December 24, 2011
"All politics is local."
~Former House Speaker Thomas P. "Tip" O'Neill
Earlier today I discussed the reasons why online poker isn't legal despite the DOJ's recent formal opinion stating that the Wire Act applies only to sports-related gambling. Essentially, because poker, like all gambling, is regulated at the state level, the DOJ's position regarding the Wire Act ultimately has little direct effect on the legality of online poker. An important corollary to this point is that the online poker legalization battle will have to be fought and won in each individual state.
I know poker players and the PPA are focused (correctly) on federal legislation to legalize online poker. Technically, Congress could use its Commerce Clause power to preempt state gambling laws and impose a national online poker system. Given that gambling issues are traditionally the province of the individual states, and given the lack of national consensus as to legalization of online gambling, a sweeping federal plan is a complete non-starter.
The best result poker players can hope for on a federal level is legislation permitting online poker on a national basis, while allowing individual states to choose whether to participate in the system. An "opt-out" system (where states are included in the system unless they specifically choose not to participate) is superior to a federal "opt-in" system (where states must affirmatively choose to join the system). For any controversial issue, it is politically easiest to maintain the status quo, as political change requires affirmative use of political muscle. So, an opt-out system is almost certain to bring many states into a federal system which otherwise would lack the political will to affirmatively join under an opt-in system (as of now, Nevada, California, New Jersey, Florida*, and Iowa are the only states which have actively explored legalizing online poker).
If federal legislation fails, then individual states will likely begin to legalize online poker on an intra-state basis. As I have discussed previously, it is likely states will adopt some type of reciprocity system to permit players from states where online poker is legal to play against players from other states with similar online poker regulations. Consortiums like this would improve liquidity and create synergy for all participating states, leading to increased numbers of players (and greater rake and tax receipts). It's also possible, even probable, that as states become comfortable with security issues, foreign players from countries where online poker is legal would be permitted to play as well (though there likely would be some tax and money transfer issues to work out on a federal level first).
The most important point to remember, however, is that whether online poker legalization occurs at the federal or state level, the online poker legalization process is controlled by each of the 50 state legislatures. The legalization process will be easy in some states. But in many states, online poker advocates will have to engage in a political battle against a variety of opponents. Obviously, the usual groups opposed to gambling on moral and social grounds will be vocal. In some states, local or tribal casino interests fearing loss of revenues may oppose online poker, and may have the money and political clout to prevent legalization. There will certainly be a few states where opportunistic politicians will shanghai the online poker issue to strong-arm political concessions for completely unrelated issues.
Make no mistake about it, the online poker legalization fight will be a long and messy process. Regardless of whether a federal or state level system develops, it's entirely possible that online poker may not be uniformly available in all of the states for several years, possibly even a decade. Professional players willing to relocate will likely be able to find a state where they can play legally within a year or so. Unfortunately, many recreational players will not have that option, and will be left to the whims of their state political process.
It's time for poker players to get to know their state legislators.
* ADDENDUM (26 December 2011): Edited to add Florida to the list of states which have actively explored legalizing online poker. I was inspired to go back over my post by a thoughtful discussion of the DOJ opinion posted today by Shamus at Hard-Boiled Poker. Just more evidence my memory isn't what it used to be!
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