How Close is the US to Regulating Online Poker?

Chris Grove : August 9th, 2010

The short answer: closer than most people think, but not as close as most people hope.

The long answer: a variety of developments this summer have left us feeling that online poker has the best shot of getting regulated in the US that the industry has had in quite some time. We’ve collected and summarized those developments below.

Frank’s Bill Could Take a Legislative Shortcut

Most sober-minded people had a fairly tame reaction to the news last week that Frank’s bill got out of committee. Yes, it was a crucial step, but a long legislative road still lay ahead – passage by the House, passage by the Senate, a reconciled version of their two bills and a signature from Obama. Most figured the process would be a year, at minimum.

Then news emerged this week that the PPA would push for the bill to come up for vote as an attachment to another bill, as opposed to the bill standing on its own. Many readers will recall that this is essentially how the UIGEA was shoehorned into law in the first place. Pappas seemed fairly optimistic about the ability of the PPA and Frank to accelerate time-table for a vote on the bill. From a recent interview he gave to CardPlayer:

“As the chairman indicated, he thinks that the finance bill needs to move now, the tax and revenue piece of this in the House Ways & Means committee. So, we’re going to focus our attention there. There’s not a lot of time left. They’re on recess [now], and they won’t be back until September.

We’re going to try to push for what we can in September, and then we also have some opportunities to move some things in the Senate. And then we also have the lame-duck session.

”Read the whole interview here.

That obviously shakes up the time frame quite a bit, potentially reducing it from years to months – a good thing for the bill’s chances, as anything that generates revenue is going to have a better shot in this uniquely terrible economic climate.

Harrah’s is Pushing Aggressively Into Online Poker

Harrah’s has apparently seen the future, and it is online. The company has made a number of moves over the last two years to prep for what many regard as the inevitable regulation of online gambling in the US, but one step taken last week should serve notice to those who think online poker won’t ever make it in the US – the company opened a US-facing online poker free play room.

Harrah’s certainly isn’t the first – the WPT and CardPlayer both have subscription-based online poker rooms that accept US players. But while CP and the WPT may be big names in the poker industry, they’re not anywhere close to being in the same league as Harrah’s. You can also make the point that Harrah’s is simply working on branding the WSOP, and that reading into this launch is pure speculation.

That said, the move still feels significant. Harrah’s already has mobile and Facebook-based WSOP games, so a dedicated room would feel a bit superfluous if it were for that purpose alone. Also, remember that Harrah’s hired the former head of PartyGaming to run their online division and has a contract with 888 that covers software, support and banking. Seems like a pretty extensive bet simply to promote the WSOP.

At worst, the developments suggest that Harrah’s is preparing aggressively for a world in which online poker is regulated, meaning they’re less likely to oppose regulation on a legislative level. That’s critical, because without the support of the large land-based casinos, any bill having to do with gambling would probably be dead in the water.

Speaking of Party Poker…

In news that didn’t make much of a ripple, Party Poker last week cleared what many analysts believed to be the last possible obstacle to winning approval from US regulators. Specifically, majority shareholders Russ De Leon and Ruth Parasol reached a probity agreement with the company, significant because unlike their co-company founder Anurag Dikshit, De Leon and Parasol had not settled with US authorities.

Party head Jim Ryan had this to say about the move in an interview with EGR:

““There’s always been questions about PartyGaming and our position to do that, but we have now closed the loop and I think we are very well positioned for re-entering. Now all we need is regulation.”

”Seems like you might not be so interested in closing all those loops if there wasn’t a benefit, no? Of course, Ryan and co may just be catering to shareholder’s dreams of a re-entry into the US market, but the tying up of such minor loose ends suggests that they see regulation as a matter of when and not if, and that the “when” is coming sooner than later.

Gambling.Google.com?

Wouldn’t that be a nice little link up in the top left of your gmail?

Gmail | Calendar | SNG Lobby | Reader.

The possibility began to seem a lot less far-fetched last week when reports emerged that Google had purchased Slide, a company that focuses on virtual games with real-money exchanges. That, on top of the reports that Google had put a decent chunk of cash into Zynga – operators of the massively popular Facebook Poker game – the week before indicates that Google sees a real future for virtual games where real money exchanges hands.

Does that necessarily mean you’ll be able to play real-money poker at Google any time soon? No, but there’s a relevant aphorism one should note here, namely that to someone with a hammer, everything looks like a nail. If Google has all of the tools to generate revenue from online gambling, it might not be too long before they start to become an advocate for a regulatory scheme in the US. Harrah’s lobbying for regulation is one thing – Google coming out in favor would be another altogether.

It’s the Economy, Stupid

The US economy isn’t getting any better. Some analysts think it’s getting worse. Either option is depressing for the Federal Government, but states are in an even tougher spot, as many of them legally cannot run a budget deficit.

Gambling may not be an appealing revenue stream for some states, but it’s certainly more palpable than cutting basic services such as fire, police and education. The NYT had an article this week detailing the desperate straits states are finding themselves in; at some point, cash from gambling will start to look pretty damn appealing, at least when contrasted against the alternative.

Will all of the above equal regulation in the short-term? To put it in poker terms, it’s looking a lot more like a coin flip than a gutshot these days, but still – we all know how ridiculously hard coin flips can be to win.