Thursday, January 19, 2012

Patchwork Poker

Patchwork pokerAmid yesterday’s poker-related headlines was a story from the Des Moines Register relating how a senator from that state, Jeff Danielson, is taking that recent memorandum from the Department of Justice regarding the 1961 Federal Wire Act as an invite of sorts for his state to entertain online gambling as a possible revenue source.

You remember the DOJ memo, the one from just before Christmas which clarified that the Wire Act applied to sports betting only. Danielson told the Des Moines Register this week he believed not only that the opinion -- which he (like others) calls a “ruling” -- opened the door for online gambling within the state, but also means “we can now have a multistate compact” with other states, too. (Danielson attempted to push a similar bill last year but failed.)

Another Iowa state senator, William Dotzler, is on board with Danielson. In the article he points out how “the evidence is pretty clear that Iowans are already gambling online… using offshore Internet gambling accounts,” and so he is ready, too, to find a way for Iowa to keep such revenue in-state. The article suggests Danielson is about to draft a bill for which Dotzler “would most likely serve as floor manager” when it comes to trying to shepherd it through the legislative process.

Iowa thus joins a growing list of states edging closer to following Nevada’s lead by passing legislation to offer some form of online gambling (either intra- or interstate). The District of Columbia has also passed such legislation, while New Jersey and California are making noises to indicate they may be next in line. Here’s a good, thorough overview by Michael Cooper of The New York Times reviewing where things stand at present, “As States Weigh Online Gambling, Profit May Be Small.”

That headline for the NYT piece suggests how the ability to form a “multistate compact” may well be key to states actually realizing significant revenue from online gambling -- i.e., the kind of revenue that would encourage some legislators to set aside whatever reservations they might have in order to vote in favor of such bills.

Right now the situation feels a little like one in which there are a few disconnected folks trying separately to drum up a game. They’re aware of each other, and in fact there exists a kind of competition between them to try and get a game up and running first. Yet all are additionally aware the game is going to be much better if they can somehow get to a stage where they can pool resources, share contacts, and spread a game that won’t have too many empty seats to be viable.

So many contingencies still must be met, though, including the one regarding whether or not such multistate agreements will be allowed to proceed free of any undue federal pressure. From the way the state senators and others (like New Jersey governor Chris Christie) are talking, there doesn’t seem to be a concern that multistate agreements can’t go forward à la the Powerball. But I can’t imagine such plans will be realized without some interference coming along at least to slow things down, if not stop them entirely.

Also worth noting in this context was Sen. Harry Reid’s comment last weekend regarding the DOJ’s revised opinion on the Wire Act and how “it’ll give us an incentive to get something done” with regard to pushing through a federal online gambling bill. Reid wants to avoid having “a series of laws around the country related to gaming,” believing “it’s very important that we have a national law.” See this Pocket Fives article for more on Reid’s recent comments.

The Des Moines Register piece ends with a quote from a representative of the American Gaming Association expressing similar concern “that a state-by-state approach would result in a ‘patchwork quilt of rules and regulations’ governing online gambling in the United States.”

It’s a legitimate concern. I don’t know how realistic hopes are for a federal bill to pass. But it sure seems at the moment that the “patchwork” state-by-state (or multistate) form of online gambling is a more likely future. If the future includes any online gambling in the U.S. at all, that is.

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