that or is that on the unregulated sides? >> every once in awhile you'll see somebody in a scheme that is violating law and the police those very carefully. and that is the difference. people who always break the law but if you have them in place a law enforcement skills and tools are there then you can put them out of business. >> that's all i have come into

for your patience and i yield back. you are recognized for five minutes. >> there are so many things going through my mind as we listen to the different witnesses and the input on this you know right now if we have offshore online internet casinos with that we want to call them and they are receiving funds illegally from u.s. citizens do you support, would you support legislation that would say that those companies that are knowingly right now violating the law that would ban them from ever opening up and being a part of legal u.s. internet gambling? >> i will answer for myself but not from fair play usa or with the answer is and if you violate

the law you shouldn't be able to engage in a license deregulated in the same way you couldn't open a casino brick and mortar you shouldn't people to do this either. >> mr. stevens. >> we would be supportive, absolutely. >> mr. whyte? >> we are neutral on the gambling. so we had no opinion on that. >> then i will last you personally. >> personally -- >> do you have an opinion personally as to whether or not a company that has been conducting technically illegal activity offshore is going to want to come in and be licensed to do this in the united states. >> if they are breaking the law it certainly seems they would be unaffected in the general gaming statute if we have. >> senator d'amato. >> shouldn't be delighted to have a license.

>> if the company has been intentionally violate the law i don't see them as if it gambling operator here. >> i think there's been some agreement with these companies to acquire the taxes and so forth that might work. >> they are not really violating the law. that is a very real question. and indeed i think the court the fifth circuit indicated that the lawyer act which really creates the violation hasn't been violated as it relates to playing poker or that act was inquired for the sports gambling so there's a legal distinction. some are still battling that out

having gone up to the supreme court and that is the highest ruling today. >> certainly i'm aware of that conflict that's there. professor eggert, if i can read a will something and get your thoughts on that, in 2007, jeff schmidt, the ceo of office the provider of the security and related products testified before the committee. mr. schmidt certainly recognizes an expert on these issues on online identification and authentication. in his testimony, he stated, and i quote, ag verification and determination of the geographical location certainly cannot be done reliably over the internet, and i would ask has technology changed and improved to the point where that is drastically changed since 07, and do you agree with mr. schmidt's assertion regarding the location verification?

>> that is a good question. i'm not sure why the proper person to answer that because i haven't really studied age verification and internet search. i wouldn't want to hazard an opinion without doing more reading on that. >> and i know that you would agree that it has changed or improved, would you not? >> it's changing radically and very quickly and all of us are not carrying around devices with gps all the time. so it has changed greatly. and as i was part of the task force that says you can't authenticate kids but you can authenticate adults that needs to be asked in the right way and we ask the age certification of adults. >> can a person still not sell their information were share that? >> you could if you are using biometrics along with it that would require your when you maldon you are authenticated as you and that has been verified in some some regimen that has

been improved i think we can really get there and we are getting their across-the-board on a lot of other areas. >> if we legalize internet gambling in the united states they will be obviously cost associated with that. >> what would prevent someone from saying it cost me more to use what the legal internet gambling here i still want to go offshore what's going to prevent them from still doing what they're doing now. >> now you are going to have a lot of big players in the set. everybody is out side of the sense that when you get a lot of the players that know what you're doing and the technology and the patterns that plea and understand all of these who now have a vested stake in size they can turn around and blow the whistle on everybody else and helped you get the ones who are the of lawyers because they are competing unfairly. >> thank you. dr. cassidy for five minutes. >> mr. whyte, as i think about we have a subset of people but

we accept what you said earlier not just to challenge but to learn you are not significantly increased the risk there is a possibility to those that do gamble will significantly increase their gambling we estimate absolutely. we cover that in the written statement. i learned when gambling was introduced in louisianan the problem gambling increased dramatically as well lasted theft from businesses as people financed their habit if you will have you learned in the jurisdictions that legalized and track gambling that problem gambling increases and the incidence of the theft associate to with such increases. as befits a good question. in the jurisdictions we've looked at today without exception the rate of problem gambling has not exploded. it's not exploded in proportion to the -- >> it's in the subject of term. >> there are subtle increases in

