Future of Online Poker in the USA

[TheEngineer]

I thought it might be time to discuss our view of the future of online poker, so we can plan our response accordingly. I see three possibilities for the future of online poker in the U.S.: unregulated online poker, licensed and regulated online poker (either nationally or only in some states), and a prohibition on online interstate poker.

Outcome #1: Unregulated online poker. Everyone’s favorite. We generally had this until UIGEA passed and until the DOJ ramped up enforcement of offshore sports betting sites. Status quo with the remaining U.S.-facing sites is like this, except television advertising has been reduced (and is only for the .net sites, even for poker-only sites), and money movement is trickier and riskier. Getting unregulated online poker expressly permitted and acknowledged requires us to fight at the federal level to pass legislation. Given the congressional voting history, this would be a big challenge. Keeping the status quo requires us to continually fight at the federal level to keep our opponents from banning interstate/international poker like HR 4777 proposed (btw, HR 4777 had 146 cosponsors…1/3 of the House).

Pros: taxes low on sites, no government pot rake, legal (though ambiguous)
Cons (unregulated poker expressly permitted): getting fish to trust offshore sites (i.e., fish think the games are rigged), fish don’t like sending money overseas
Cons (status quo): limited number of U.S.-facing sites, difficulties with banking issues, ads for .nets only, U.S. fish think it’s illegal, fish think the games are rigged, fish don’t like sending money overseas, the unsettled nature of this position doesn’t provide stability for industry.

Outcome #2a: Federally licensed, regulated online poker, as proposed by IGREA. Poker would be legal within the U.S. in states and tribal lands that didn’t opt-out. The federal government would provide for licensing. Sites would have to meet specific requirements for licensing. Regulations would provide for age verification, money-laundering issues, compulsive gambling, other red herrings with which our opponents come up, and RNG verification. Getting this outcome requires us to fight at the federal level to pass legislation.

Pros: legal, advertising of .com sites, lobbying power of Harrah’s and MGM to preserve right to play (once bill is passed and they get into the industry) and to keep taxes reasonable, echecks, credit card funding, fish more trusting of playing American branded sites, combined comps for online and B&M play from B&M casinos (good for us to get comps and to encourage fish to play).
Cons: potential of taxes too high to allow for a profitable game (risk mitigated somewhat by B&M competition), potential of a direct government pot rake (IGREA doesn’t provide a provision for a government rake), difficulty for offshore sites to get licensed, states may opt-out.

Outcome #2b: State licensed, regulated in-state poker. Same issues as in #2a, except actions as state level.

Added cons: States seem to expect citizens to have to pay for the right to gamble, so they’ll expect heavy taxes if they’re voting for legalization and setting up the licensing and regulations (with IGREA, the feds do the work and hand money to the states). Also, some states lack sufficient population for a really successful instate game.

Outcome #3: Prohibition on online interstate poker. Opponents of online gambling don’t have a soft spot in their hearts for online poker. HR 4777, the Internet Gambling Prohibition Act, banned online interstate/international poker. It also defined poker as a game of chance. Again, it was cosponsored by 1/3 of the House. Also, it’s important to remember the fanaticism of our opponents. Here’s a 2000 quote from I. Nelson Rose, at http://www.gamblingandthelaw.com/antigua.html.

[ QUOTE ]
Anyone who doubts that politics shapes legislation should examine the history of the Internet Gambling Prohibition Act, commonly called the Kyl Bill, after its author, Jon Kyl (R-Az) and similar proposals introduced into the House of Representatives. The Kyl Bill was first proposed as an amendment to the Crime Prevention Act of 1995. In its early years, the Internet Gambling Prohibition Act proposed placing far more restrictions on gambling than the infamous 18th Amendment’s Prohibition on intoxicating liquors. It would have outlawed virtually everything, from actual betting online to merely putting information in online gambling magazines. The proposed restrictions against putting gaming information online were so broad, that it would have been dangerous for a licensed casino to advertise its legal activities on the World Wide Web.

The Kyl Bill’s major weakness, besides violating the First Amendment’s protection of free speech, was that it would also have made it a federal crime to merely place a bet. The U.S. Department of Justice, which does not have fond memories of its role trying to enforce Prohibition, made it clear that it did not support a law that would require knocking on bedroom doors to go after $5 bettors.

[/ QUOTE ]

While no one is currently pushing for criminalizing placing a bet online at the federal level, it may be worth keeping in mind how our opponents tried this in the past. Let’s also remember how the DOJ treats drug users (to which we’ve been compared). Finally, placing a bet online is a felony in Washington state. Will other states criminalize placing bets if online gambling is outlawed at the federal level?

We don’t have to fight for this outcome. Our opponents will gladly fight for this.

