Since 2006, when Congress passed in the United States the Unlawful Internet Gaming Enforcement Act (UIGEA), there has been a drive to pass regulations allowing for the operation of online casinos and poker. For several years, there wasn’t a great rush to enact these laws because, hey, pretty much everyone was still doing what they wanted – playing online – because the UIGEA had so little teeth to it for players that it didn’t do anything (the UIGEA basically made it illegal for banks to knowingly accept gaming transactions – it didn’t outlaw online gaming or poker). That all changed, however, in the spring of 2011.
“Black Friday” tore the game wide open and completely savaged the U. S. online gaming and poker society. When 11 of the online industry’s biggest executives were indicted – and three of the largest online poker rooms were shut down in the U. S. – it basically destroyed any semblance of normalcy in the online community. With what they loved taken away, now they had to organize and try to dig out of the chasm dug by “Black Friday.”
In 2013, it seemed that the online poker community was turning the corner. Three states – Nevada, Delaware and New Jersey – all enacted intrastate online gaming and/or poker regulation (only Nevada went online poker only) and it seemed this would be the future of online gaming in the U. S. – the state-by-state system. The reason? The federal government couldn’t get its crap together to decide whether to regulate the industry (and collect hundreds of millions in taxes) or ban it outright.
A strange thing happened on the way to this state-by-state system, however. Since 2013, no other state has stepped up and passed legislation regulating the industry. There have been many false signals – a committee meeting where nothing is voted on is not an advancement of the legislation – but there has yet to be another online regulatory bill reach the floor of any state legislature. Of late, there are two potential states that are entertaining the idea of a floor vote (Pennsylvania and California), but neither has moved forward as of yet.
So why are there so many problems with passing online gaming and/or poker regulation? Here’s a few things to consider, in no particular order, when you look HONESTLY at the situation (and we won’t even be touching on the political powder keg that California is with its different factions).
What Is Your Story?
Those that have advocated for online poker/gaming regulation haven’t exactly stayed on the same course over the years with their arguments. In the early 2000s, the argument was that poker was a “skill game” and, as such, should not be subjected to gambling laws. This has been a constant undercurrent over the years, but it hasn’t been able to get over the stigma that many “normal” people consider any endeavor in a casino to be gambling, poker included. Occasionally a court would agree with the “skill versus luck” people, but overall the argument wasn’t accepted by many in the legal or the legislative arenas for the perceived above bias.
From there, the argument for regulation moved on to a “personal freedoms” issue. This came about around 2008, when the Tea Party and individual freedoms movement was at its apex. While such activities as what someone does on the computer does fall in this area, it was tough to discuss this issue with folks over 50 who had difficulties with turning on the device, let alone their personal stances on what constitutes a “personal freedom.” Thus, while it is an excellent argument, many of the minds that needed to be changed weren’t willing to entertain the notion.
Recently two arguments have made their way to the fore. One is that online gaming/poker needs to have “consumer protections” to prevent offshore operations from defrauding their customers. The second are the revenues that would come from the regulation and taxation of online gaming and poker. Once again, these are two solid arguments, especially the one for consumer protections. Then again, many who are in the position to set legislation view that those who gamble should fall under the category of caveat emptor rather than being protected by a set of laws and regulations.
With the revenues…well…
Success? You Call That Success?
In the two-plus years that there has been intrastate online gaming and/or poker, the revenues haven’t exactly streamed into the state coffers. In Nevada, what once was a three-room industry in 2014 – WSOP.com, Ultimate Poker and Real Gaming – has now become only one, WSOP.com (there are rumors of other operations starting, but nothing concrete). When there were three online poker rooms in existence, they struggled to crack the $1 million per month gross revenues line, not exactly ripping it in for a state that drew in $10.6 billion in gaming revenues alone in 2015 (accurate numbers aren’t available because the Nevada Gaming Control Board no longer reports the “win” rate of the online industry).
In Delaware, the story is arguably worse. There have been times when online poker drew in five figure revenues in a month, but this could be more a reflection of the state’s miniscule population (roughly 900,000) than the action in the rooms. The online casinos seem to have done better in the state as the activity is more apt for “hit and run” play than the online poker rooms have been. Delaware has also benefitted more from its compact with Nevada, without the same reciprocal success.
New Jersey is the only state of the three that can say it has had a modicum of success, but that is vastly lower than what was expected. Prior to passage of online casino gaming and poker legislation in the Garden State, Governor Chris Christie said that the industry would draw in $1.2 billion within its first year of operation. In 2015 (the second full year of the Jersey online gaming industry), gross revenues for the online operations of the New Jersey casinos topped $148 million, a far cry from Christie’s revenue estimations (a positive argument would be the $14 million or so in taxation revenues earned by the state that wouldn’t have been there without online gaming, but that is also under the estimated $160 million in tax revenues by the Christie Administration).
While these numbers are great, they aren’t exactly awe-inspiring to states that are facing hundreds of millions in budget deficits (what is $14 million or so going to do when you’re running behind on the budget by $250 million dollars or more?). Thus, state legislators may be considering the action but, after a deep look (and the initial flood of licensing), deciding it isn’t a path they want to go down.