the severity of problems and the special groups look for simple young men. they tend to be of the internet gambling. so i think in the extent what is the same there are at risk groups that when the gambling is made legalized more accessible, more available and acceptable they may shift in their patterns of gaming. >> the 20% of the definite can you give me a percentage that says chris of jurisdiction would see a five to 20% increase? >> no, sir, we have not seen that. >> do you have a percentage? >> i'm making it a number. >> and the united states, roughly from .5% to around one per cent of the last 30 years. >> that's a large percentage increase. >> my local va told me that the associated with increased significantly now not a definite number after gambling was legalized the amount of fat is so much of a problem that it's

absolutely 60% of the problem gamblers will commit white collar crime to finance their gambling and as the higher stake forms are available they may be driven to more severe become more severe crimes because they're chasing more and more money. >> let me ask dr. romer and mr. eggert first to mr. eggert if i did say that my goal is to limit the amount problem gambling to limit the number of adolescents to enter into the lifestyle which is destructive but to allow people like mr. bork that you will to pursue his tough time do you think that this legislation is a positive in terms of pursuing that goal or do you think it is ? >> i consumer protection expert. i think that there are good things about internet gambling where you can put harmonization strategies i don't think that

there's a good study out there that shows there's a net benefit to this chemical about consumer protection committee to the legislation is a negative or positive for the consumer protection? >> i haven't seen any legislation yet that has like consider strong consumer protection i think if we had legislation with strong consumer protection that could be a net positive. >> would they allow it to be increased consumer protection you are not convinced of. some folks in hearing said just legalize and the legalization from the consumer protection. >> i think you have to build in the strong. >> again let me ask you do you think the legislation in particular i gather from your testimony this legislation was some would be beneficial in terms of the problem of adolescent gambling.

to respect it would put in place the kind suggested because the internet is a place where you can alert people to the problems while they are gambling you can cut them off and we could also examine the law for the bill that is proposed suggests we can make public the records of the gambling companies so we can see are they making disproportionate profits. stomach to go back to mr. eggert's comments he wants to see that on the front end of not retrofited on the back and do you think such legislation would have that sort of transparency built in on the front end? >> i think consumers ought to know what their chances are of winning on a particular site and if it's difficult they ought to know that. they ought to know the odds. >> okay, so i don't -- i haven't read this legislation so chronically. >> you may not be an attorney, i hope you're not. >> we would have no problem supporting legislation in clearly called for the kind of thing that eggert suggested that

is to be identified what percentage does the house keep if this three per cent, 2%, what ever it is no problem in establishing that and that's great consumer protection and putting it out there before the poll that it's not a slot but before the deal the cards. >> i'm out of time i yield back. i would like to think the panel very much for being here today. you've been very gracious with your time and helpful and enlightening with your answers and i look forward to answering with all of you again as we continue to explore the issue of internet gambling as the trend of the subcommittee that me be clear but two things first we are going to be thrown in examining a wide range of issues related to internet gambling before coming to any conclusions and second at the end of the day we are going to be doing what is best for american consumers. i remind members to have ten business days to submit questions for the record and ask

the witness is to please respond promptly to any questions they might receive. the hearing is now adjourned. >> [inaudible conversations]

[inaudible conversations]

european heads of state leave tomorrow in brussels for a summit on the debt crisis that hit greece and threatens other

european economies including spain, portugal and italy the house financial-services committee looked at the european debt crisis in the hearing today witnesses from the treasury department, u.s. chamber of commerce and the brookings institution discuss the role of the u.s. government and the imf and the implications for the u.s. economy. this is two hours. >> the hearing will come to order. on the debt crisis and a petition to the united states. o i asked dennis consent thatorde. the mr. lynch of massachusetts and mr. green of texas both of whom are members of the financial service committee be permitted to sit down with members of thee peitommittee today for the purpose of delivering a statement hearing testimony and purp ofn the witnesses today. we look at the opening statements to ten minutes each side based on the agreement with the ranking member and recognizh myself as much time as i might consume.e melf today's youth focus on the crisis and the potential impact on the u.s. economy. despite the financial systems db provided by the european and

potential impact on the u.s. economy. despite the financial assistance provided by the european union, eu, international monetary fund, imf, greece, ireland, portugal have plunged into deeper crisis. the german and french economies are showing signs of strain. in the past year there's been a series of credit rating downgrades from many eu members often following the rounds of stress tests on systemically important european banks. these rating agencies have warned about the risk associated with a global interconnectiveness of european banks and potential risk of investing heavily in government bonds. the eu must take bold and aggressive action to ensure that crisis is addressed and contagion in the international credit markets is prevented. they hope to arrive at an agreement on how to address the worsening debt crisis. over the weekend work was done to come to an agreement.

