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Online Poker Regulation in the US: Q2 2018 Review

Posted on by John Lathram

US Online Poker RegulationThe second quarter of 2018 has been a major disappointment for proponents of regulated online poker in the US, despite the repeal of PASPA in May and the partial passage of an iGaming bill in Michigan last month. Unfortunately, the situation is unlikely to improve in the run-up to November´s midterm elections.

On May 14th, the Supreme Court ruled the federal Professional and Amateur Sports Protection Act (PASPA) was unconstitutional – paving the way for states to pass their own legislation in order to regulate sports betting. Many states had preempted the Supreme Court´s ruling and put the wheels in motion to act on a positive outcome.

At the time of publishing this Q2 review, two states have joined Nevada in allowing their citizens to bet on the outcomes of sports events, five more have passed legislation to facilitate regulated sports betting, and a further thirteen states will consider bills to regulate sports betting when members return from their summer vacations.

The speed at which politicians have been able to introduce and pass sports betting legislation illustrates how quickly it is possible to make things happen when the desire is there. Compared to how long it has taken states to regulate online poker in the US – which has been an option since the DoJ´s opinion in 2011 – the same desire is apparently lacking.

Michigan the Only Silver Lining in a Cloudy Quarter

MichiganLast month I reported how Brandt Iden´s “Lawful Internet Gaming Act” had been passed by Michigan´s House of Representatives by a margin of 68-40. The Act will now be debated by the Senate in the fall, where a similar bill passed the Senate Regulatory Reform Committee in March 2017, but failed to gain the support it required in the full Senate due to financial, tribal, and constitutional issues.

Most of the financial issues have been addressed by a redistribution of the revenues from regulated online gambling in Michigan, but tribal and constitutional issues remain. None of Michigan´s tribes are onboard with the proposals and many observers feel Iden´s expansion of gambling services is still an expansion of gambling that requires statewide approval from voters.

Elsewhere, the Sound of Inertia is Deafening

Elsewhere, there was little to encourage proponents of regulated online poker. As expected, proposed online gambling legislation in Connecticut gathered dust for three months before being abandoned; while in New York it was déjà vu all over again as the Senate´s Racing, Gaming and Wagering Committee passed poker-only proposals for the third year running, only for them to be stymied in the Assembly.

Whether either state makes any progress in 2019 is in doubt. In Connecticut, a report on the consequences of taking the state lottery online is not due to be compiled until 2023; while in New York the driving force behind online poker legislation – John Bonacic – is retiring this summer. Considering the obstacles Bonacic has faced, it is not known whether another Senator will step up to take his place.

Are Gambling Operators Losing Interest in Online Poker?

One of the reasons why the drive towards regulated environments is stuck in the slow lane is an apparent lack of interest by gambling operators in online poker. In Pennsylvania, where applications for online gambling licenses opened in April, not one operator has applied for an all-encompassing $10 million license that would allow them to offer online slots, online table games and online poker.

It is being speculated operators are waiting for the 90-day application period to expire, after which individual licenses for online slots, online table games and online poker will be offered at a cost of $4 million each. This will enable operators to choose which services they want to provide – with the likelihood that many will opt out of online poker to save themselves $2 million.

Under Pennsylvania´s gambling regulations, it is possible for out-of-state operators to snap up spare online poker licenses; so the prospect of a regulated state with no regulated poker is unlikely. Nonetheless, the apparent lack of interest is concerning when positive lobbying by online gambling operators is one of the major contributory factors in getting legislation passed.

Possibly a revitalized Poker Players Alliance may be able to encourage some states to consider the possibility of regulated online poker – and some operators to support their efforts – but, considering the organization´s track record to date, it is not something that is going to happen in the near future. Certainly proponents of regulated online poker in the US should not hold their breath.

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