A new State Legislative idea

[Skallagrim]

I come up with a new thought recently and am wondering what you folks would think.

Although in no way meant to slow down the major efforts at the Federal level, it occurred to me that the lack of "intrastate" online poker has been primarily due to no company seeing a big enough market in a single state to justify the expenditures. So what if instead of a site, a state legislatively authorized, under its general gambling laws, a specific ONLINE POKER funding financial service? A law would be passed that says playing poker online in state X is specifically allowed provided the players in state X use an approved financial service company to transfer the money (to any poker site in the world that will accept it). The FS company would be required to insure age verification and other legit concerns. And of course it has to give a % of its take directly to the state.
Seems to me totally compliant with Federal law and the UIGEA.

State gets tax revenue from current poker that is impossible to stop, gets some safety assurances, and tax revenue. An FS company of this sort would be pretty cheap to set up too and should have no legal problems with an official stamp of approval.

Comments?

Skallagrim

[JPFisher55]

But are there enough online poker players in any one state for this type of ewallet company to be financially viable? Maybe a group of states could get together and authorize the same ewallet, but I doubt that will happen.

[oldbookguy]

Actually I have been working on something to propose for here in WV since this is a big gambling state.

Reading the UIGEA it does NOT say the poker site must be in the state, only payment made and received in the state.

Someone posted in jest here on 2p2 concerning California and the state being an affiliate.

This actually would work; in-fact the state could be an affiliate of MANY sites. Simply have a state lottery run it, log in to your state, select deposit and where you want the funds credited to; I.E. WV_PartyPoker, WV_Pacific, etcetera.

The individual state would simply be a 'skin' of the site.

This would benefit the state since they could have income NOT premised on a citizen losing, but winning and generating rake.

At this point I am still in the early stages. However, our current Gov. Manchin is a good man and when he was Sec. of State I worked with his office (the rep. from his office is now his chief of staff) to completely overhaul our voting laws, so I have some credibility. In-fact my presentation was presented verbatim to the State Judiciary committee and no changes were made though she presented it as her own.

[Dennisa]

[ QUOTE ]

Actually I have been working on something to propose for here in WV since this is a big gambling state.

Reading the UIGEA it does NOT say the poker site must be in the state, only payment made and received in the state.

Someone posted in jest here on 2p2 concerning California and the state being an affiliate.

This actually would work; in-fact the state could be an affiliate of MANY sites. Simply have a state lottery run it, log in to your state, select deposit and where you want the funds credited to; I.E. WV_PartyPoker, WV_Pacific, etcetera.

The individual state would simply be a 'skin' of the site.

This would benefit the state since they could have income NOT premised on a citizen losing, but winning and generating rake.

At this point I am still in the early stages. However, our current Gov. Manchin is a good man and when he was Sec. of State I worked with his office (the rep. from his office is now his chief of staff) to completely overhaul our voting laws, so I have some credibility. In-fact my presentation was presented verbatim to the State Judiciary committee and no changes were made though she presented it as her own.

[/ QUOTE ]

Fantastic idea, but it will never fly in California. There is not enough graft in the world to overcome the power of the following lobbies:
The Indian Casino lobby will kill it, if they dont, then we have the Nevada Casino lobby, the B&M Poker lobby and finally the California State Horse racing lobby.

[oldbookguy]

I used California as an example since the poster did, I am in WV, though it will be a tough sell.

obg

[permafrost]

[ QUOTE ]
Reading the UIGEA it does NOT say the poker site must be in the state, only payment made and received in the state.


[/ QUOTE ]


UIGEA says the "bet or wager" must be "initiated and received" exclusively in state. The wording seems definite that the bet is between two resident state parties.

This interesting intrastate "exception" section is very likely to be used by some states to authorize online poker, license sites, and deal wildly popular, lawful games. No new Fed legislation needed, again, it's already right here. If a site had access to tens of thousands of avid players, it could easily justify a small office, a license, server, etc. If a B&M room can make money in state, why can't an internet site?

