Gain a clearer understanding of the current U.S. online poker legislation picture.
Since 2011, United States online poker has been unable to approach the height of popularity it enjoyed pre-Black Friday. Once a darling of the global iGaming industry, the game we all love has been demoted to secondary status on many land-based casinos’ corporate balance sheets while struggling to become legalized online.
As of February 2018, only four U.S. jurisdictions (Nevada, New Jersey, Delaware and Pennsylvania) have passed legislation to allow real money poker on the internet.
The following U.S. online poker sites legislation update seeks to provide our Upswing readers with a better overall understanding of the current regulation/legalization picture. I’ll also go over some U.S online poker FAQs later in the article.
Pennsylvania Regulated Online Poker
Pennsylvania became the fourth state to legalize real money online poker in October 2017, when Gov. Tom Wolf signed House Bill 271 into law (Page 546). The large-scale Keystone State gambling expansion not only authorizes online poker, but allows the Pennsylvania Gaming Control Board (PGCB) to sell all-inclusive iGaming licenses (poker/slots/house-edge casino games) for $10 million USD — which is 25 times the cost of a similar license for neighboring New Jersey. Pennsylvania real money online poker is expected to “go live” in late 2018.
Party Poker, 888 Poker and PokerStars will be in the mix, as there is no suitability or bad actor language that would prohibit the world’s largest poker site from participating in the Keystone State market. (PokerStars currently operates in New Jersey, but is barred from providing online gambling services in Nevada).
Formally legalized online poker in the U.S. could receive a significant boost if Pennsylvania joins an October 2017 player pool sharing agreement reached between lawmakers in New Jersey, Nevada and Delaware. In this “best-case” scenario, roughly 8% of America’s adult population would be able to play online poker in a regulated, shared liquidity environment by early 2019.
In my opinion, Pennsylvania will need such an agreement for its online gambling offerings to be competitive due to the state’s expensive licensing fees and disproportionate tax rates (54% for online slots, 16% for online poker and house-edge casino games).
While this wouldn’t normally be of interest to poker players, it is widely believed that the Keystone State online gambling market will only be able to support a small number of operators due to the enormous upfront licensing expense along with more incoming land-based and internet options. House Bill 271 also paved the way for the state’s lottery to go online.
On top of that, the new law allows Video Gaming Terminals (VGTs, operated by Rush Street Gaming) to be placed in qualified truck stops — and PA could see its brick & mortar destinations nearly double as a result of Category 4 “satellite” casino license sales that have already brought in well over $100 million to the state’s coffers.
Michigan Regulated Online Poker
Michigan is one of the front-runners to formally legalize online poker in 2018 thanks to the efforts of State Representative Brandt Iden (R – Kalamazoo), who ushered House Bills 4926-4928 through the House Regulatory Reform Committee last year by a 12-3 vote.
As with many statewide online gambling legislation proposals in the US, the deciding factor of whether the Wolverine State regulates is heavily dependent on an agreement between land-based tribal and commercial casino stakeholders. Michigan law (specifically, the Gaming Control and Revenue Act of 1997) requires a 75% voter referendum to expand gambling in the state beyond tribal and Detroit casinos that already exist.
Lawmakers who are in favor of authorizing online gambling in Michigan are seeking a “workaround” to this by stipulating that all iGaming servers and related equipment be physically housed within those properties.
House Bill 4926, along with supplementary HB 4927-4928 proposals, would grant The Stars Group a clear pathway to enter the Michigan iGaming market along with its iDevelopment and Economic Association (iDEA) lobbying group allies, which include Party Poker parent company GVC Holdings, 888, Resorts Interactive, Betfair, Golden Nugget, Tropicana Entertainment and several other related interests.
Land-Based vs. Online “Security” Discussion in Michigan
One of the major points of contention in the September 17th, 2017 Regulatory Reform Committee Hearing was whether brick & mortar casinos or internet gambling operators provide a safer, more secure atmosphere for customers. You can consult this Michigan Regulated iGaming Study Guide I wrote for Part Time Poker if you would like a detailed timestamps review of the six videos from that hearing.
The Which platform is safer? battle played out in testimony between David Cookson of Sheldon Adelson’s Coalition to Stop Internet Gambling (Video #4) and John Pappas of the Poker Players Alliance (Video #5). Jeanne David (Head of Responsible Gaming for The Stars Group) and Martin Stuart (Director of Security Services for The Stars Group) provided additional testimony (Video #6) that also clashed with Cookson’s views that online gambling is less secure than brick & mortar casinos.
Here are some timestamps and bullet points from Stuart’s contributions during the hearing, which should be of keen interest to online poker players. Most of the information can be viewed via the on-screen display shown during Stuart’s testimony.
(6:38) TSG has 900 operations personnel members, 600 of which are dedicated to Customer Support while the other 300 focus on potential Terms of Service violations
(7:34) TSG has 240 staff members dedicated to Security
- Adoption of Know Your Customer and Anti-Money Laundering guidelines
- Use of Geolocation detection software
- Screening transactions for possible multi-accounting/duplicate account violations
(11:56) 67 staff members dedicated to Game Integrity
(13:11) Key Facts & Figures (TSG Global Operations)
- TSG receives average of 7.5 collusion reports from customers each day
- TSG receives average of 4 prohibited software (bots) reports from customers daily
- TSG testifies 90% of all colluders and 86% of all bots detected by TSG pro-actively
Which leads one to conclude…
- TSG receives over 2,730 customer-initiated collusion reports per year
- An unknown number of these are legitimate (TSG “total colluders detected” not provided)
- TSG receives 1,460 customer-initiated “bot” reports per year
- An unknown number of these are legitimate (TSG “total bots detected” not provided)
Therefore, PokerStars players are responsible for reporting 10% of all confirmed “colluders” and 14% of all confirmed “bot users” to TSG each year, which otherwise would not have been caught by TSG’s in-house Security and Game Integrity personnel/algorithms.
