internet gambling

As I have written about before, Sen. Harry Reid (D-Nev.) introduced a bill earlier this month that would legalize a limited form of online poker. While the bill was clearly a payback to the Nevada casinos that treated him so well during his campaign, and despite the fact that there were many problems with the legislation (i.e., the 15 month black out for all online gambling), it would have represented a step forward for professional online poker players. It would have at least provided some measure of protection for poker players from the government.

As yet another congressional session is set to end without an online gambling legalization bill passed, it appears that professional Internet gamblers will left out in the cold once again — left to the mercy of any state legislator of government agency that wishes to target them.

While it was believed that Reid would attempt to  attach his legislation to the president’s must-pass tax bill, probably the best chance of passage during this session, that did not pan out. Now online poker players watch and wait as a couple of bills that could have legalized their chosen activity languish in the final days of Congress.

Frank’s bill H.R.226 — the Internet Gambling Regulation, Consumer Protection, and Enforcement Act — which had a good measure of bipartisan support, was apparently shelved once it passed through committee. Then along came Reid with his surprise proposal to legalize online poker. His attempt to attach the bill to the Obama tax-cut bill is a promising move taken from the very same playbook used to pass the UIGEA in 2006, which is the sneaky tactic that prevented real debate in Congress seems to have worked against Reid. Unlike UIGEA, which was sneakily attached to the “must-pass” SAFE Port Act of 2006 and had at least gone through some debate, Reid’s legalization bill did not. As Sahmus of the website “Hard-Boiled Poker” wrote:

…when it came to the UIGEA, that sucker had been around a long, long time — in various forms, that is — having been proposed again and again for nearly a full decade before. And in July 2006, the House of Representatives had passed H.R. 4411, the Internet Gambling Prohibition and Enforcement Act proposed by Jim Leach (R-AZ), by a 317-93 vote (with 22 absent/not voting). That is to say, while the Senate never really debated the UIGEA (a whittled-down version of Leach’s bill) in late September 2006, senators at least knew the thing had been discussed and approved on the other side of Capitol Hill.

But Reid’s attempt to legalize online poker seemingly came out of thin air:

It seems to me that the situation surrounding Reid’s bill is entirely different. Neither the full House nor the Senate has been given a chance to discuss or vote on any of Frank’s earlier bills designed to license and regulate online gambling in the U.S. And there really hasn’t been any discussion even on the committee level regarding an online poker-only licensing and regulatory scheme.

It appears that Shamus was right. And the news that Sen. Reid’s bill probably won’t pass isn’t causing too many tears among online poker players. Despite an understanding that the future could be worse than the the present, most poker players were only tepidly in favor of Reid’s plans for legalization.

First off, it does not sound as though the bill if passed would be such great news to any of the current “U.S.-facing” online poker sites — most particularly the two largest ones, PokerStars and Full Tilt Poker — all of whom apparently will be swiftly swept away from the U.S. market for an extended period of time should Reid’s bill become law.

The bill as written requires that no licenses to operate online poker sites in the U.S. will be issued until 15 months after the bill becomes law. Furthermore, the bill includes provisions to prevent issuing licenses to anyone but U.S.-based casino operators (or other business entities who have been involved in the industry here in the states for five years or more) for the first two years after that. In other words, Stars, Full Tilt, Cake, the Cereus delinquents, and others would all have to sit in the penalty box (so to speak) for at least 39 months before coming back to the U.S.

The idea here is obviously to try to develop this new market of online poker in the U.S. in such a way as to ensure its primary beneficiaries are U.S.-based (and, not incidentally, significant backers of Reid’s campaigns).

The future of online gambling, at least over the next two years, will most likely advance through state-by-state initiatives. The result could be a patchwork of regulations that still shuts out the current platforms from the market. We could also see World Trade Organizations complaints and lawsuits against states. The real victims, though, will be the online poker players, mothers, fathers, disabled, retired, etc. — people who simply want to earn an honest living through online competition; they will find their income drying up, or at the least will remain in a state of confusion about the legality of their chosen profession.

As I wrote last week, the federal government has no laws that makes online poker illegal in the U.S., but its ambiguous legal status will continue to see innocent online poker players snared by the U.S. legal system.