Editor’s Note: Please note the legal landscape has changed slightly since we wrote this in March of 2015, but much (unfortunately) remains the same:
The venerable American tradition of poker playing exists under an unfortunate, looming shadow of legal ambiguity when it comes to playing online in most U.S. states. It stands in stark contrast to the regulated UK market where poker sites operate with full legal certainly and are now targeting, together with the big UK casino operators the fledgling US gaming market.
Ever since Black Friday, when U.S. authorities effectively shut down online poker nationwide, players have wondered the same thing: Are we headed for the next poker boom, or will a new nationwide ban spell poker doom for the online gaming industry in America?
We’re Not Drawing Dead, but We’re Not Ahead Either
Though tens of thousands of players are able to legally enjoy the game in hundreds of brick and mortar card rooms across the U.S., as of this writing only three states have officially declared online poker legal, with a regulatory framework to match.
We’re not lawyers here at Red Chip, but we obviously follow the industry very closely. There is no clear-cut timetable for the legalization of online poker. In fact, there isn’t even any assurance that poker will remain legal in the three states it’s currently legal in. Believe it or not, very powerful political forces are making big gains toward outlawing poker… again!
Rather than break it down state-by-state and make spurious predictions, we are going to give you ten important facts that will help you come to your own conclusions. Poker legalization is like poker itself — a game of incomplete information, with lots of colorful characters fighting hyper-aggressively to take down a massive pot. And the sad truth is that the non-conducive legal and political climate is means poker legalization is a dog right now, drawing to fewer outs than any poker fan would be comfortable with.
1. The fight against online poker in the U.S. is heating up
The 10th richest person in the world hates online poker, will “spend whatever it takes” to outlaw poker across the entire U.S., and is winning the fight.
Congress will soon hold a hearing (postponed due to bad weather in March) on the Restore America’s Wire Act bill, which would ban all U.S. states from authorizing online poker. As you can imagine, poker players and online poker industry reps are fighting this hard, and you should join in, because Villain in this scenario is Sheldon Adelson, who has a stack of $36.4 billion to shove against online poker. This 0.000001 percenter has vowed to “spend whatever it takes” to corrupt and manipulate the political and legal landscape in his favor. Why? Though couched in moral rhetoric, the motive seems to many to be simple profit: he owns some of the largest brick and mortar casinos.
Adelson has stacked the deck in his favor for the upcoming hearing, so we’ll be watching closely for any harbingers of doom that could spell the end of online poker in the U.S., at least for the time being. Poker scholar Nolan Dalla has the best summary of why online poker could get outlawed.
2. In the states where it’s legal and regulated, online poker has had an underwhelming debut
The only three U.S. states where poker is currently legal are Nevada, Delaware and New Jersey. In each of those states, legalization was fought for and won largely based on promises of extraordinary additional revenue being generated. In Jersey alone, Gov. Christie promised $1 billion in revenue for Atlantic City casinos, while only a fraction of that has actually materialized.
By all accounts, legal online poker is getting off to a slow start in the three states that are currently running games. But a little perspective is necessary: for one, the promises of huge revenues were deliberately exaggerated by lawmakers to push legalization through.
Secondly, it’s important to remember that as of this writing, states cannot share player pools between them — although we expect that to change in the coming weeks as Nevada and Delaware being sharing their player pools. This is a godsend for Delaware in particular, with under 1 million residents in total. The state’s measly $27,695 in online poker revenue in January 2015 will give you a sense of how badly the industry needs to combine its player pools. Some poker sites in Delaware average less than one full ring game at any given time!
3. Current efforts to legalize poker in U.S. states keep getting delayed
In Washington state, playing online poker is currently a felony despite the state having 74 brick-and-mortar poker rooms. Perhaps because of this insanity, there has been recent interest in legalizing online poker, but it is still years away by all estimates.
California was primed to legalize poker this year, but 2019 is the new prediction from one well-placed industry representative. The state is seen by many as a “tipping point” for online poker, a prerequisite for getting a discussion going at the Federal level.
The main problem is that #1 and #2 on this list are putting up huge barriers for other states to get in on the legal poker action.
What Are Our Outs to Poker Legalization?
The facts being what they are, the ultimate question is, what needs to happen for online poker to become legal? It all hinges on the outcome of the three situations listed above.
If Adelson’s well-funded fight to restore the Wire Act doesn’t get off the ground after the congressional hearing, that may signal the industry to move full steam ahead. It may also embolden Adelson to fight harder. It’s hard to see either side giving up anytime soon, there is too much money at stake. And with the brick-and-mortar and online poker industries often working cross-purposes, progress will likely remain slow.
We certainly expect the shared player pool between Nevada and Delaware to reinvigorate action in those states, but with legalization in limbo, the marketing and promotion of the now-legal sites will need to be stepped up to increase the size and diversity of the player pool ASAP. It’s incumbent upon the stateside poker industry to find more fish for the tank to set new peaks in user traffic, or risk action drying up completely.
Finally, we’ll need to see more state lawmakers introducing bills to get enough of a critical mass to discuss legalization on the national level. Key states like California or New York can be a tipping point. We’re going to need a lot of skill — and a little luck — to win this one.