Pros: none
Cons: uhh…game over. No U.S.-facing sites. No U.S. fish. We either move or play via proxy servers, using foreign bank accounts while hoping the sites don’t take our money for violations of terms and conditions.

So, here are the options. I like outcomes #1 and #2a (and #2b without an interstate ban). I believe we have to fight back at a federal level to get and keep a favorable outcome. Status quo requires a strong show of support, I think. Many here think I’m a huge IGREA and PPA supporter. I actually see these as tools. What I advocate is the creation of a strong grassroots effort aimed at protecting our rights to play poker online. I advocate fighting hard for our rights.

So, what do you all think?

[JPFisher55]

With the WTO situation, I think that either by international WTO pressure or US federal court (appellate level or supreme court) unlicensed, unregulated online poker is a better chance than licensed and a better outcome.
But licensed, regulated online poker is a good back up to pursue. If something like the IGREA passed it would become the worst alternative; not outright prohibition. In addition, the WTO pressure or court action could still give unlicensed, unregulated online poker.
Thus, I favor support of the IGREA and the efforts of the PPA.

[Superfluous Man]

Outcome 2b seems pretty impossible. Are they really going to go to the trouble to filter IPs/users by state? If so, I doubt it will be very profitable, except in perhaps the most populous states. If not, it seems like it could easily be construed as interstate commerce, which the federal government would then seek to regulate.

[TheEngineer]

[ QUOTE ]
Outcome 2b seems pretty impossible. Are they really going to go to the trouble to filter IPs/users by state? If so, I doubt it will be very profitable, except in perhaps the most populous states. If not, it seems like it could easily be construed as interstate commerce, which the federal government would then seek to regulate.

[/ QUOTE ]

Yes, without affirmative action from Congress, it would have to be strictly instate. It would be possible for a populous state like California. Not so for Wyoming.

[Bilgefisher]

The tribal influence can't be underestimated. Just look at Washington state.

[TheEngineer]

[ QUOTE ]
With the WTO situation, I think that either by international WTO pressure or US federal court (appellate level or supreme court) unlicensed, unregulated online poker is a better chance than licensed and a better outcome.
But licensed, regulated online poker is a good back up to pursue. If something like the IGREA passed it would become the worst alternative; not outright prohibition. In addition, the WTO pressure or court action could still give unlicensed, unregulated online poker.
Thus, I favor support of the IGREA and the efforts of the PPA.

[/ QUOTE ]

I hope we can get something out of the WTO decision. It is a longshot, so I'm glad you're helping with IGREA. I think every possibility we have requires us to show political support.

Everyone:

- Want the U.S. to follow the WTO? Our government will have to WANT to....they won't do it otherwise. We'll have to write and call our congressman. We'll have to write to newspapers. We'll have to write op-ed pieces.

- Want a "skill" court decision to stick? We'll still need political support, so it doesn't get called a "loophole that should be closed" by opportunistic politicians. We'll still have to write and call, and there's no need to wait until the court case comes. After all, a culture change now will help whenever such a case gets before a court.

- Want IGREA? We know we have to write and call congressmen and newspapers. A good op-ed would be awesome here as well.

- Want the status quo? Supporting IGREA will serve to bottleneck opposition bills.

- Think the federal government can't force states to allow gambling, so why work at that level? It's true that the feds cannot force states to allow gambling, but they can make it easier, which is what IGREA seems to do. Besides, states can allow instate online poker, but federal legislation (like the Interstate Horse Racing Act for interstate horse racing wagering) will be required to facilitate interstate poker. As federal action will be required, it makes sense to get behind IGREA now. Also, you don't want HR 4777 to come back under this scenario. It would be a shame to get a state or two on board, only to have interstate poker banned.

I can't think of a scenario where we won't need political support at the federal level, so I guess we should stick with working at that level.

[TheEngineer]

[ QUOTE ]
The tribal influence can't be underestimated. Just look at Washington state.

[/ QUOTE ]

I imagine they'll be the first to offer sites if IGREA passes. They'll be allowed to offer international gaming from a site on tribal lands. Even it every state were to opt out, they'd still be allowed to offer gaming wherever legal internationally (plus on their tribal land). With that, it would only be a matter of time before other states came on board (I hope).

[TreyWilly]

You're on Ritalin, Eng. I'm convinced of it.

Keep it up.

[cROUNDER33]

Engineer what do u believe will happen to the future of online poker. In all honesty i can see july 10th come and it stay the same as poker is now. Not much of a difference.

[cROUNDER33]

Engineer what do u feel will honestly happen on July 10th. My personal feel is that poker will be the same july 10th of this year next year and following years just as it is now. I honestly dont think were in for any big surprises