And many of these avid players would be new to poker...

[oldbookguy]

A 'skin' can reside in any computer server. Thus, it is made and received within the state. It does not say the other person(s) participating have to be in the state as well. Nor does it specify it must be a single state system.

Example: One state sells tickets to a muliti-state lottery online to residents of that state only, however, most participants are not from that state, the states then pool the money. There is no reason they cannot do the same with in other online gaming.
An area I am going to explore a little more.

obg

[Skallagrim]

The UIGEA says that it only prohibits money transfer for bets or wagers illegal under state or federal law. Federal law does not cover poker. Perma is right, I think, about the limitations the UIGEA places on an intrastate gambling site, but the "new" part of my idea is that the legislation to be proposed would specifically say that citizen X in state A placing a bet in an online poker game is perfectly legal so long as the money transfer agent used by X is licensed by state A. Hence it is explicitly exempt from the UIGEA.

JP raises an appropriate concern, and I have no information to know for certain, but my guess is that setting up a mini neteller like operation in a single state would not cost that much, and thus could make a profit off of just one state's players (certainly this must be true in the larger states). Plus, I would not lobby for a monopoly here, but allow any Financial Service provider to get the license. Thus the FS would not be limited to one state, and, if more than one license is issued, players get a choice.

This is obviously not for every state - but for states that would like to see some increased revenue from gaming, a law such as this would provide that revenue. It would also provide the safeguards everybody supports. It would also not lead to any new "gambling" businesses. It would only cover an activity many citizens already engage in (so the other gaming lobbies really couldnt object that much - the only direct competition is with B&M poker, and most B&M poker places realize online play helps bring in customers rather than the other way around). And the cost of the whole enterprise is minimal to the state, one extra desk job in the Lottery office probably is all thats needed to oversee the FS companies.

A cheap easy way to get a cut of the poker revenue stream, that merely allows people to play a game of skill for money in the privacy of their own home. Hell, if the moralists or nanny staters really object, you could even have money limits (like $500 a month unless personally exempted).

I am going to talk to some state reps I know here in NH, and let you know what they think. NH is a good place to try because A) with no income or sales tax NH is always looking for a new money source, B) NH does not have a lot of moralists in its Rep party, and C) gambling is popular in NH, although actual casinos are not - this is new gambling revenue w/o new casinos!

I think there are probably a number of other states where this idea would be viewed favorably, like oldbookguy's WV /images/graemlins/smile.gif.

Skallagrim

[Grasshopp3r]

North Dakota is the best place for this to work as they have a state owned bank. Plus, they have tried in the past to provide online poker.

North Dakota Representative James Kasper was the proponent of the online poker proposal.

On March 8, 2005, the ND House approved HCR 3035, 50 to 44, to allow the people of ND to vote in a primary election in 2006 on an amendment to the state's constitution that would mandate the legislative adoption of an internet poker licensing bill.

The ND Senate Judiciary Committee held hearings beginning March 8, 2005 On March 18, 2005, that committee deadlocked, 3 to 3, on whether to recommend that the ND Senate vote for or against the bill. An Associated Press story notes: "The Judiciary Committee did agree on a set of changes to the Internet poker measure, including more specific language on the attorney general's regulatory power. The amendments also require that the state collect at least $1 million in licensing fees before any poker site may operate.

On March 21, 2005, the ND Senate voted overwhelmingly, 44 against, 3 for, thus defeating this bill.

[DeliciousBass]

[ QUOTE ]
On March 21, 2005, the ND Senate voted overwhelmingly, 44 against, 3 for, thus defeating this bill.

[/ QUOTE ]

Thereby saving all North Dakotans from themselves.

[permafrost]

[ QUOTE ]

A 'skin' can reside in any computer server. Thus, it is made and received within the state. It does not say the other person(s) participating have to be in the state as well. Nor does it specify it must be a single state system.

[/ QUOTE ]

Yes it does say all participants have to be in the state, that's the meaning of the intrastate "exemption". An out of state resident can't "initiate" a bet in the authorizing state; the bet is no longer "exclusively" intrastate.

