Online Poker Regulation in the US: Q2 2019 Review

US Online Poker RegulationThe second quarter of 2019 saw more uncertainty than usual with regards to the prospects for regulated online poker in the US – and it could soon get worse.

At the end of my Q1 2019 review, I wrote that the Q2 review could be very interesting indeed in light of the stream of online gambling legislation being proposed and passed throughout the country. At the time, we were also waiting for a verdict in New Hampshire´s Wire Act case against the Department of Justice.

In the three months since, the stream of online gambling legislation has come to an abrupt halt, the two states that were favorites to pass poker-friendly online gambling regulations have taken big backward steps, and – although the verdict in the Wire Act case was favorable for New Hampshire – regulated online gambling is still in danger of being shut down at federal level.

A Very Quiet Quarter for Poker-Related Legislative Action

Whereas in my previous review it was difficult to squeeze the volume of poker-related legislative action into a single article, this time it is easy – there wasn´t any. For all the “statements of intent” and gambling expansion bills under consideration, nothing happened. No new bills were introduced and those that were under consideration in my last review are now gathering dust.

Proponents of online poker regulation in the US will be most disappointed about the lack of progress in New York and Michigan – the two states most likely to pass poker-friendly legislation this year. Ongoing concerns about an expansion of gambling being unconstitutional continue to block efforts in New York, while the cannibalization of the Michigan lottery is preventing progress in the Great Lakes State.

Wire Act Threat Still Hanging over Regulated Online Poker

Apart from the unique situations in New York and Michigan, the most likely reason for the lack of legislative action is the threat of enforcement action by the DOJ against operators that violate its revised interpretation of the Wire Act. Although New Hampshire won its Wire Act case, the DOJ has warned that, if the verdict is reversed on appeal, it will come after operators retrospectively.

The DOJ´s enforcement action may not only be limited to online gambling operators. Payment processors, software providers, and regulated affiliates could also be in the firing line for facilitating gambling across state lines. Furthermore, the DOJ has warned there is no safe harbor for offenders – meaning that those operating legally now could be forced to close in the future.

Prospects Could Get Much Worse Very Soon

States might be even more reluctant to pursue online gambling regulation following the near shutdown of New Jersey´s government (which would have resulted in the shutdown of the Division of Gaming Enforcement and the cessation of all regulated online gambling), and many will be looking to see how Pennsylvania gets on when regulated online poker is soft-launched on July 15th.

However, according to Pennsylvania-based contributors to the 2+2 forum, there´s not a lot being done to attract players to the new regulated market. With only two weeks to go until the launch of regulated online poker in Pennsylvania, nobody knows which sites will be open for business, what their opening offers will be, or how players can create accounts and fund them. It´s hardly a positive advertisement for any state looking to see whether regulating online poker is worthwhile or not.

Online Poker Liquidity is Going to be a Big Issue

One of the key ingredients for successful regulated online poker is liquidity – something that Pennsylvania will be lacking due to the regulator´s reluctance to join the existing tristate compact while uncertainty remains about possible Wire Act enforcement action. However, a bigger threat to online poker liquidity comes from Apple´s decision to prohibit non-native gambling apps from its App Store.

The new App Store Guidelines take effect on September 3rd 2019, by which time online poker operators will have to develop native apps or provide iPhone users with an HTML5 platform. Due to the cost of developing and maintaining native apps, I expect most operators will opt for the latter, vastly inferior option, which will lessen the online experience and potentially result in players finding their online entertainment elsewhere.

Conclusion: It´s Not Good, and It´s Not Going to Get Better Any Time Soon

With traffic in the regulated market falling, the launch of Pennsylvania´s market likely to be a damp squib, and little in the pipeline to encourage proponents of regulated online poker, the prospects for the remainder of the year do not look encouraging. We don´t know for sure the DOJ will appeal the New Hampshire verdict (although it looks likely), but we do know all the time there is uncertainty about the future of online gambling in the US, states will be reluctant to push ahead with online poker legislation.

Jacqueline Packett
Jacqueline Packett