Poker in the United States

It is estimated that there are over 60 million poker players in the United States, out of the 100 million who play worldwide.  With that in mind, it is clear that poker is a huge part of the cultural scene in this country, and any changes to legislation by local or federal governments impact a great many people. The world of online poker and land poker are intertwined, especially in the United States, where groups such as the Poker Players Alliance, which represents both online and offline players and their rights to play – whether in a card room or on the internet.

Important Milestones in Recent US Poker History

Poker in the United States has been impacted by a number of milestones in recent history.  The first was when the infamous and hugely controversial Unlawful Internet Gambling Enforcement Act (UIGEA) was passed in 2006.  This wreaked havoc in the world of online poker and led many operators such as PartyPoker to head out of the market in fear of legal action against them.  Banks and credit card establishments refused to honor transactions to and from poker sites, making it difficult to pay for online poker entertainment.  This is possibly the largest problem faced by online poker players in the US today.

The industry slowly adapted to the new situation, with less online poker options available to players from the US, but the game still hugely popular for millions.  In 2011, the industry was rocked yet again on Black Friday when the Department of Justice seized the domains of top names such as Poker Stars and Full Tilt Poker, charging their owners with fraud, ponzi-schemes, money laundering and more. This was the tipping point says the CEO of USpokersites.us, Savanah L., in a recent email discussion. This is where things got really complicated, state or federal, licensed or offshore, compacts or non-compatcts.

Individual States Launch Online Poker Platforms

A change of opinion by the Department of Justice that the 1961 Wire Act only applied to sports betting was a turn for the better in the world of online poker in the United States.  This opened the doors for individual states to consider launching intra-state poker platforms, in a bid to not only generate more revenue for their coffers, but also to save their floundering land poker and casino industries which were suffering from the recession and growing competition from neighboring states.

Nevada, casino capital of the country, passed an intrastate bill allowing the creation of online poker in 2013.

At the time, Governor Sandoval said:  “This is an historic day for the great state of Nevada. Today I sign into law the framework that will usher in the next frontier of gaming in Nevada.”

In July 2014, Nevada gave its initial nod to online poker player pooling among several operators, which will increase the number of players in the state.

Nevada was soon followed by New Jersey which provided permission for online poker as well as online casino games, as long as online operators linked with Atlantic City based casinos.

Delaware actually pre-empted Nevada through its introduction of an online gambling regime on its law books, but the state is very small and its player pools quite miniscule.  With the number of new players dropping each month, the only hope for Delaware’s online poker platform is if a planned compact with Nevada gets off the ground and increases the number of players.

At the time of signing the compact, Nevada’s Governor Sandoval said: “This multi-state Internet agreement is the first ever of its kind. I consider this a landmark intersection in the road of gaming history. … [Nevada is] proud to have the first state as our first partner.”

More States Consider Online Poker

At least 11 states have given consideration to online poker legalization, although it is believed that it may be months or years before other states join the initial three.  New Jersey, the largest state to allow online poker, recognizes this fact and is currently pushing to get involved in the international market.

“I believe there is greater potential there than in the US market at this time,” said the architect of some of New Jersey’s most ground breaking online gambling laws, Senator Ray Lesniak in early 2014.

California has the most realistic chance of being the next state to legalize online poker, as long as all the entities involved in its poker market come to an agreement regarding the wording of a potential law.  Indian tribes and local card rooms carry the most clout and in recent weeks, 25 card rooms banded together to show their support for online poker but requested that their concerns be taken into account before a law is passed.  Overall, the Californian poker rooms request inclusion in any new online poker regime, and don’t want it to be taken over by Indian bands.

Threat to Poker in the United States

Online poker faces a number of challenges as it takes form in the United States.  The first is the threat of a federal law that could ban all forms of online gambling, online poker included. Utah Congressman Jason Chaffetz and South Carolina Senator Lindsey Graham have introduced online gambling bills on a federal level. Where the card rooms differ from the tribes in their online poker bill requirements is with regard to licensing. The card rooms do not want the licensing conditions to be so strict as to keep some of the smaller card rooms from participating. The group fea which, while may in all likelihood not pass, still have given states reason to pause and rethink their plans.

Incredible efforts continue to be made by billionaire casino tycoon and owner of the Las Vegas Sands, Sheldon Adelson who created the Coalition to Stop Internet Gambling and embarked on a public crusade to scare the public into backing his cause.

In an interview to Forbes Magazine, Adelson said: “My moral standard compels me to speak out on this issue because I am the largest company by far in the industry and I am willing to speak out. I don’t see any compelling reason for the government to allow people to gamble on the Internet…”

Another threat faced by online poker in the United States is the poor results currently coming out of the three regulated states.  New Jersey, Nevada and Delaware have not lived up to expectations in terms of online poker revenue, and this may be another reason why other states are not rushing out to embrace their own change of laws.

Return of PokerStars to the US Market

Another important event being played out at the moment is the potential return of Poker Stars to the arena.  The site was recently acquired by Amaya Gaming group for an unprecedented $4.9 billion, with plans to enter the US market through legal front doors.  It goes without saying that other poker rooms will do all they can to keep the world’s biggest poker room out of their neighborhood, and some states are rushing to add a ‘bad actors clause’ in their potential legislation to ensure that Poker Stars will not be able to offer their services to players now or in the future.

Land Poker and Online Poker: Intertwined Destinies

The world of land poker is intertwined with online poker: After all, it is believed that it was partly the success of Chris Moneymaker in the Vegas based World Series of Poker Series who triggered the incredible rise in popularity of online poker from 2003. The then-amateur Moneymaker won his seat into the competition by qualifying through an online tournament at Poker Stars, and the WSOP was his first live tournament ever.  The Moneymaker Effect, as it came to be known, saw land poker and online poker align in popularity, with one industry feeding the other.  When one grew in popularity, so did the other; however, post Black Friday (2011), taught analysts an interesting thing: A decline in online poker options for Americans did not have a spillover effect and that online poker players were not suddenly rushing to fill up neighborhood casinos.

Future of Poker in the United States

Analysts believe that online gambling in the United States will be worth $3.5 billion by 2017. This number was actually lowered by Morgan Stanley’s original assessment of $5 billion.  “We need to be realistic when talking to lawmakers about what can be expected from iPoker revenue, particularly when looking at a state-by-state deal where individual states are operating,” said John Pappas, chairman of the Poker Players Alliance, a grassroots group that represents over one million poker players in the United States. “Until they can have interstate liquidity, I think they will always have lower-than-expected revenues.”

“As long as a 20-year-old can buy into a $5 satellite that gets him a seat in a $55 satellite, which, in turn gets him a seat in a $225 Sunday tournament that guarantees $350,000 for first place, online poker will continue to draw new players,” writes Jay Caspian Kang in his article, The Certain and Uncertain Future of Poker(2012).