Law Blog: Federal Efforts Falter as Several States Up the Ante

Topics: Epic Poker League, Law Blog, Online Poker, Legislation, Politics, Harry Reid [+]

The rumors of the last few weeks regarding Senate Majority Leader Harry Reid’s Internet gambling efforts raised hopes in the poker community that online poker may return sooner rather than later. Alas, the idea of a quick fix has yet to come to fruition.

As I mentioned last week, it didn’t look as if Reid was going to be able to attach any type of Internet gaming add-on to the payroll tax extension bill, and that was confirmed on February 16. There was no explanation from Reid, only a brief statement to a reporter that online poker was not in the must-pass bill.

Even further, Howard Stutz of the Las Vegas Review-Journal wrote the following day that there will likely be no online poker legislation on the federal level until 2013, according to Macquarie Securities gaming analyst Chad Beynon. He went on to speculate that Nevada’s online poker regulation will benefit from the lack of federal action, as will states like New Jersey, Iowa, and California, all of which he predicts will pass state legislation in 2012.

Reid is said to continue talks with Sen. Jon Kyl (R-AZ) about possible online gaming legislation. Could it still happen in 2012? It is Congress, so anything is possible.

On the state side of online gaming, Iowa seems to be making the most movement of late. The Chicago Tribune reported on February 20 that an Iowa Senate panel approved Senate Study Bill 3164 to allow the Internet poker bill to be forwarded to a full committee for debate. The study bill could authorize legislation for licensed companies - those permitted to operate gambling games in Iowa on boats, land-based casinos, or racetracks - to operate Internet poker only. With a framework structure issued by the Iowa Racing and Gaming Commission and numbers showing the possibility of $3 to $13 million in revenue, the issue will be debated further this week.

Conversely, Washington, D.C. has killed its chances to be one of the first to offer online gaming. Intralot’s contract with the D.C. Lottery for a program called iGaming was in place, but questions arose about the process by which the partnership came to be. A report from the inspector general criticized the deal, citing various distortions of the facts and the licensing of a subcontractor who seemed unqualified to perform his duties. Investigations into wrongdoings are being pursued, and the contract for online gaming has officially been killed.

In even more discouraging news (at least if you like poker and live in Utah), Utah is moving forward with a fervent anti-online gambling stance via HB 108, a bill introduced on January 31 by Utah Rep. Stephen Sandstrom (R). The piece of legislation will officially prevent any online gambling via the Internet or on handheld devices, with a specific intention of prohibiting Indian casinos in any form. The bill also allows Utah to opt out of any future federal legislation.

Upon Sandstrom’s announcement of the bill, he stated, “We want to keep Utah free from the negative impacts of legalized gambling. Without courageous leadership to block Internet gaming, Utah could see Indian casinos popping up statewide in just a few years.”

HB 108 found significant support in the state’s House of Representatives, as it passed by a 61-9 vote on February 21. The first reading occurred in the state’s Senate later that day, and the bill is expected to pass. As Utah is one of only two states that prohibit all forms of gambling (including state-operated lotteries), the margin of support should not be a surprise.

For now, it looks as if Utah will remove itself from any gambling equation, and Iowa may be the second state in the nation to authorize Internet poker. While states like Hawaii, California, and New Jersey continue to bat the issue around in various forms, Nevada is moving forward with the licensing process and still hopes to have online poker ready in 2012. Meanwhile, Reid and Kyl plan their federal legislation under a thick veil of secrecy while Indian tribes and anti-gambling forces increase their lobbying efforts in Congress. It is a volatile situation, indeed.