As we approach the final quarter of 2017, a fourth consecutive year with no further online poker regulation in the US is looking increasingly likely.
Since 2013, proponents of online poker regulation in the US have been waiting for a “second wave of regulation” that would result in a “domino effect” of state-level legislation. Following an eventful 2016, 2017 was supposed to be a “breakthrough year” for online poker regulation in the US, but – to date – nothing has happened to support that theory.
Indeed, as the year has progressed, online poker legislation has taken a back seat to the regulation of Daily Fantasy Sports. In the past quarter, five states have enacted legislation “to regulate and legalize paid-entry fantasy sports” bringing the total number of states in which this form of online gambling is permitted to fifteen. DFS is tolerated in all but nine other states.
The Issues Preventing Online Poker Regulation
So, if state governments can regulate DFS in order to better protect players and raise tax revenues, why can´t they regulate online poker? Two reasons – tribal gaming and brick and mortar casinos. Depending on the state in question, one or both of these financially powerful parties has been the reason (or part of the reason) for the failure to pass legislation regulating online poker.
CaliforniaIn California, tribal opposition to the participation of PokerStars in a regulated market has been the biggest handicap to regulation for years. There has been no apparent movement towards a compromise since Reggie Jones Sawyer introduced his proposed legislation in February and, with the legislative calendar now finished for 2017, online poker in California is dead for another year.
MichiganIn Michigan, the current proposals to regulate online poker have lukewarm support from the tribal gaming community, but the state´s brick and mortar casinos are opposed to the proposals due to a tax rate differential. A “meaningful” hearing last month exposed more objections to the proposals, without resolving any of the constitutional issues preventing the regulation of online poker moving forward.
New YorkTime ran out for online poker in New York back in June; since when “market saturation” has been blamed for poor revenues being generated by the state´s fledgling brick and mortar casino industry. With fears already existing about land-based casino revenue being cannibalized by online gambling, future proposals to regulate online poker in New York may not be so enthusiastically received.
Despite encouraging noises coming out of Harrisburg recently, nobody knows if the budget revenue plan will include a provision for online gambling. Even if it does, there is no guarantee the regulation of online gambling in Pennsylvania will be resolved this year – as we saw in 2016, when the budget revenue plan included $100 million from an expansion of gambling which never saw the light of day.
Prospects in Other States Fade Away Quietly
In other states, proposals to regulate online poker faded away quietly. Massachusetts´ proposed omnibus iGaming solution ended up as a DFS-only solution, while House Representatives in Illinois chose to resolve the state´s budget crisis by whacking up personal taxes rather than support the online gambling and DFS bill passed by the Senate.
When I wrote my Q1 review back in March, I suggested other North-Eastern states would only consider the regulation of online poker once its larger neighbors had got involved, and that is still the case. At least proposed legislation was introduced in West Virginia and New Hampshire, whereas in Connecticut, Maine and Rhode Island, all was quiet.
It seems likely to remain that way for the foreseeable future, even if politicians in Pennsylvania decide to regulate online gambling in the Keystone State. Would that be a “keystone” moment that would generate a “second wave of regulation” and a “domino effect”? It seems unlikely considering the issues facing other states, but proponents of regulated online poker in the US can carry on hoping.