While the poker blogosphere was abuzz last week with news that the U.S. Congress may take yet another crack at regulating Internet gambling at the national level, the conversation continues in lively fashion at the state level, where the industry’s best hopes for expansion still lie and where advocates can point to progress, though it’s been halting, and the results predictably have been mixed.
So far this year, the issues have been visited in no fewer than 14 states representing in total more than one-third of the population.
Everyone knows about Ultimate Poker, the country’s first legal real-money site, which has been operating on an intrastate basis in NEVADA for a little over a month. Lawmakers there continue to tweak the rules. Earlier this year, they amended the authorization statute to provide for interstate compacts. Last week, they added foreign and Indian tribal governments to the list under a bill approved by the Legislature unanimously.
DELAWARE has chosen the supplier for its intrastate online platform, which is slated to be unveiled by the Delaware Lottery this autumn. Selected was a joint venture consisting of the state’s current lottery supplier, Scientific Games, and Williams Interactive, a division of U.S. slot machine giant WMS Gaming, which was acquired by SciGames earlier this year, and Williams’ platform provider, LSE-listed, Gibraltar-licensed 888 Holdings.
NEW JERSEY has submitted its draft regulations for public consultation, a process that concludes in August, at which time rules will be drafted enabling Atlantic City’s casinos to run their games online within the state, possibly by the end of this year.
In ILLINOIS an add-on to bill providing for a considerable expansion of land-based gambling would have permitted current and future casino licensees to operate on the Web within the state. But the language was removed in response to concerns from Gov. Pat Quinn. The larger bill, designed to plug a multibillion-dollar gap in funding for public pensions, died earlier this month as the summer legislative recess approached with too many details still to be hammered out.
It is possible the online issue could be revisited later this year in the form of standalone legislation. A stripped-out version of the original amendment has been recast as a test bill that has the backing of Senate President John Cullerton. The bill would create a Division of Internet Gaming within the Illinois Lottery and would allow any entity currently licensed to offer a broad range of games to Illinois residents under a tiered tax system ranging from 7.5 percent to 20 percent of revenues. The bill also applies a 10-year prohibition on any applicant “who has been convicted of accepting wagers via the Internet in contravention of this Act or United States law”—a somewhat more open-minded application of the “bad actor” clauses imposed in Nevada and elsewhere.
MASSACHUSETTS is in the process of licensing three full-scale casinos and a slot parlor which are expected to be operating by 2016, and lawmakers looked ready earlier this year to add intrastate online gambling, or at least poker, to the mix. A bill was introduced in the Senate in February, and a similar amendment was attached in the House of Representatives to the 2014 budget. But hopes dimmed when the House rejected the budget amendment and were extinguished altogether in May when the Senate’s minority Republican caucus attached a budget amendment to allow the four prospective casinos to take their wares online at a tax rate of 20 percent, but it was ruled unconstitutional and was withdrawn.
A similar measure was proposed earlier this year in NEW YORK by a bipartisan coalition in the state Senate but it failed to make a legislative deadline for inclusion in the 2013-14 budget.
In populous MICHIGAN, home to more than 9 million people, the administration of Gov. Rick Snyder is asking the Legislature for more than $3 million to establish an “iLottery”. Officials of the Michigan Lottery say Internet sales could increase profits by $100 million over the next four years. But Snyder’s fellow Republicans, who control both the House and Senate, disagree on the plan. The former has approved the request, the latter intends to reject it as part of its negotiating position on the state budget. Snyder is up for re-election in November and is reported to vulnerable.
OHIO lawmakers likewise are skeptical of the state lottery’s contention that taking its products online would make them more competitive with other forms of gambling and boost sales by attracting younger players. Trade groups representing retailers are united in opposition to any Web offering. The House of Representatives already has approved a ban, and the Senate was due to consider one before the Legislature recesses in the next month.
The KANSAS Senate has approved the insertion of an online ban in the state’s gambling statutes. The amendment, sponsored by Republican Jacob La Turner, would make Internet wagering a criminal misdemeanor. The state is home to four land-based casino “zones,” and La Turner represents the only one without an operating property.
In WASHINGTON, online poker advocates are working to collect 300,000 signatures on either of two ballot initiatives to change the state’s laws on Internet gambling. One would overturn an existing law that makes it a felony to play poker online. The other would authorize the state Gambling Commission to establish a licensing process for online and mobile poker rooms. If either reaches the required number of names it will then go to the Legislature for consideration. Or it’s possible they could then go to statewide referendum. A bill died in legislative committee earlier this year that would have eliminated the five-year prison term for which convicted players are liable.
In OKLAHOMA, in one of the stranger disputes to arise over Web gambling, the Cheyenne and Arapaho Tribes have taken down a free-play site in exchange for the state’s consent to a Web gambling operation outside the United States should the tribe choose to launch one. The Cheyenne and Arapaho owns two land-based casinos in Oklahoma under a federally mandated gaming compact with the state that does not permit expansion onto the Internet, not in Oklahoma and anywhere in the United States, according to Oklahoma’s interpretation, and the negotiations that produced the agreement on the international operation requires the tribe to continue to pay fees to Oklahoma.
