Online Poker Regulation in the US: Q3 2018 Review

US Online Poker RegulationOnline poker regulation in the US took a step backwards in the third quarter of 2018, with further regulation in the short term look increasingly unlikely.

Despite the repeal of PASPA in May being interpreted by some industry observers as an opportunity for online poker legislation to be piggy-backed onto sports betting legislation, the prospects for online poker regulation look much darker at the end of Q3 than they did at the end of July. It´s not just the case that nothing is moving forward due to the legislative break, but rather that a series of events has contributed to putting the brakes on any momentum that existed.

Many operators have turned their attention away from online poker to focus on potentially more lucrative opportunities (as witnessed in the Keystone State, where – almost a year after legislation was passed – regulators are still trying to offload four online poker licenses at a cost of $4 million each). It is also not encouraging that revenues from regulated online poker in the Garden State nosedived to their lowest ever while revenues from other verticals increased.

The Clouds Gather over Former Candidates

Most of the former top candidates for online poker regulation appear to be experiencing events that will create obstacles for the passage of online poker legislation in the short term, failing to resolve existing issues, or both. In Michigan for example, the state had the opportunity to resolve the question of whether the “expansion of gambling opportunities” was in breach of the constitution by including the issue in the November ballot. Sadly the opportunity was missed, and the question remains unanswered.

Possibly of more concern for proponents of regulated online poker in Michigan is that the driving force behind online poker legislation in the Great Lakes States – Brandt Iden – looks likely to lose his seat in the House of Representatives in the forthcoming elections. Faced by a well-respected Democrat nominee – Alberta Griffin – Iden´s chances of re-election suffered a blow when it was revealed he failed to admit to a DUI charge on the 61st District Voter Guide questionnaire.

New York Beset by More Important Issues

[geolink href=””]New York[/geolink]Any expansion of gambling to include regulated online poker in New York is looking more and more unlikely as every day passes. Not only are recently-regulated brick-and-mortar casinos [geolink href=””]spectacularly underperforming[/geolink], but the state is now in dispute over payments from the Seneca Tribe´s six tribal casinos and a recent report published by Moody´s suggests that the gambling market is oversaturated – with any further expansion of gambling likely to result in cannibalization of the existing market.

The retirement of Senator John Bonacic is also a negative for the prospects of regulated online poker in New York. Bonacic has been responsible for introducing online poker legislation in each of the past four years and it is difficult to know where his replacement will come from. Unfortunately, the bill he leaves behind for consideration in 2019 includes a “bad actor” clause, so is unlikely to receive the support of the world´s largest online poker site – without which any bill will likely die once again.

Florida Amendment Puts Brakes on Any Expansion

[geolink href=””]Florida[/geolink]The state of Florida has never been high on the list of potential candidates due to an anti-gambling governor and a compact with the powerful Seminole Tribe that is conditional on the state refraining from regulating online gambling. However, governors retire and compacts can be renegotiated; but, if Amendment 3 is passed by voters in November´s elections, Florida´s legislature will lose the authority to approve any expansion of gambling in the Sunshine State.

The amendment is supported by the Seminole Tribe and the Walt Disney Corporation, who wants voters to be in control of gambling in Florida in order to preserve its “family friendly” appeal. Both organizations have [geolink href=””]donated more than $10 million[/geolink] to the “Yes on 3” campaign which, if successful, will require voter approval before any future proposals to expand regulated gambling in Florida can be implemented – effectively putting the brakes on hard!

Illinois Bill Needs Dismantling and Starting Again

[geolink href=””]Illinois[/geolink]The proposed regulation of online poker in Illinois forms a very small part of [geolink href=””]a very large omnibus gambling expansion bill[/geolink] – so large that it has been described as “the worst model for legalized gambling in the country”. In addition to raising concerns about over-saturation and cannibalization, stakeholders are already bickering about who should be in control of what, and what concessions they are entitled to if – as anticipated – the expansion of regulated gambling in Illinois results in a loss of revenue.

The language of the bill relating to online poker is also a cause for confusion. Whereas previous attempts to regulate online poker in Illinois have included a ten-year “bad actor” ban for any operator that continued to provide a service in the post-UIGEA era, the current version of the bill prohibits any operator applying for a license that has ever taken an online bet. If this chapter remains intact, it would exclude operators such as Party Poker, 888 Poker, and, as well as PokerStars.

Elsewhere the Prospects Look No Brighter

In comparison to clouds gathering in Michigan, New York, Florida and Illinois, there is a tropical storm already in California. The Golden State is a prime candidate for regulated online poker; but, due to disputes between the horseracing industry, existing brick-and-mortar casinos, and tribal interests, it has never happened. Now the focus is on regulated sports betting, [geolink href=””]the same divisions are appearing[/geolink] – forcing a constitutional amendment off the ballot sheet and delaying legislation for another year.

Back on the East Coast, a rather more sinister event is obstructing an expansion of gambling in Connecticut. Allegedly, MGM – who operate a casino on the Massachusetts side of the Connecticut/Massachusetts border – are [geolink href=””]applying pressure on the U.S. Department of Interior[/geolink] to prevent a joint tribal casino opening on the Connecticut side of the border. The dispute has resulted in delays taking the state lottery online and the compilation of a report looking into online gambling problems that is due to be delivered before any further expansion of online gambling in Connecticut is discussed.

Are There Any Glimmers of Hope Anywhere?

Not really. The slow uptake of regulated sports betting has pushed online poker onto the back burner and although there might be some surprises in the pipeline as financially-desperate states attempt to raise tax revenues, the likelihood is the obstacles preventing the above states from passing online poker legislation will re-emerge in one format or another. Fortunately, if you enjoy a game of online poker, and you live in a state that has not yet passed legislation, you have [geolink href=””]plenty of options to choose from[/geolink].

Jacqueline Packett
Jacqueline Packett