So How Long Till Regulation?

It'll be a long time till you'll be doing this for real money in the States again...

There is no way around it: we’re not playing online poker for money in the United States (on a major operator) for a long time.

But how long?

We’ve read varying articles that suggest Black FridayTM could speed up regulatory legislation. We’ve also read that the criminal stains splattered on PokerStars, Full Tilt, and AP/UB will make lawmakers less likely to touch online poker.

However, one thing clear to us that is getting lost in the media story-telling shuffle: there is absolutely no connection between the indictments and any past or future efforts to get online poker regulated in the United States.

There are no conspiracies here. This isn’t part of some evil plan by Caesars or MGM to clear out the competition.

Yes, even had Senator Harry Reid pushed his bill through in December, the indictments last Friday still would’ve happened. PokerStars/Tilt/UB are alleged to have laundered money and committed bank fraud. The Reid BillTM wouldn’t have saved them from those indictments.

So yeah, the indictments and regulatory efforts happened/are happening completely independent of each other. One brick & mortar gaming executive we spoke to, after his team had discussions with Senators and Congressmen, echoed that sentiment, telling us that they “[don’t] seem related.” And we have no reason to believe otherwise.

On that note, after speaking with a few industry insiders and gaming executives, here’s what we see as the most likely timetable scenarios towards regulation:

:: Scenario 1: Senator Harry Reid (and others) push Federal online poker regulation at the end of the 2012 session.

Why? Harry Reid still owes Nevada brick & mortars for getting him re-elected. He almost hitched online poker regulation onto legislation in the last out-going Congressional session in December 2010, and this would be his next chance.

If this happens, you’re still looking at a period of at least a year until proper regualtions are put in place and licenses are granted–so we’re at least three years away from any form of real money online poker in the U.S.

Scenario Probability: 50%

:: Scenario 2: D.C., California, Nevada (and others) push through intrastate bills, forcing the Fed to step in.

Why? Well, it’s already happening.

D.C. has legalized it. Iowa is approving a study to legalize it. Nevada has movement. California and New Jersey have made progress.

If multiple states push through regulation this year, it *may* force the Federal government to step in quicker. Federal regulation is by far the preferred method of brick & mortar casinos, and Caesars/MGM will be all up in Harry Reid’s ear to make sure they don’t lose their edge to the Tribes or other entities.

In this scenario, which we’d consider the best-case, we’re still two years away though from actually playing real money games.

Scenario Probability: 25%

:: Scenario 3: Nothing is pushed through of note at the state or Federal level by end of 2012.

Why? Because if nothing happens at the intrastate level, and nothing happens at the end of the 2012 session, then we’re in for a long legislative process.

Obviously, this would be a worst case scenario, particularly if Republicans take control of the house.

As one industry insider told us, “…more republicans [doesn’t] necessarily mean less gaming support; nannycrats are just as problematic,” which is true, except that online poker regulation will always have more support by Democrat committee heads, at least in the short-term.

Regardless, in this scenario, we’re looking at at least five years before we’re playing real money online poker in the U.S.

Scenario Probability: 25%

It’s not all bad news. Clearly brick & mortar lobbying efforts have stepped up in favor of online poker regulation over the past couple of years. And if the PPA ever gets their messaging on point and focuses on the financial benefits (as opposed to the personal freedom argument) of regulation, then they’ve at least shown they can mobilize constituents online to send letters to their elected officials.

But make no mistake about it, we’re years away from playing Federally regulated online poker in the U.S. So dig in, it’s gonna to be a long night.



2 Responses

  1. TJ

    April 26, 2011 8:27 am, Reply

    Great post man. One questions, Scenario 2: Wouldn’t it be legal to play online in those states that push through intrastate bills directly?

    Many professional players would probably move there if so, and remote desktops could solve the problem for others.

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