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Online Poker Regulation in the US: Q3 2019 Review

US Online Poker RegulationMy quarterly round-up of online poker regulation in the US shows more inertia than usual, and little chance of the situation improving before the year end.

When I started this quarterly review a few years ago, there was a fair amount of optimism about the future of regulated online poker – some of it was misplaced, but nonetheless the optimism existed. These days, many of those who forecast a second wave of online poker regulation are no longer in the industry – preferring to take what low-hanging fruit they can get from regulated sports betting.

It´s not really a surprise. Since 2013, only two states have passed legislation to regulate online poker and neither of those have got around to dealing their first virtual hands yet. It´s been almost two years since the Keystone State passed a “hasty and ill-conceived bill” and although online poker was supposed to get the green light in July, then August, then September, nobody knows when it will go live.

The situation is slightly different in West Virginia, where an online gambling bill was passed in March. The state is among the ten poorest in the country and doesn´t have the population to support an intrastate poker network. Online poker is not expected to go live in the Mountain State until February 2021 at the earliest – and that´s subject to the DOJ losing its appeal against the Wire Act verdict.

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Of the Remaining States that Promised so Much …

Michigan is beset by budget issues – with Governor Whitmer keen to increase funding for education, but still pushing back against online gambling legislation due to fears cannibalizing the state lottery´s outrageous slots games. Rep. Iden has said it is the Governor that needs better education, but until he gives her an explanation of how the unregulated market works, the Governor is not going to change her position without a substantial increase in gambling taxes.

Even then, if a bill passes, the perceived unconstitutional expansion of gambling in Michigan is likely to present problems. There will undoubtedly be a legal challenge to Iden´s bill by opponents to online gambling (just as there was when New York illegally regulated Daily Fantasy Sports), and concerns exist that tribal casinos could withhold payments to the state for a breach of their compacts – negatively impacting what´s available in the School Aid Fund to support education in Michigan.

While on the Subject of New York

A bill to regulate online poker in New York was introduced at the beginning of the year, but – like most of its predecessors – it sat on a shelf gathering dust for the rest of the legislative session (which is now finished for the year). Although you can expect to see another bill next January, it´s chances of passing are already limited due to the legislature failing to pass an Interactive Gaming Bill that would have enabled sports bettors to bet on regulated sports from mobile devices.

It was hoped that, if the Interactive Gaming Bill was passed, it would open a gateway for other forms of online gambling – including online poker. I strongly suspect another attempt will be made to pass online gambling legislation in New York next year in order to support the state´s underperforming brick-and-mortar casinos. However, any proposed unconstitutional expansion of regulated gambling is likely to come under the spotlight in the same way as Daily Fantasy Sports did last year.

Of the Other 43 States Still to Regulate Online Poker … …

Of the other forty-three states, only two have made any movement in respect of regulation – and in both cases it´s backwards. In Connecticut – where there are issues about a third tribal casino and who will have the right to offer online sports betting – Governor Lamont has put online gambling proposals on hold until the issues are resolved; while in California, the usual suspects can´t even agree if a proposal to expand online gambling in the Golden State should be put on the ballot paper.

So, whereas back in 2015 there were reasons to be optimistic for the future of regulated online poker in the US, it is difficult to find any now. There are a handful of states that have launched online sports betting this year that could add other forms of online gambling in the future – including online poker – but that´s really no more than clutching at straws. Unfortunately, it´s going to take a seismic shift in thinking by state legislators, regulators, and operators for the situation to change.

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