By Martin Owens
And Then There Were Three: State governments check out Internet poker.
"Seize your opportunities by the beard, for they are all bald behind."
Philadelphia, PA (Sports Network) - Today three American state governments - California, Florida and New Jersey - are formally considering legalizing online gaming. They have had the right to do that since 2006. The Unlawful Gambling Internet Enforcement Act ( UIGEA) clearly sets out that it is legal for the states to do that - probably the only clear statement in that impossibly muddled law.
Why has it taken so long? First, the need was not great enough until now. The supposedly wicked influence of gambling on society made it risky for politicians to support it. In real life, of course, gambling's reputation as a social evil is vastly overblown. If the powers-that-be were serious about keeping John Doe away from risky, ruinous propositions they would close the stock markets and the companies peddling worthless mortgages. But old prejudices die hard, and gambling is never allowed to expand as long as those in power can still afford a conscience - or at least gestures that look conscientious . This time, however, the financial jig is up. At least thirty of the Fifty States are looking at big deficits this year ( California's is a horrific $20 billion, for the third time in two years.) But this time, there is no bailout from Washington on the horizon, and it is a tossup whether spending cuts or increasing taxes are more politically dangerous in this shaky economy. And so ignoring a potential source of revenue, from an industry that is positively volunteering to be taxed in return for an authorized shot at the US market, makes less and less sense, even in statehouse politics.
Second, there was opposition from vested interests. Forty eight states permit some form of gambling, and that meant constituencies eager to protect the home markets. Card rooms and Indian tribes, race tracks and casinos, all agreed on one thing: Internet gambling cut into their customer base. But that was before the economy imploded, before people started deciding that a night out or a resort weekend was a luxury they couldn't afford anymore. The handle dropped all through the gaming industry- but it dropped least for I-gaming. Meantime, new formats and games added to online gaming's attractiveness and availability. Internet poker's global market, in particular, swelled to $15 billion, recession or no recession. Noted California political strategist Jim Tabilio told me that, "even the Indian casinos began to wonder if they weren't becoming the next Blockbuster, stuck to an outdated business model." The California Senate will hold hearings on legalizing Internet poker beginning February 9th.
Similar conditions prevail on the other coast, too. Consultant Frank Catania, experienced both as a New Jersey legislator and head of its Division of Gaming Enforcement, confirmed that State Senator Lesniak's bill to legalize Internet poker was finding unexpected allies. Formerly flush Atlantic City casinos were no longer united against I-gaming, especially if sign ups were to be handled through their brick and mortar facilities. "They're hurting", Catania explained, "and they're coming to see that they need this."
Meanwhile, in slightly frosty Florida, the state legislature is reviewing a study it commissioned on the feasibility of online poker down there. Florida's Office of Program Policy Analysis noted that licensing it would lead to increased revenue and better consumer protection. Florida, in fact has already passed a law authorizing Internet poker if the authorities consider it worthwhile.
So which one would be first? California, with the greatest need and an existing regime of licensed card rooms to build on, would be able to get into action quickest. Florida has effectively given itself permission to move, but would essentially have to construct its system from scratch. New Jersey would have the power to buildup quickly if the casinos cooperate- but this state has seen, and lost, several previous opportunities to legalize so Jersey is still a tossup. The race to be first with in-state online poker seems to be California's to lose.
The advantages will be many for the first operator to crack a US market, and the system itself would become the keel of a multistate system that would inevitably- and rapidly- go nationwide. That means benefits for the first state to get its system up and running. AS Andrew Carnegie said, "The first one in gets the oyster, the last one gets the shell." We'll soon find out who's the best swimmer.
Mr. Owens is a California attorney specializing in the law of Internet and interactive gaming since 1998. Co-author of INTERNET GAMING LAW with Professor Nelson Rose,( Mary Ann Liebert Publishers , 2nd ed 2009) ; Associate Editor , Gaming Law Review & Economics; Contributing Editor, TSN. Com
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