With 2016 ending, we look forward and examine the prospects for online poker regulation in the US over the next twelve months.
Proponents of regulated online poker had a pretty bleak year in 2016. Attempts to pass legislation in California, New York, Michigan and Pennsylvania were unsuccessful, and uncertainty exists over the future of regulated online poker in Nevada, New Jersey and Delaware due to a new president and continued attempts to ban online gambling throughout the country.
So, are the prospects for online poker regulation in the US any better in 2017? It is likely that the four states that flirted with regulation in 2016 will try again next year. They could be joined by up to six more states looking to support their brick and mortar casinos and capture tax revenues. Proponents often say it will only take regulation in one state to start a domino effect, but which one? If any?
Try and Try and Try and Try Again
Of the four states that discussed the regulation of online poker in 2016, new or revised bills are expected in California, New York, and Michigan. In Pennsylvania, a bill has already passed the House and is due to be discussed by the Senate when the legislature reconvenes in January. However, each state has its hurdles to overcome if regulation is to become a reality in 2017.
This will be the tenth year in succession that California has tried to pass legislation to regulate online poker, and each year the hurdles get higher. In an attempt to clear some of the hurdles last year, Assemblyman Gray introduced proposals that would see the horseracing industry the major financial beneficiary of the state´s tax dollars and that would ban bad actors for a period of five years.
These proposals have set dangerous precedents. It is unlikely that any new proposals that fail to take the horseracing industry into account will gain the support they need. Furthermore, tribes opposed to the participation of bad actors in the Californian market will insist that the ban (on PokerStars) remains in place – an impasse that might take another ten years to resolve.
Hopes were high for regulated online poker in New York when, in February, the Senate Racing, Gaming and Wagering Committee approved John Bonacic´s proposals for regulating online poker in less than four minutes. In March, a resolution within the state´s budget proposals called for “language to authorize and regulate online poker” and, in June, the Senate passed the proposals.
However, in New York´s other legislative chamber, Gary Pretlow´s companion bill wasn´t even considered for a vote. The primary issue is that a poker-only bill will generate limited revenues for the state and operators. It could cost New York more to regulate online poker than they will collect in taxes, while few operators will pony up the $10 million license fee to operate in a market with a potential value of around $20 million.
The state of Michigan seemed to be on a fast-track to regulation earlier this year when a bill was introduced, a hearing was scheduled and the proposals passed the committee stage in quick succession. However, a subsequent Fiscal Impact statement found that the costs of regulating online gambling in Michigan would likely exceed the revenues the state would collect.
It is also being debated whether the regulation of online gambling constitutes an expansion of gambling – an act that would require voter approval in a statewide ballot. There are also issues about the lack of player protection in the bill, tribal sovereignty, and the accuracy of claims that the regulation of online gambling in Michigan would create 22,000 new jobs.
The situation regarding regulated online gambling in Pennsylvania seems to get more complex by the day – if the two legislative chambers ever agree on the language of the bill. Proceeds from regulated online gambling were supposed to contribute towards $500 million gap in the state´s budget, but now may be used to replace the “local share tax” deemed unconstitutional by the Supreme Court in October.
There has also been some notable opposition to the bill from a leading politician. Senator Robert Tomlinson recently urged colleagues in the House of Representatives to consider underage gambling, problem gambling, cannibalization and actual revenues before passing any bill returned to the House from the Senate next year. His concerns are largely unjustified and have been dismissed before, but they keep getting air time and could be taken on board by enough legislators to prevent legislation passing.
The Potential New Kids on the Block
If Pennsylvania does eventually pass legislation to regulate online gambling, it could prompt neighboring states to take action. Massachusetts nearly passed online gambling legislation in 2013, while Connecticut may consider it if revenues from its brick and mortar casinos continue to decline. Ohio, Rhode Island and Illinois are other contenders that may discuss online gambling regulation in 2017.Indiana might also appear on the radar in 2017 now that former governor Mike Pence has stepped down to become Donald Trump´s VP. Whereas Pence – a co-sponsor of UIGEA and a supporter of RAWA – was definitely anti-legislation, his successor Eric Holcomb is considered to be more open to regulated online gambling as a way of reducing the number of “reversions” in the state´s budget.
Other Factors to Consider in 2017
There are plenty of other factors to consider in relation to the regulation of online poker in 2017. Caesar´s possible bankruptcy, underwhelming revenues from the three states that have regulated online poker, a lack of grass-roots support and how much effort PokerStars will put into driving regulation forward – the participation of PokerStars probably being the biggest factor of all.
The only bright light for proponents of regulated online poker in the US last year was PokerStars finally getting a license to operate in New Jersey. However, since March, the anticipated dominance of the world´s largest online poker site in the Garden State has failed to materialize, and its first live Festival event at the Resorts Casino was so poorly attended that many events had to be cancelled.
PokerStars´ parent company – Amaya – has its own problem at the minute and, with the company likely to oppose any legislation in California that doesn´t involve them, and unlikely to support legislation anywhere that is unprofitable, it is hard to see the world´s largest online poker site dedicating a load of resources to push for regulation in 2017.
There are a few outside chances of individual states passing legislation to regulate online poker. There might also be a few surprises with previously unconsidered states coming out of the woodwork. However the likelihood is that in twelve months´ time – when poker news sites compile their reviews of 2017 – many will be writing the same headline in respect of online poker regulation in the US – “Déjà vu”.