Online Poker Legalization Not a Slam Dunk as Many Claim

I’m not here today to give you the typical “company line” that many have been in poker over the last few weeks since the DOJ opinion.  Many will have you think that online poker is a slam dunk for 2012 for much of the United States when in reality, there are going to be many hurdles to overcome.

California, Iowa, and New Jersey are all strongly considering online poker legalization and Nevada has “legalized” it.  The fact of the matter is that the DOJ opinion came after these states had already started the ball rolling on the matter.  All the opinion did was give them some perceived breathing room in relation to the Wire Act.

However, as others have pointed out already, this could still change.  The DOJ could just as easily turn around and state that they do not agree with that opinion or lawmakers could still try and move forward with adding online gambling to the Wire Act.  While many do not see this as likely, it is not totally outside the realm of possibility.

Let’s step away from the federal side of things for a bit.  Personally, I don’t think we will see significant progress this year in Congress on the issue of online poker.  I define significant progress as getting a bill up and at least voted on by Congress.  I still think we are another year away.  Instead, let’s look at issues that many states will have to consider.

First, the #1 issue that you will hear for many states that will consider the issue is the “impact online poker and gambling will have on lotteries.”  In some states, throw horse betting in as well.  For many states, the lottery is a huge money draw and expect a major fight in some states over this issue.  The only way that I think you will see it pass in certain states is if they feel they can make more money on gambling than with the lottery or possibly allow their lottery a stake into online gaming in the same fashion as DC proposed.

An issue that will be as important in other states will be the impact on and the influence by live casinos in the state.  For example, in Connecticut there is an agreement where the tribes give the state 25% of their video gaming revenue provided that the state does not change their laws and allow others to start gaming.  Will the state gamble on the loss of revenue from the tribes?   A good number of casinos will likely welcome this change as it gives them chances for additional revenue streams.  However, will there be any objections due to the potential for increased competition?  For example, some Indian tribes are against online gambling being legalized.  How will these objections play on states..

Finally, the technological, social, and moral issues surrounding online gaming is going to cause more problems than people are giving credit for.  I entirely expect many states to take a wait and see approach to how successful Nevada is with their attempts to keep underaged gamblers off their sties.  In addition, expect a lot of testing and scrutiny over online poker technology.  Also, in your more conservative states, expect a lot of opposition based on the social and moral costs of online gambling and online poker.
For example, I never expect online poker to be seriously every considered in my home state of Virginia due to the moral climate of the state.

Will legal online poker grow in 2012?  Absolutely.  However, I don’t expect it to grow by the amount that many expect.  By the end of the year, expect no more than 5 to 7 states to have legalized poker, and my personal thoughts is that I am being generous in that number.