The States of Online Poker

Word is that Barney Frank (D-MA), the Chair of the House Financial Services Committee, is very close to reintroducing legislation -- any day now, apparently -- designed to counter the Unlawful Internet Gambling Enforcement Act of 2006.

What’re we supposed to think about that?

If the new bill is like his previous Internet Gambling Regulation and Enforcement Act (IGREA) -- introduced during the previous Congress almost two years ago -- it will likely propose a means by which to regulate and tax online gambling, thereby creating the possibility for U.S.-based sites to begin operating.

The IGREA had outlined a licensing process which would allow for such sites, however, it wasn’t too specific about how taxation would work. That sort of thing was more directly considered in some of the other anti-UIGEA bills that came and went over the last couple of years, and perhaps could get incorporated in Frank’s new bill somehow.

The IGREA was quite specific, however, with regard to its having included a provision for individual states to opt out of the new arrangement if they wished. And it wouldn’t take a vote or anything for that to happen, either. All it would take would be for the state’s governor to inform the person in charge of the licensing process (according to the IGREA, that would have been the Director of the Financial Crimes Enforcement Network, which operates out of the Department of Treasury) that his or her state didn’t want to play along.

Have to believe that given Frank’s “states’ rights” leanings, he’s likely going to include a state opt out provision again this time around, too, regardless of the specifics of the new bill. Probably something to consider, given what’s been happening in Kentucky and Minnesota.

You remember Kentucky, where the governor Steve Beshear decided last fall that in the interests of the state’s horse racing industry he’d declare himself king of the intertubes and try to block the state’s residents from accessing 141 domains on which online gambling sites were located? The governor lost that one on appeal back in January, although I believe the state’s administration continues to fight their cause, planning to appeal the appeal in the Kentucky Supreme Court.

And in Minnesota the Department of Public Safety (no less) last week ordered ISPs to start blocking access to over 200 gambling websites, an action based not on the UIGEA but on the 1961 Wire Act. Incidentally, the list of sites to be blocked appears to have been written by someone without a heck of a lot of knowledge of online gambling (which, of course, some might argue ain’t really the purview of “Public Safety” anyhow).

Most of the sites on the list are for casino games or sports betting, with just a few poker sites listed. Without much rhyme or reason, some poker sites are on the list (Full Tilt Poker, Bodog), while others are not (PokerStars, Absolute, UltimateBet). And there are some sites on the list (Titan, Mansion) that don’t even serve U.S. customers! I’m sure the proprietors of those sites are wringing their hands over losing Minnesota.

Anyhow, back to the upcoming bill. The political climate is certainly much different today than it was in May 2007. The prospects for a Frank-sponsored online gambling bill seem on the surface much more favorable in terms of it actually moving through the House and to the Senate, and perhaps even further than that. We all still lament the UIGEA’s passage and the fact that we still cannot play on many online poker sites. Perhaps many of us, having gotten so used to railing against the UIGEA for more than two-and-a-half years now, are still instinctively cheering on Frank or anyone else interested in challenging that misbegotten law.

But while the political climate has changed, so, too, has changed the climate in which online poker is currently being played in America. U.S. players have it much, much better today than they did two years ago when it comes to moving money on and off of online poker sites, despite the fact that the UIGEA regulations were finalized back in November 2008 and went into effect in January of this year. Of course, the situation could conceivably change when the UIGEA really goes into effect on December 1, 2009. That’s when “designated payment systems” are said to be required to start complying with the law’s interdiction against transactions from individuals to online gambling sites.

It is possible that Frank’s bill could, in fact, also contain language that would specifically undo the UIGEA altogether, incorporating the emphasis of a couple of his other bills from the previous Congress that didn’t make it out of committee. If that were indeed the case, online poker players will be in an interesting position when it comes to deciding whether or not to throw their support behind Frank’s bill, I think.

On the one hand, regulation and taxation probably is not something most of us sincerely desire, all things considered, although I can see certain benefits -- the most obvious being protection against fraud -- from having such regulation in place. On the other hand, it could be in our interests to see a bill become law that rendered the UIGEA obsolete, especially if come December our banks really did start preventing us from moving cabbage onto our favorite sites.

Whatever happens, it’s going to take some time. I could be wrong, but I’m reasonably sure we’ll get to December 1, 2009 before any repeal of the UIGEA happens. Meanwhile, at least one state -- California -- looks like it might be positioning itself to try to “opt out” of the UIGEA, in a sense, and write their own ding-dang laws concerning online poker (although it isn’t completely clear they can actually do that given the way the UIGEA is written).

If you happen to live in a state which presently doesn’t allow live poker, I guess I wouldn’t be all that enthused about the prospect of your state being invited (forced?) to make some sort of decision about the legality of your playing online poker.

Should be a while, though, before states start seceding from our embattled online poker nation.

(EDIT [added 4:00 p.m.]: News came today that Frank will be announcing his new bill tomorrow, May 6th. Stay tuned.)