finalization of a plan to resolve the crisis on sunday but it changed to wednesday. we hope things will be finalized tomorrow so europe will be on path to recovery as swiftly as possible and will consider impact of crisis in europe on the united states. while the solutions to euro zone crisis must be a european one, the u.s. is not insulated from the problems in europe. the euro zone debt crisis has significant implications for the u.s. economy. u.s. economy is highly dependent on trade with the eu and will suffer if our largest trading partner cannot fix the economy. our nick relationship with europe is significant and exceeds $4 trillion. more than 20% of goods are exported to europe totalling more than $400 billion. 35% of u.s. service exports are to europe. 70% of foreign direct investment fdi in the united states is from europe. this is a result of jobs for u.s. workers and it's a very important one. if the crisis leads to slower

growth in the euro zone and general weakening of the euro against the dollar over the long-term, this could have a severe impact on trade by depressing demand for u.s. exports. in addition the market is interconnected and lack of market confidence can become contagion. we have seen the impact on u.s. stock prices and are concerned about exposure to the crisis. there's no question that it will be a u.s. consequence to further decline in the euro zone. it is our interest that there be a swift and effective resolution to the crisis in europe. stability in the euro zone is very important to u.s. economic interest and we should play constructive role where appropriate. as we look at this issue we need to be concerned about the u.s. exposure to foreign sovereign debt in europe. we must ensure that u.s. government is not using taxpayer money to bail out foreign governments or bank institutions. as taxpayers should not be on the hook for failure of foreign governance. today's hearing is focused on

european policy options under consideration for containing the crisis. the impact of problems related to job growth in the u.s. our first witness from the treasury department will shed light on the role of the u.s. as played in the european policy deliberations and they contemplate to reduce uncertainties in europe. given the administration's involvement in talks in brussels, the oversight role is important. we want to know who the u.s. is meeting with and what is coming out of these meetings. we want to know what kind of commitments the administration is making during these meetings. in addition we are concerned about the impact of any commitment on u.s. taxpayers. overall i hope this hearing sheds some light for members on what the appropriate u.s. role should be during the crisis and how to protect u.s. taxpayers from exposure. our second panel of witnesses will help members understand how instability in europe can affect the u.s. economy and

transatlantic trade. we want to understand the implications of the u.s. economy particularly with respect to exposure of u.s. banks and nonbank entities like hedge funds. we want to understand impact of u.s. companies regarding their exports. we're concerned about the impact on jobs in this country and the risk this poses to our own economic prosperity. given the significant economic and financial relationship between the united states and europe, u.s. had a substantial stake in the resolution of this crisis. how europe manages this issues will affect the united states economy. this crisis poses a significant threat to global economic recovery overall. again, i want to be clear that this is a european problem that must be solved by europe. there's no question our economy will be impacted by success or failure of the measure to resolve the crisis which is why the committee will follow progress on europe closely. we must work to insulate u.s. taxpayers by ensuring that u.s.

funds are not on the hook for any resolution measures. we must work to insulate our own economy given our trade and financial markets interconnectiveness with europe. i want to thank the witness for being here today and for being able to present a good and honest forthright testimony of what's going on. i yield to the ranking member for three minutes. >> thank you, chairman miller, for holding this important matter to examine the crisis and what potential impact could be for the united states. the global financial crisis that we are continuing to recover from set the backdrop for what's become unsustainable debt levels and unsustainable financial positioning for a number of euro zone countries. what has become the euro zone crisis first started with solvency debt crisis in greece in early 2010. fear and concern over potential fall of greece and how that could spread to other countries set in across european and u.s. markets. european leaders responded to

the situation in greece followed by ireland and portugal through a mix of financial assistance through a newly created crisis fund and several sending reductions. the policy responders thus far have been viewed by many in the international community as far too short. long-term solutions are necessary to address slow economical growth, lack of investment confidence and undercapitalized banking systems. if europe cannot contain the crisis given our strong economic relationship with the european union, it could pose a significant risk to our economical recovery efforts. the president and the administration officials have been consulting with their european counterparts encouraging bold and aggressive action to stifle potential spread to other countries and the international markets. as we await the details of final agreement by the european leaders, media sources report solutions may include a

