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Mixed Day for Online Poker Regulation in the USA

Posted on by John Lathram

US Online Poker RegulationThere was both good news and bad news for proponents of online poker regulation in the USA yesterday, as one state moved forward and another one stalled.

Proponents of online poker regulation in the USA will clutch at any straw offering a sign of optimism right now. In the past few months it has become clear there will be no progress towards the regulation of online poker in California, Michigan or Massachusetts this year; and the passage of legislation in Pennsylvania and New York could be best described as in the balance.

Consequently, yesterday´s decision by New York´s Senate Finance Committee to pass Senator John Bonacic´s bill intending to redefine poker as a game of skill (S.3898) gave proponents cause to celebrate. The Committee did not debate the merits of the bill and, despite five committee members voting against its passage, approval was granted in less than a minute.

The passage of the bill came just a few hours after it was announced a scheduled hearing of Pennsylvania´s Senate Community, Economic & Recreational Development (CERD) Committee had been cancelled. The committee was due to vote on proposals to expand gambling in the Keystone State – although it was not known which set of proposals the committee was considering.

Good News in New York, or Nothing Much to Write Home About?

The passage of Senator Bonacic´s bill through the Finance Committee was largely expected. The bill is practically identical to the one that passed the same committee stage last year before sailing through the full Senate with a majority of 53-5. The bill is likely to sail through the Senate again later this year, but with five committee members voting against it, the bill may come under more scrutiny than before.

The bill will almost certainly come under more scrutiny – if it comes under any scrutiny at all – should the merits of the bill be debated by the New York Assembly. Last year, Assemblyman Gary Pretlow´s companion bill did not even reach the committee stage – Pretlow claimed it did not have the support to pass – and this year´s version of the bill has been gathering dust since it was introduced in February.

There appears to be stronger objections to online poker regulation in New York in the Assembly. Concerns exist about redefining poker as a game of skill to circumnavigate the state constitution and the impact online poker will have on new brick and mortar “Vegas-style” casinos. There is also opposition from tribal groups, who have been excluded from applying for online poker licenses.

New York´s legislative session ends on June30th, by which time Pretlow´s companion bill will have had to pass three committees and get the approval of the Assembly. While the court case against the regulation of DFS in New York is still in progress (DFS legislation was passed last year on the similar premise it is a game of skill), that timeline looks pretty tight.

Passage in Pennsylvania Looking Less Likely Every Day

The cancellation of the CERD Committee hearing is a worrying sign that legislators do not have a consensus on how – or if – the regulation of online gambling in Pennsylvania should move forward. Various proposals are on the table, the latest being an economically-viable one to license twenty-five “satellite casinos” throughout the state. This proposal excludes any form of online gambling.

Economic viability appears to be the cornerstone for any expansion of gambling in Pennsylvania. Governor Wolf has stated he does not want a “zero sum” resolution to the budget deficit, and several Senators have expressed concerns that the financial projections submitted by proponents of regulated online gambling in Pennsylvania may not be entirely accurate.

Senator Gene Yaw – who sits on the Senate Policy Committee – has said he is waiting to see accurate projections for each of the different proposals before supporting any expansion of gambling. The Senate Policy Committee has alternate proposals available to balance the budget – including the privatization of the state´s liquor sales and cuts to economic development programs that have failed to produce results.

Time is also of the essence in Pennsylvania. Legislators have to find a solution to the local share tax issue by May 26, and the deadline for balancing the budget is June 30. An extension to allow more time to resolve the local share tax issue is unlikely – one already having been granted in January – and, without a suitable proposal, local communities will have their incomes cut by $140 million per year.

A Glimmer of Hope, but Just a Glimmer

The passage of the online poker bill in New York will have brought a ray of sunshine to proponents of online poker regulation in the USA, who have invested a lot of time and money in their lobbying efforts and affiliate websites. However the clouds are gathering over Pennsylvania, where the likely outcome will be an eleventh-hour, knee-jerk reaction to avert a crisis.

What exactly the two states decide to do with regard to regulated online gambling is very much in the balance, with the time available to do anything reducing every day.

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