The Morality of the States
Which brings us to the next problem for passing online poker and gaming regulations. As a general rule, both sides of the political spectrum have their problems with online gaming/poker. For Republicans, it is that “demon sin” gambling that they have a problem with, especially those that consider themselves evangelical. For Democrats, many consider gambling a regressive tax that preys on those that can’t afford to take part in the activity.
Furthermore, there are physical states that, while they may have Indian casinos, would not even broach the subject of having online gaming operations because of their leadership or their religious affiliations. Utah, which has legislatively dictated that they will never take part in an online gaming operation, is one such state and others exist. If there are going to be 20-30 states that are definitively in the “no online gaming” category – which could be an underestimation – then it is going to be tough to pass legislation, federal or otherwise.
Not Enough Ammunition
One of the most powerful voices in the world of politics is the lobbying industry. Whether you like it or not, lobbying has a humongous effect on what bills pass and what bills are left by the wayside. When it comes to the online gaming/poker community, we can’t even seem to get our house in order.
The most powerful gaming advocate in the country, the American Gaming Association, used to support online gaming regulation, but pulled that support for two reasons. First, the resignation of Frank Fahrenkopf, a supporter of online gaming and poker, as president of the AGA derailed the voice of the casino industry from the online argument. His successor, Geoff Freeman, took the AGA away from the table (many believe at the behest of Las Vegas Sands Corporation founder and chairman Sheldon Adelson and his threats to leave the group), suddenly pulling the lobbying arm of the casinos out of the battle.
The only organization left that is advocating for online gaming – and it is only online poker, they haven’t committed to full casino gaming – is the Poker Players Alliance. The PPA has been an active advocate for poker since 2005 and has had some impact on the discussion of online poker and gaming regulation…just not enough to budge the needle significantly. A simple look at the numbers will demonstrate that they are woefully lacking in ammunition to be able to win the war.
In 2012 (it is difficult to find public information on non-profit organizations), the PPA had total revenues of $3.6 million, of which $3.3 million in expenses was spent (on salaries, payroll taxes and “other” – that isn’t explained in the statistics) and has boasted that it is the voice for “a million poker players across the country.” The 2012 contributions by the PPA to federal candidates were $48,888 (with a 51/49 split between Democrats and Republicans). In 2014, that total dropped to $8000 and to this point in 2016, the PPA has contributed $7000.
Let’s now contrast this with another lobbying organization. The National Rifle Association, with its five million members, generated $348 million in 2013 with expenses of $291 million. The 2012 contributions to federal candidates totaled $1.19 million, with a sizeable majority of the money going to members of the GOP (73%-27%). So far in 2016, the NRA has contributed over $600,000.
As demonstrated by the numbers, the PPA is bringing a slingshot to a nuclear war in both manpower and money and could really use some help from another strong lobbying organization (making the AGA’s gutless efforts particularly irritating). In all honesty, who do you think is going to get more attention from those elected officials in Washington and in the statehouses across the country?
Is There Anybody Out There That Cares?
When it comes to the professionals in the poker world, nearly all of them could care less about what is going on in politics in general and regarding online poker politics particularly. Sure, Daniel Negreanu can speak up once in a while and Jason Somerville and Andy Frankenberger can sign on as advocates (former World Champion Greg Raymer has also been a vocal supporter in the past), but most of those recognized as “professional poker players” have steered clear of getting involved in the fray. There’s some base reasons for this.
First, poker is these people’s livelihoods. Why would they want to bring in more competition to make it tougher on them? You can say that a vibrant online poker industry in the U. S. would give these professionals outlets, but it would also breed more opponents for them.
Two, since these people ARE playing poker for a living, they have to PLAY. Those 12-hour days don’t leave much outside for going to meetings, rallying politic or penning passionate op-eds. Professionals spend many hours a day honing their craft and poker’s no exception.
Finally, poker has always been a “lone wolf” mentality. Part of the reason that people get into playing poker is they don’t have to listen to anyone. They don’t have to worry about politics, about appearances, about “who thinks what”…thus, when someone says “Why don’t you support us?” the player can say (probably won’t but can), “Because I don’t care.” It is also extremely possible that, to poker professionals, the matter of online poker just isn’t that important to them…and that is why they don’t toss their support to the cause.
To the rank and file, it is important but life also affects their ability to rally their efforts. Sure, everyone would love to go to their respective capitols and show their support for the efforts of online gaming and poker, but they have jobs to attend. Miss too many days of work to politick for online poker and you’ll soon find yourself out of a job. Thus, the best some can do is Tweet or Facebook from their homes.
These are just a few of the reasons why online poker/gaming regulations aren’t as much a slam dunk as many supporters might think it is. This is also the reasons why some dislike when the latest committee meeting is hyped as the “Second Coming” of online poker. There are issues that need to be taken care of, otherwise the uphill battle will remain that and with no logical end in sight.