July 05, 2010

Double Dutch for Online Poker

"There's only two things I hate in this world.  People who are intolerant of other people's cultures and the Dutch."

—Nigel Powers (Michael Caine) in "Austin Powers: Goldmember"

This is much easier than jumping through the hoops
regulating international online poker.

Recently, there have been a pair of important Dutch legal rulings related to online gambling.  Last month, a European Union (EU) court ruled that the Netherlands could legally prohibit online gaming sites based in other EU countries from doing business with Dutch citizens, even if the online gaming site was operating legally and subject to regulation in its home country.  The primary rationale for the ruling was to allow countries to prevent fraud, crime, and problem gambling.   Although the court cautioned that countries cannot utilize a monopoly solely to expand and control the economic benefits of gambling within their borders, the court recognized that:
"It is possible that a policy of controlled expansion in the betting and gaming sector may be entirely consistent with the objective of drawing players away from clandestine betting and gaming – and, as such, activities which are prohibited – to activities which are authorized and regulated," said the court. "In order to achieve that objective, authorized operators must represent a reliable, but at the same time attractive, alternative to a prohibited activity. This may as such necessitate the offer of an extensive range of games, advertising on a certain scale and the use of new distribution techniques."

The fruits of the EU court's ruling can be seen in France, which recently forced online poker sites to be based within France, utilize a ".fr" website, and be open solely to players in France.  The French online poker regulatory regime is similar to that imposed recently in Italy.  Eventually, online poker sites may need to set up gambling websites in every country where they wish to do business, which may leave some smaller countries out in the cold.  In the very long run, however, I suspect these issues will be resolved by trade agreement (outside the EU), and by EU regulatory decree (within the EU), such that the poker will again be played across borders, with regulations in place to protect all players, and with each country getting its fair share of the taxation loot.

In a way, the EU country-by-country approach to online poker may be a harbinger of the eventual method of poker legalization in the United States, in which states enact laws legalizing online poker (or online gaming) within the state, subject to state regulation, and open only to residents or individuals located within the state.  Such an approach would satisfy the state's historical interests in regulating gambling, without need for federal action to regulate interstate online gambling.  Of course, there may be constitutional Commerce Clause issues to navigate, but an easy solution would be Congressional action to explicitly punt the issue to the states. 

On a more poker-positive note, a Dutch judge last week ruled that poker was a game of skill, and thus not subject to gambling laws prohibiting games of chance.  I haven't been able to find a copy of the court's decision itself, but this ruling, while welcome news for Dutch poker players, should be regarded with the usual caveats:
  • It is a lower court ruling subject to appeal, and appellate courts are much less open to the "poker is a game of skill" argument.
  • It applies only in the Netherlands, and has no real usefulness to the poker legalization fight in the United States.
Still, it's a great week to be a Dutch citizen, at least one who plays poker and loves sports.  For us in Iowa, we can celebrate with the ultimate in decadent treats—Dutch Letters from the Jaarsma Bakery in lovely and historic Pella.  For the rest of you, internet ordering will have to suffice.

Dutch Letters—Flaky pastry filled with almond paste and coated with sugar.

2 comments:

  1. This trend of creating isolated poker markets seems really worrying. One of the beauties of playing online is to be able to compete against inmense player pools against which you hopefully have a big edge.

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  2. @ astrobel: I agree, though a nationwide or statewide poker network will generally be a fairly big pool of players. For some smaller countries or states, however, the online poker community might become a "Chesterfield South" situation where the same players swap cash while the house takes a rake, hoping a few fish swim by from time to time.

    Another concern would be the effect on the development of the game, if poker becomes parochial. You wouldn't have the same influence of players from other countries on how the game plays, or which games get played. Of course, you will have the obvious problems of a lot smaller tournament fields and smaller cash game player pools, making your game of choice tougher or possibly even unavailable at times.

    Unfortunately, this piecemeal approach may be a necessary step toward an eventual international online gaming system. It's frustrating for now, however.

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