Although this September 2017 testimony points to the need for improvement by the world’s largest poker site when it comes to safeguarding peer-to-peer real money online gambling, brick & mortar casinos have their own security flaws — particularly in the realm of preventing “problem gamblers” from making real money wagers. Self-exclusion violation fines are routinely levied against land-based casinos for allowing banned individuals access to their facilities.
The back-and-forth rhetoric between land-based and internet gambling interests is peculiar (since neither can currently provide a 100% foolproof secure environment for their patrons), and highlights how many brick & mortar establishments still perceive iGaming as a cannibalization threat.
It is also worth noting that while PokerStars’ reliance on player-initiated complaints to root out hundreds of cheaters and non-human players each year is unfortunate (and needs to be improved upon), there is no indication that competing internet poker sites would, or do, fare any better against the growing threat of prohibited software and colluders.
U.S. Online Poker Legislation – Frequently Asked Questions
Q: What are the chances of regulated online poker in New York and smaller U.S. states in 2018?
A: Similar to Michigan, there are constitutional questions as to whether a future NY gambling expansion enacted by a congressional body would illegally bypass existing laws that require a statewide voter referendum in order for such industry changes to take place. There is an existing court battle (dating back to October 2016) brought forth by New York citizens against state officials which calls into question the constitutionality of current NY laws authorizing Daily Fantasy Sports.
However, there is still movement in New York to legalize online poker along with sports betting. Many believe regulated sports betting would quickly motivate several states to regulate iGaming.
In fact, there is a high profile sports betting case awaiting a ruling (expected later this year) by the United States Supreme Court that could overturn the 1992 Professional and Amateur Sports Protection Act (PASPA), which prohibits real money sports wagers from taking place outside of Nevada and three smaller jurisdictions. Following decades of professional US-based sports leagues shunning real money wagers on their events, the NFL, MLB, and NBA are now lobbying for “Integrity Fees” to be attached to any bet placed on their respective games.
This in turn leads many analysts to believe that the SCOTUS ruling will be favorable to allowing sports betting nationwide — which explains why sports betting is now widely circulated in iGaming media circles. Read PocketFives co-founder Adam Small’s Sports League Lobbying Efforts summary for PennBets if you’d like a clearer “current events” picture of this topic.
Q: What about California regulated online poker?
A: The gridlock between an important sector of tribal-based casino and iGaming industry stakeholders in California is at an all-time high, which is saying a lot considering how the August 2016 PokerStars/PPA pullout of legislation that would have legalized online poker in the Golden State resulted in the most heated poker legislation editorial ever published here at Upswing Poker.
Basically, an amended version of the long-forgotten Assembly Bill 2863 would have blocked PokerStars from entering the California iGaming market for several years (search for the word “suitability” in the linked document to learn more). Stars and the PPA subsequetly removed their support from AB 2863, calling it a “bad bet” for poker players.
So does that mean online poker fans are better served by California tribal casino interests (which have been a driving force of opposition to PokerStars entering the state)?
No, not really. California tribes have targeted commercial card rooms in CA according to this February 2018 article by Online Poker Report. Not to mention that the 2016 Pechanga coalition did everything in its power to block online poker until Assemblyman Adam Gray switched loyalties and included “bad actor” clauses in the bill.
As I stated earlier in this article, United States regulated online poker is extremely dependent on whether stakeholders in any given state are capable of coming to terms — and how efficiently statewide lawmakers are able to arbitrate such negotiations to then draw up legislative proposals that iGaming proponents (along with land-based interests) will support.
It doesn’t rely on voter or grassroots player initiatives or approval — aside from those efforts ultimately being incorporated into the rhetoric of whichever stakeholder is able to secure a meaningful database of engaged activists.
Q: Should I join (or continue to support) the Poker Players Alliance?
A: If you haven’t made a determination on this poker community-related topic, you’re not alone. I have periodically revisited this question in my own mind since August 2016 — and this is a decision that each online poker proponent should make for him/herself.
In many ways, The PPA and its staff have indeed provided value to poker players.
- Helped facilitate over $20 million USD in reimbursements to poker players affected by Black Friday government shutdowns
- Played critical roles in the four states that have formally regulated online poker
- Provided expert testimony before dozens of regulatory committees and panels
- Defended against attacks from opponents of online poker
In my opinion, these achievements are very much in line with players’ interests, but that doesn’t mean poker enthusiasts should ignore how the PPA aligned itself with PokerStars’ blockage of the 2016 California proposal that would have legalized real money internet poker. Or how incoming PPA President Rich Muny — an extremely engaged online poker activist — took out his own frustrations of getting the cold shoulder from The Stars Group’s decision makers by gaslighting TwoPlusTwo online poker proponents in the News, Views & Gossip forum.
Or the valid arguments posted by fellow online poker activist “curtinsea” within the follow-up thread on the 2+2 Poker Legislation board. Or dozens of other concerns related to whether the PPA has been/will be a net-positive/net-negative for players’ interests in the 46 states where online poker remains unregulated.
There is value in becoming as informed as possible on the subject of regulated online poker in your state, which should lead you to a more informed decision about which legalization movements to support/not support in the future.
From The Author: The aim of this article has been to inform our readers and the entire community of current events as they relate to United States online poker regulation. Opinions expressed in this writeup belong solely to me, and should be weighed, alongside and against, knowledge possessed by others whose interests align with passing meaningful legislation that enables lawful real money online poker in the United States.
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