In a ground-breaking agreement, Nevada and Delaware, the first two states to legalize and regulate intrastate online gambling, joined forces Tuesday to allow players from either state to play on internet poker rooms based in the other.
Interstate gambling compacts are nothing new; many states around the country have combined to grow jackpots in lotteries such as Mega Millions and Powerball for years. When it comes to online poker, though, this is a first.
The “Multi-State Internet Gaming Agreement,” as it is called, was made possible by a source that people not in the online poker community might find unexpected: the Unlawful Internet Gambling Enforcement Act of 2006 (UIGEA), which outlawed the transfer of funds to and from internet gambling sites. While it did not make online poker explicitly illegal, it struck at the heart of the industry, its cash flow. The UIGEA did leave a window open for internet gambling, though, saying that if individual states wanted to legalize games such as online poker, they could. It also permits states who do legalize online poker to enter into interstate gaming compacts with each other. Hence, the deal that was struck today.
It was not a surprise that Nevada and Delaware came to this agreement. Both states’ governors had expressed interest in the past, so it was really more of a matter of “when” and not “if.” The reason the two states needed to do this was because of their size. The latest population estimates have Nevada at about 2.8 million residents, while Delaware is even smaller, with just over 900,000. Their gaming laws restrict online poker sites to accepting players from only within state borders (though players need not be residents – visitors who can be geolocated within the state are welcome to play). Because poker is a game in which players compete against other players and not the house, online poker rooms are extremely reliant on high volume traffic to their sites. Low traffic means sparsely populated games, which in turn are unattractive to both current players on the site and prospective players. This can result in death spiral in which people stop playing on the site because of its poor games, leading to worse games, leading to more defections.
Neither Nevada nor Delaware have been able to draw many players to their gaming sites, primarily because they are so small. The two Nevada poker rooms, WSOP.com and Ultimate Poker, have a seven-day average of just 190 cash game players according to PokerScout.com (RealGaming just launched, so data for that site is minimal). Delaware’s three casinos, which all share a poker network, have a seven-day average of only 16 players. Compare this to New Jersey, the other state in which online poker is legal, which has had 516 players frequent its sites in the past week. New Jersey is at a clear advantage as one of the most populous states with about 8.9 million residents. By teaming up, Nevada and Delaware hope to see their poker rooms draw larger crowds.
In a press conference Tuesday, Nevada Governor Brian Sandoval said the partnership will help the two states accomplish what they had originally envisioned for online gaming. “This agreement will harness the vast potential and reach those possibilities, leveraging them in ways that will greatly benefit our states’ respective economies while promoting industry growth and preserving consumer confidence in the integrity of the gaming industry,” he told the audience.
Added Delaware Governor Jack Markell, “We don’t know how the online gaming industry will evolve over time, but it does make sense to think long-term about ways to position our states to take advantage of future growth.”
The shared player pools will only be for online poker, as that is the only game Nevada allows. Delaware’s sites can offer a whole suite of games, such as poker, slots, craps, and blackjack. The most likely scenario for the merging of player pools is that players will login to the site of their choice in their state like they do now, but the players at the tables will be from both Nevada and Delaware. Of course, this doesn’t necessarily mean that every site in each state will share the same player pool; just like PokerStars players don’t sit at the same tables as iPoker Network players, it will probably be up to the sites to make sure they form interstate networks. It remains to be seen how all the exact details shake out.
The states will still have their own regulations and sites must abide by the laws of the state in which they are based. No date has been set for the interstate poker launch as the states and poker sites must make sure rules are all agreed upon and technologies all work together smoothly.
(quotes courtesy of video from KNRV-DT Reno)