Down in the Deep South in LOUISIANA, a state of 4.6 million that is home to 18 commercial casinos, three tribal casinos and dozens of small but lucrative video poker venues. “Gambling by computer,” however, is against the law. Republican Rep. Mike Huval wants to change that and has prevailed on the GOP-controlled House of Representatives to approve a legislative study on the “feasibility and practicality of authorizing Internet gaming”. Should it pass the Republican-controlled Senate, a panel of lawmakers from both houses would oversee the study and report their findings at some point next year.
At the other end of the continent a handful of lawmakers in PENNSYLVANIA think it’s urgent that the nation’s sixth-most populous state protect its home-grown casino industry from competitive threats lurking in a number of corners, mainly in neighboring New Jersey. First-term Democratic Rep. Tina Davis, who represents a suburban district a few miles northeast of the Philadelphia city line, was joined in April by nine Democrats and two Republicans in introducing HB 1235 in the Republican-controlled House. The bill would allow the state’s 11 standalone and racetrack casinos to offer house-banked casino games online, plus poker, but excluding numbers-based games that could be deemed a threat to the Pennsylvania Lottery.
Analysts suggest an online industry in the Keystone State could generate US$450 million in revenue its first full year and maybe $800 million in five years’ time. That would deliver an estimated $126 million to $224 million to the state’s coffers, based on the 28 percent tax rate the bill contemplates. Looking ahead to the inevitable political opposition, it earmarks 85 percent of these proceeds for tax relief and other services for senior citizens and carves out the balance for the state’s horsemen. Operators would pay another $5 million up front and would be assessed $500,000 every three years to renew their licenses. It’s an intrastate-only bill that requires players to register in person at a casino to establish an account. But it allows for interstate and international compacts.
HB 1235 has considerable support within the leadership of the Democratic minority in the House.
Thomas Caltagirone, the party’s ranking member on the Judiciary Committee, and Mark Cohen, the ranking Democrat on the State Government Committee, are co-sponsors. One of the Republican co-sponsors is George Dunbar, vice chairman of the Gaming Oversight Committee, where the bill has been lodged.
Three weeks after its introduction, veteran Republican Paul Clymer brought out a bill, HB 1404, to prohibit the state Gaming Control Board from licensing Internet gambling. Also routed to the Gaming Oversight Committee, 13 Republicans and one Democrat have signed on as co-sponsors—the lone Democrat, Michael O’Brien, oddly enough, represents a Philadelphia district that includes Sugar House, the only casino within the boundaries of the city. His district also takes in neighborhoods where Steve Wynn and several influential local entities are vying for city’s second land-based license.
Neither HB 1235 nor the Clymer bill is likely to make progress before the House recesses for the summer. Neither has been aired yet in the Gaming Oversight Committee, and, to date, no hearings are scheduled. The committee doesn’t plan to convene before 20 June, after which the House has just five sessions before the break.
Then there is CALIFORNIA, the big prize, home to 38 million people and the world’s eighth-largest economy. Legislation has been advanced several times in the last few years only to fall apart through failure to reconcile the competing interests of the card rooms, the racetracks and a large and powerful tribal gaming industry, which itself is divided over the issues.
Currently, three bills are under consideration, two have actually been introduced in the Senate, but neither of these is likely to be considered before the Legislature reconvenes after the summer recess. A previous sponsor, Anaheim Democrat Lou Correa, introduced SB 678 in February, authorizing intrastate poker under the auspices of the California Gambling Control Commission. The bill was routed to the Committee on Governmental Oversight, which is chaired by Inglewood Democrat Roderick Wright, a long-time advocate of legalization who introduced a more detailed bill of his own, SB 51, back in December.
SB 51, the “Internet Gambling Consumer Protection and Public-Private Partnership Act,” allows for online poker on an intrastate basis by any of the state’s currently licensed operators—the tribes, the tracks, the card rooms, advanced deposit wagering sites—or entities in “good standing” approved for a license, provided they’ve been in business at least three years and locate their operation in California. (“Good standing” would exclude any operator that took bets from Americans after the 2006 passage of UIGEA.)
The bill contemplates a 10 percent tax on gaming revenue and a $30 million startup fee credited against the tax. It also would permit interstate compacts subject to the approval of the US Justice Department.
A more restrictive bill is being circulated in draft form by an alliance of eight tribes that doesn’t like the idea of combining player pools with different states or foreign networks and would ban them.
Led by two powerful Southern California tribes—the Pechanga, owners of a resort casino in Riverside County, and the Agua Caliente, owners of resort casinos in Rancho Mirage and Palm Springs—the group’s “Internet Poker Consumer Protection Act of 2013” would restrict the industry to tribes with casinos and card rooms that have been in business at least five years. Games would be limited to poker. The license fee would be $5 million, and licenses would be good for 10 years. The bill’s “bad actor” clause would permanently ban any entity that took bets from Californians prior to the bill becoming law.