About a week ago, I was ready to sing the praises of Michigan, the fifth state to join the three states with legal online poker sites already in operation: Nevada, New Jersey and Delaware, along with Pennsylvania, the fourth state that has passed the necessary legislation and is gearing up to join them.
By the time I sat down to write my blog, however, Michigan’s online poker bill had taken a dagger to the heart, having been vetoed by lame duck Governor Rick Snyder during his last few days in office. Despite the tremendous support of the Wolverine State’s poker players, and the fact that the bipartisan bill had easily passed through the state Senate and House of Representatives, Snyder decided that it wasn’t “appropriate to sign legislation that will effectively result in more gambling.”
Apparently, Snyder killed the bill due to concerns about how it might potentially affect the budget. In his veto letter, Snyder wrote, “Due to largely unknown budgetary concerns, I believe this legislation merits more careful study and comparison with how other states have, or will, authorize online gaming. To be blunt, we simply don’t have the data to support this change at this time.”
Michigan lawmakers expected this one to be passed easily due to broad support from both sides of the aisle. Now it looks like they’ll have to wait to see how newly elected Governor, Democrat Gretchen Whitmer, feels about online poker.
From time to time we have tried to keep you up-to-date on the status of online gambling in the U.S. We imagined it would be an ongoing update with states falling in line to follow Nevada’s lead, but boy were we wrong!
In fact, since 2013 only New Jersey and Delaware have followed Nevada’s lead to legalize and regulate online poker, despite the millions of dollars generated in each state.
FINALLY, there is an update! As of October 30, Pennsylvania became the fourth state to legalize i-gaming, which includes i-poker. In a new white paper, “ Analysis: Pennsylvania Moves to Regulate Online Gambling,” several key points regarding the regulations as well as the revenue potential for the state are described.
For example, Pennsylvania will have a unique licensing structure, dividing licenses into three categories of Interactive Gaming Certificates (IGCs) – poker, table games, and slots. Licenses can be in only one or in all three categories, but buying an IGC will cost a hefty $4 million.
Also, Pennsylvania has some of the highest taxes on land-based casinos in the world and the same will apply to online gambling, with a 42% blended tax rate for the three online gambling options . . . more than twice the tax rate in New Jersey.
That means that New Jersey can afford to spend more than twice what Pennsylvania can on critical items like advertising and promotion. This explains why the online gambling market in New Jersey has been so successful, generating over $100 million in tax revenue in 2017.
On the positive side, the Pennsylvania bill is designed to facilitate a quick to market approach, taking advantage of the four years of experience and templates available to them from New Jersey and Nevada. The bill is also designed to make it easy for the state to share the online poker player pools already established by the other three states.
It will be fascinating to see how it goes in Pennsylvania. Just counting the projected upfront licensing fees, the state should see approximately $120 million injected into their state budget.
As Greg Raymer, Board member of the Poker Players Alliance states, “Every state has a chance, and the best way to get online poker in your state is to let your representatives know you want it, and that their decision on this issue makes a difference when it’s time for you to vote.”
In the meantime, we’re predicting that New York will become the fifth state to legalize online gambling. Which state do you think will be next?
It has never failed to amaze me that more states, in fact all states, don’t want to take advantage of the huge amount of extra revenue generated by online gambling, especially poker. I would have thought by now we’d catch up to the rest of the world, yet more than three years have gone by with only Nevada, New Jersey and Delaware successfully passing legislation, and reaping the benefits, of making online poker legal.
After more than three years, why does there suddenly seem to be more action in more states to get similar legislation passed? There’s California, of course, which has tried and failed on several occasions to get internet poker legalized. Until they can get the politicians, card rooms, horse racing crowd and the Indian tribes that currently have the monopoly on gambling to come together and make it happen, the latest bill from online gambling advocate, Assemblyman Reginald Jones-Sawyer, will probably die on the vine. That sure leaves a whole lot of money on the table that the union’s largest state could definitely make use of.
New York has managed to get two bills to the committee stage, which, if combined into one actionable and acceptable-to-all bill, might just have a chance of being signed by Governor Cuomo. Pennsylvania is also eager to have online casino gambling, but still needs to pass the necessary regulations. Their HB 392 would authorize full online casino gaming but also would open daily fantasy sports in the state; it has lots of support but hasn’t passed anything yet.
A couple of new-to-the-game states have also shown a lot of interest recently. Michigan has a bill, SB 203, to legalize online poker that’s also open to including other forms of online gambling activity. The voters of Michigan seem to be behind its passage, but there are still a bunch of hurdles to go through. And finally, a bill in Hawaii, SB 677, has been introduced to open “internet gaming” in the state, Interesting because Hawaii actually has laws on the books preventing live gambling.
As some might imagine, the desire on the part of these states and perhaps others to get legislation passed quickly has grown considerably since the current administration took office. While no one can predict what the president thinks about online poker (he seemed to be for it five years ago, but we all know that means nothing today), we CAN predict where the new attorney general, Jeff Sessions, stands on the subject. During his confirmation hearings he was asked directly what his thoughts were on the legality of online gaming by famously anti-gaming Senator Lindsey Graham, who has been among those who would love to re-institute the Federal Wire Act of 1961 (passed to deal with racketeering). Sessions testified that he already thought it wasn’t legal for online gambling to be conducted and would look into it further once he was heading the Department of Justice. Don’t you just love these states’ rights republicans?
Keep in mind that in 2011, it was the Department of Justice that announced its belief that the 1961 Wire Act applied only to sports betting, thereby opening the door for states to legalize intrastate non-sport online gambling, such as lottery ticket sales and Internet poker.
Bottom line is that we really have no idea which way this will go, considering the extreme views of certain leading republicans who continue to want to restore the federal Wire Act. Should that happen, states would be unable to circumvent federal law to pass their own internet gambling laws. Although that seems highly unlikely, the uncertainty about it has hastened the efforts of at least a few more states to pass a bill, under the assumption that they would be grandfathered if they had already legalized online poker.
A couple of years ago, we were following the progress of legal online poker with great interest; it seemed like the next big thing about to bust wide open. But not much happened and interest among our readers waned. Nevertheless, we decided to take another look at the status of online gambling today.
As many of you know, Nevada was the first state to legalize and regulate online poker in 2013, with WSOP.com controlling 99% of the industry. In March 2015, Nevada and Delaware entered into an interstate poker compact which benefited Delaware tremendously. New Jersey came on board at the end of 2013, There are currently two poker networks involving four sites in the state: Borgata, Party Poker, WSOP.com, and 888.
All eyes now are on California, Pennsylvania and Massachusetts as we look ahead in 2016.Being that it’s an election year, most pundits agree that no controversial legislation will be passed. On the other hand, some believe that with the huge popularity of DFS (Daily Fantasy Sports) and sports betting in general, the outlook for iGaming — including online poker — is brighter than it’s been in a long time.
We’ll let you know whenever there’s news about online gaming – there could be a surprise or two that we haven’t even considered yet. In the meantime we are heading off to the tables for a little bit of LIVE Texas Hold’em.