That still leaves very viable opportunities for dealing lawful online poker in most/all states.


[ QUOTE ]


Example: One state sells tickets to a muliti-state lottery online to residents of that state only, however, most participants are not from that state, the states then pool the money. There is no reason they cannot do the same with in other online gaming.
An area I am going to explore a little more.

obg

[/ QUOTE ]

The MUSL model and the horse betting model are both good. We have a ways to go before we get to those levels, but first get a few states allowing online poker businesses, with those models as a further goal.

[Skallagrim]

For once I am not disagreeing with you permafrost, but there has been ZERO movement along the lines of trying to get individual state online poker sites. Nevada already has a law that looks to do exactly that, but no one has even sought a license, from what I have been told. Apparently the cost of setting up a site is just to great in a market limited to one state, and where the players in that state can very easily bypass it for other "illegal foreign" sites (that will probably have cheaper rake).

But a money transfer service is far cheaper to set up and run. In fact, having the stamp of government approval, it ought to be able to make deals with banks to transfer money far cheaper than any one else out there is currently doing, even with a % going back to the state.

The market viability of a money transfer service that is cheaper and easier than other current options and under which you could legally play AT ANY SITE seems pretty obvious. Why would a NH resident choose ePass type fees with dubious legality when they could play at any site (even Party!) legally by using a cheaper money transfer service.

The only reason not to use it would be to hide from the IRS, not a good reason in my book.

It being a hot Friday afternoon where my attention can no longer focus on real work, I have drafted the following:

THE NEW HAMPSHIRE ONLINE POKER ACT OF 2008

WHEREAS, many citizens of the state of New Hampshire enjoy the ability to play the great American game of skill called Poker for money on the internet, and

WHEREAS, these same citizens would enjoy this pastime even more if its legal status were definitively clarified, and

WHEREAS, there exists the possibility that without legal framework a certain percentage of citizens may show addictive behavior towards the playing of poker, and

WHEREAS, it is in the interest of the state to insure that adequate safeguards are in place to protect the money of its citizens engaged in such games, and to insure that underage citizens are not involved in such games, and to identify and help any citizen who develops problems associated with addiction to such games,

BE IT ENACTED THAT

1) NH Gambling law be amended by adding the following provision:
"The playing of the game of poker on the internet or any similar communication medium by any person within the borders of New Hampshire shall be deemed lawful and not a violation of any law provided that the player is over the age of 21, and the player uses a method of money transfer for the playing of the game that is licensed by the NH Lottery Commission."
"Any person found to be using the internet to play poker for money without using a licensed money transfer service shall be guilty of a violation and may be fined not more than $500 for each transfer in violation of this law."

2) The NH Lottery Commission shall create a new executive position to monitor compliance with the above law, and to approve licenses for Financial Services providers to act as the money transfer agent for internet poker playing. This executive shall be responsible for approving all applications for a license under this section and shall devise a set of criteria for the issuance of any such license that will include the following:
a) Assurance that all users of the service are above the age of 21,
b) Assurance that adequate methods exist to identify and offer treatment to individuals identified as suffering from "gambling addiction,"
c) Assurance that the funds of NH citizens are at all times protected, both while in the hands of the FS provider, and by transferring said money only to reputable sites that offer poker games,
d) Assurance that methods exist to identify and report and activity that may be deemed money-laundering or otherwise unlawful, and
c) Assurance that proper reporting of all transactions shall occur.

3) Any company issued a license pursuant to this act shall be responsible for payment to the state of 1% of the gross total of money transferred out of the state on a schedule to be determined by the Lottery Commission.

Feel free to use this if you want, and again, all comments are appreciated.

Skallagrim

[TheEngineer]

[ QUOTE ]
I come up with a new thought recently and am wondering what you folks would think.

[/ QUOTE ]

I'll leave interpretation of the law to you and the other lawyers here. From my layman's perspective, it sounds good. Hopefully we can find many loopholes along the way.