State Versus Federal Online Poker Regulation

There has been a lot of discussion about how players are unhappy about how slow online poker legislation is taking at a federal level.  With so many political issues at a federal level in this country, I am left to wonder if federal online poker is really the way to go.  This goes beyond the obvious issues with Congress at the moment including their inability to understand the internet and the country’s role in it.  Online poker is a divisive issue for Congress.  Many conservatives will not vote for expanding gambling in this country, even if it does not affect their state.  This could potentially cause a problem with federal legislation.

In December, Nevada became the first state to approve intrastate online poker.  Nevada is a pioneer in all forms of gambling.  Nevada was the first state to legalize casinos, the first state with legalized sports betting, and the first state to offer any form of online gambling which comes in the form of sports betting.  Nevada knows gambling, it is what made them famous, and it has kept the state afloat for 80 years.

If other states adopt Nevada’s gaming regulations, or something close to it, it will ensure fair games and fair competition.  It will also guarantee that the state is 100% behind online poker.  There will be no fears of lawsuits from state governments.  When online poker is approved, the gaming companies can immediately begin getting their online poker business started.  If this happens on a federal level, you can be sure that anti gambling groups and states will take the issue to court.

Gambling Cannot Be Forced on States

Gambling has always been a state right.  The U.S. Government has never tried to force gambling onto states, and has never received taxes from states or casino companies outside of a federal income tax.  In other words, unlike some other countries, there is no U.S. Gaming Commission.  If the U.S. Government got into the online poker licensing business, a new department would have to be formed.  This would cause conservatives to balk at federal online poker even more as many conservatives are against bigger government, regardless of the reasons.

Many online poker players would like to see states being forced into online poker.  That is not going to happen.  There are too many states that do not want to see any type of expansion of gambling.  If online poker passes at a federal level, I cannot see any scenario where states would be forced into allowing it.  That would be fought in court immediately, with the states almost certainly prevailing.

Federal Government Will Only Increase Taxes on Poker

Another issue that comes up is that the federal government is not going to approve online poker unless they will gain new taxes from it.  This will cause a big problem.  States will already receive taxes from online poker if they pass it on the state level, regardless of whether the feds pass it too.  The states do not need a federal law allowing them to offer online poker to their residents, and they do not need a federal law allowing them to network their poker rooms to other states.  Basically, states that want online poker do not need the federal government at all.  The federal government will only be a nuisance.

This nuisance of federal interference will come in the form of online poker taxes going to the IRS.  These taxes will cover the newly founded federal online poker gaming commission.  It will also go towards the general revenue fund.  The federal government will do basically nothing for these funds except creating new government jobs that would be redundant since there would already be similar state jobs.  All that involving the federal government will do is cause there to be more taxes, and more bureaucracy.  It may also lengthen the time that it takes for states to get online poker live.  That is because if the feds pass online poker, it is likely that states would no longer be proactive about passing it themselves.  It might take the feds years to roll out gaming regulations and fight lawsuits.

Online Poker in France Overtaxed

The online poker industry has already seen what can happen when federal governments take too much control of online poker.  Online poker rooms that are licensed in France have large tax burdens.  These tax burdens cause high rake and slim margins for the online poker rooms.  It has gotten to the point that some online poker rooms are not operating at a profit due to these taxes.  Players are raked so heavily that it is hard for most to turn a profit either.  If the U.S. follows that same path, we could have those same problems in the U.S.

While players are pushing for federal legislation, that legislation could really backfire.  Players may have to sacrifice a move to a different state to play online poker.  A federal law is not likely to force online poker into their state, and could hinder the progress that states are already making in passing their own legislation.