leveraged european facility and new financial instruments for the international monetary fund. i look forward to hearing our witnesses today as we examine the impact that european economic problems may have on our own efforts on economic recovery. given the panel's expertise, i'm interested in hearing thoughts on what the european crisis strategy should be and ultimately how they pursue economic recovery. with that i yield back my time. >> can i ask for four minutes for an opening statement? >> thank you, mr. chairman. i want to thank you for holding this important hearing. i want to thapg our panelists for time and testimony here today. since the end of world war ii, the united states maintained a close and mutually beneficial relationship. they have served many interests. in the process the european union as a whole has become our

largest trading partner with over $4 trillion in annual commercial trade while european union alone accounts for over 20% of all american exports. our financial and capital markets have become highly interconnected with european union's financial and capital markets. the united states has become the largest source of foreign direct investment in europe and europe has become the largest source of foreign direct investment in the united states. as a result european economic conditions necessarily have a meaningful impact on american jobs, exports, and economic prosperity. so as europe goes through these difficult economic problems, the united states has a vital national interest in how these european economic problems are resolved. in europe's solutions don't inspire market confidence or if they impose too many losses on creditors, then american investors and financial institutions will be negatively impacted which will negatively affect american jobs and economic growth.

if europe's solutions don't promote european economic growth, we could see significantly diminished trade with europe which again could negatively impact american jobs and economic growth. meanwhile, according to the bank for international settlements, american financial institutions have over $600 billion of direct and incorrect exposure to the most challenged euro zone countries. so for america's benefit and for europe's benefit, we need to see europe resolve its economic issues as quickly and as effectively as possible without exposing american taxpayers to undo risk. i look forward to hearing from mr. collins and our other witnesses on how europe's economic problems could impact the american economy especially with respect to trade, investment and jobs. i also look forward to discussing the european policy options that are under consideration and america's role in those policy deliberations. finally, i think that many people are interested in hearing about the international monetary fund's participation in resolving the euro zone's

economic issues and how the imf can provide meaningful support without exposing the american taxpayers to undo risk. again, i want to thank you mr. chairman for holding the hearing. i want to thank our witnesses for their time and testimony and i yield back. >> thank you. mr. lynch, recognized for two minutes. >> thank you for holding this critically important and timely hearing. i want to thank you also for your courtesy in allowing me to attend and participate. i want to thank the witnesses for their willingness to come forward and help this committee with its work. i've been increasingly concerned for some time about the growing sovereign debt crisis in europe and affect on the american financial system and the global economy in general. that's why i ask to join this subcommittee for today's hearing. i commend the chairman and

ranking member for starting what i hope will be an ongoing conversation in this congress about the economy's preparedness to cope with the growing sovereign debt crisis in europe. as the chairman noted earlier in his remarks, the u.s. and euro zone economies are more globally interconnected and intertwined than ever before. a relationship between the united states and european union is interdependent. u.s. and eu combined make up 25% of global trade and 40% of gdp and hold assets between 60% and 70% -- and hold a share of 60% of 70% of the world's banking assets between them. as we have seen during our own financial crisis, closely intertwined financial markets come with benefits and risks. one is the rapid and unpredictable spread of financial contagion in times of financial stress. it's clear that the u.s. financial system's direct exposure to troubled european

economies appears manageable, our indirect exposure to derivatives and other commitments is less clear. the bank for international settlements says the indirect exposure to greece, portugal, spain and italy alone could total $550 billion while money markets, insurance, pension funds, is completely unknown. we know the problem is bad but we just don't know how bad it is i hope we get clarity today about how bad the problem is and what we're doing to address it before the european sovereign debt crisis because another american economic crisis. i look forward to having constructive conversation with the witnesses here today about steps congress might take to address this crisis. i thank the chairman and ranking member and i yield back. >> would like to welcome our witness today. honorable charles collin served

as secretary for international financing and is responsible for leading treasury's work on international monetary policy, international financial institutions, and regional and bilateral economic issues. he served as deputy director of the research department at imf where helped prepare the world economic outlook report. he obtained first-class honors at cambridge university. normally we have a summary of five minutes but i would like you to take as much time as you deem appropriate to make your presentation and you are now recognized. >> thank you very much, chairman miller, ranking member mccarthy and distinguished members of this committee. thank you for this opportunity to discuss recent developments. >> you might pull that microphone closer. it's not picking up very well. >> europe's financial crisis poses the most serious risk