Online Poker Regulation in the US: 2017 Review

US Poker 2017In 2017 there was finally some good news for proponents of online poker regulation in the US, and there could be more to come in the next twelve months if legislation in Pennsylvania prompts neighboring states to act or if the Supreme Court repeals PASPA.

Each quarter, I write a snapshot of online poker regulation in the US to keep readers up to date with the efforts being made by individual states. In my snapshot at the end of Q3, I concluded that proponents of regulated online poker [geolink href=””]had reason to “carry on hoping”[/geolink] and, in October, those hopes were realized when Pennsylvania´s House of Representatives [geolink href=””]passed a massive gambling expansion bill[/geolink].

The first online gambling bill to enjoy any level of success since 2013 was described as “ill-conceived and hasty”. Although it allows for a shared player pool with other states that have regulated online poker, players currently playing at unregulated sites will find lower value reward programs, smaller tournaments and a lack of action outside of peak times when the first regulated sites go live next year.

However, there could be better news on the horizon. Not only may the passage of Pennsylvania´s gambling expansion bill prompt neighboring states to pass legislation, but the potential repeal of PASPA could open the floodgates for states throughout the country to pass Internet gambling bills to allow regulated online sports betting. That could be a game-changer for online poker regulation in the US.

New York and Michigan Lead the Pack

The two states most likely to pass online poker legislation in 2018 are New York and Michigan – despite both states having constitutions that prohibit any expansion of gambling without voter approval. Both states have bills that will be carried forward into next year – New York´s Senate having passed John Bonacic´s proposals [geolink href=””]back in June[/geolink], and Michigan´s House Regulatory Reform Committee having passed Brandt Iden´s proposals [geolink href=””]earlier this month[/geolink].

New York´s legislators aim to circumnavigate the constitutional barrier by reclassifying online poker as a game of skill – a ruse used to pass DFS legislation in 2016. The state has recently legalized online charity lottery sales – despite the new law being a blatant breach of the constitution – and legislators seem to be unconcerned with disappointing revenues from the state´s brick-and-mortar casinos which have been [geolink href=””]attributed to market saturation[/geolink].

The passage of Brandt Iden´s proposals in Michigan came after several months of behind-the-scenes talks to resolve issues related to tribal gaming and the tax rate charged to brick-and-mortar casinos. The state aims to circumnavigate its constitutional issues by stipulating online gambling servers must be located within existing casinos in order that online gambling is classified as an “expansion of casino services”. It is not yet known what impact the stipulation might have on future online poker compacts.

Other Neighbors Flirt with Online Gambling Regulation

There was plenty of speculation throughout 2017 that some of Pennsylvania´s other neighbors may take steps towards online gambling regulation. The states of Massachusetts, New Hampshire, West Virginia and Illinois each introduced bills to regulate online gambling in one form or another. Massachusetts opted to pass a DFS-only bill, while the other three states missed out on the opportunity to generate revenues from online gambling this year – although leaving the door open for legislation in 2018.

One school of thought suggests Pennsylvania´s neighbors may leave it another year (until 2019) to advance discussions about the regulation of online gambling – waiting to see the effect of the Keystone State´s gambling expansion. If this is the case, we may not hear anything in the near future from Connecticut, Ohio, Rhode Island or Indiana – other neighboring states that are potential candidates for online gambling legislation – although that could all change is PASPA is repealed.

The Significance of PASPA to Online Gambling Regulation

In 1992, President George Bush signed the Professional and Amateur Sports Protection Act (PASPA) – an Act that effectively prohibited sports betting in all bar a handful of states. The law had been passed with the dual motives of limiting harmful gambling activities and rebuilding public confidence in the integrity of sports contests following a series of scandals. Since the advent of the Internet, the Act has been practically meaningless and “illegal” sports betting is estimated to be a $400 billion industry in the US.

The Act has been unsuccessfully challenged on many different occasions, but a recent hearing of the Supreme Court left observers with the impression PASPA could be repealed in 2018 due to it violating the tenth amendment. Should this be the case, it is likely many states would consider legislation to regulate online gambling in order to “legally” allow sports betting on the Internet. It is unlikely states would stop with online sports betting, and would also legislate for online casinos and online poker.

To put the effect of a repeal of PASPA into context, legislation regulating DFS has been enacted in fourteen states and introduced into eighteen others. Some states have also passed legislation ahead of the Supreme Court´s anticipated verdict to regulate online sports betting. If, as expected, online gambling and online poker is piggy-backed onto sports betting legislation in order to maximize tax revenues, 2018 could be a very significant year for online poker regulation in the US.

Jacqueline Packett
Jacqueline Packett