Online poker creating strange bedfellows

An interesting year for the online poker community is getting even more interesting. Ever since the December announcement from the US Department of Justice changing their stance on the usage of the Wire Act of 1961, the poker world has been turned upside down. Many are excited over the potential of having a new regulatory environment for playing poker online, either in major states or at the federal level.

Of course many are hoping for federal legislation, and that’s making for some very interesting political bedfellows. The most interesting involves Harry Reid and Dean Heller, the two Senators from Nevada. Naturally, both of them have a huge interest here, as the casinos corporations in that state have a serious stake in the matter. But Reid is a Democrat and majority leader in the Senate, and Heller is a Republican who is up for election this year, with Reid naturally backing his Democratic challenger. The article lays out how they’re both working to get poker legislation passed, but it’s a delicate matter and both sides want it to happen without benefiting the other side too much politically. Like I said, the issue is creating strange bedfellows.

Something will happen here eventually. The states are anxious to move on this, as many people agree that poker is a game of skill, and states would like to get a cut by regulating the game.

Why legalizing online poker is good policy

playing poker

Online poker is huge business on the Internet, but American companies are prohibited from participating due to a bill slipped in by the Republican congress back in 2006. Now, Harry Reid is trying to reverse that by legalizing online poker in the lame duck session.

While the odds are against him with opposition from the holier-than-thow Republicans, the chance still remains as more commentators are pointing out the benefits of changes in the law.

Christopher Beam lays out some of the arguments in favor of poker legislation.

Let’s start with the most obvious reason to permit online poker: It happens anyway. An estimated 7 million Americans already log on to poker sites every month, according to one study. But the sites they visit operate outside the purview of U.S. law because they’re located offshore. That means players aren’t protected from fraud or cheating. If they get fleeced by another player, their only recourse is to complain to the site. Gambling sites like Poker Stars and Full Tilt Poker are self-policing. If someone’s perpetrating a fraud scheme, it’s up to the sites to punish them. They usually do—after all, they want to protect their reputations—but it’s not a foolproof system. When an employee at a site called Absolute Poker allegedly cracked the system and looked at everyone’s cards, he was caught, but the money he won by cheating wasn’t recouped. If one of the poker companies disappeared tomorrow and took all its customers’ money with it, they’d have no recourse.

Reid’s bill would bring all this activity under the regulatory umbrella: Set up a licensing system, create standards for who can play, and enforce the rules.

Legalizing the game would also raise tax revenues. The Joint Committee on Taxation scored an online gambling bill sponsored by Rep. Jim McDermott, D-Wash., as generating $42 billion for the federal government over 10 years, and $30 billion for state and local governments. That’s probably a little high, since it would legalize not just poker but all Internet gambling and since it assumes all 50 states opt in, says John Pappas, executive director of the Poker Players Alliance: “I think more realistic is between $15 and $20 billion over a 10-year period.” That’s not going to eliminate the deficit. But it’s enough to make lawmakers look twice. Whatever the tax revenue, critics of online gambling argue that the social costs of legalization could be even higher. Chad Hills, a spokesman for Focus on the Family, pointed to an admittedly rough estimate that legalizing online gambling would create $25 billion annually in social costs—aggregate losses from bankruptcy, crime, and other negative impacts of gambling addiction.

The strongest argument should be the libertarian one – why should the government be telling us how we can amuse ourselves? Of course, the religious right loves to tell us what to do, and it will be interesting to see if we’ve reached a tipping point where poker players say enough!

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