The Future of Online Gambling

The narrative of Black Friday is far from over even as we head into the new year. Many analysts who have taken a deeper look into U.S. online gambling law believe that the future of Internet gambling is overseas. Since there is no way to predict with certainty what opportunities lay ahead for U.S. online gambling operations, many believe that it is more financially sound to steer away from the U.S. market at this time. However, new policies initiated by the Department of Justice have led others to believe that legalized online gambling with U.S. companies is somewhere in the not-so-distant future.


DoJ Online Poker Policy Reversal

Seal of the United States Department of Justice

On December 23rd, 2011, the U.S. Department of Justice reported a reversal in its previous standing on the Federal Wire Act and its relation to online poker. The DoJ previously held the view that online gambling was illegal according to the Interstate Wire Act of 1961. After much lobbying against this antiquated act and its unreasonable association with online gambling, the DoJ ruled that, as long as online gambling took place within state’s borders, it would be considered acceptable.

In reference to the reversal of DoJ policy, Assistant Attorney General Ronald Weich, stated, “The Wire Act only applies to the transmission of bets or information assisting in the placing of bets or wagers relating to sporting events or contests.”

The reversal in DoJ policy essentially means that players who legally reside in one state will have to keep their bets within that state and among other players within that state. In other words, it will still be illegal for a person from California to play an opponent in New York. However, this legislation is still in the works, but has given policymakers in individual states the push to begin initiating online gambling licensing and regulation.

One such state that is taking initiative to open up possibilities for Internet gambling is New Jersey. Senator Ray Lesniak stated that “the state that gets in first in this market is going to be the big winner.” Legislators in New Jersey agree and will be putting a bill up for vote that, if passed, would authorize the state’s Casino Control Commission to legalize New Jersey casinos in operating Internet servers with software that would be able to verify the residential status of players. New Jersey residents who are at least 21 years of age will be given access to these online sites and will, therefore, be able to place bets against other New Jersey residents.

Actions such as those taken by the state of New Jersey will increase state tax revenues. As it stands now, illegal gambling or online gambling via oversea sites removes the potential for a considerable amount of tax revenue. In addition to the estimated $46-$55 million annual tax revenue possible for the state of New Jersey if the online gambling bill is passed, the Econsult Corp. estimates that the state could garner $210-$250 million in gross revenue and create 1,900 jobs from the Internet gambling industry.

Many proponents of online gambling hope that the new policy set forth by the U.S. Department of Justice will eventually lead to federal licensing and regulations. It is the hope of many that U.S. Internet gambling laws will catch up with the laws of countries such as Canada and European countries.

John Pappas, executive director of the Pokers Players Alliance, said, “This will provide policy makers at both the state and federal level with the legal confidence to move forward with licensing and regulation of online poker and other non-sporting activity within their respective jurisdictions. However, it is our hope that our federal policy makers see this as an incentive to move quickly to enact federal licensing and regulation before various states produce a mix of individual state schemes that may not be the best model to serve consumers.”


Online Gambling Market in Asia

Online gambling analysts such as Calvin Ayre believe that the potential for the future of Internet gambling will take place primarily in Asian countries. Ayre believes that the increase in online gambling operations will eventually be larger in Asia than in all other areas of the world combined. In reference to Internet gambling, Ayre said, “If you don’t yet have a toehold in Asia, you have no business calling yourself an industry player.”


UIGEA Continues to Put a Damper on U.S. Online Gambling

Online Poker is on its way to be Regulated

Online Poker is on its way to be Regulated

Even though the Department of Justice has reversed its policies on the Wire Act, the Unlawful Internet Gambling Enforcement Act (UIGEA) continues to put a wedge between proponent efforts at legalizing U.S. Internet gambling and their success. This is because banks and other payment processors will remain wary of processing online gambling funds until UIGEA is repealed. For this reason, there are just as many pessimists as optimists when it comes to the future of Iegal U.S. Internet gambling.


Unifying the Online Gambling Community

In 2011, discussions among the poker community concerning provisions on online gambling leaned toward holding out for an offer that would decrease the moratorium. The American Gaming Association had demanded a 15- to 18-month moratorium on online gambling offered to U.S. citizens in an effort to create a fair playing field. Now that U.S. players have a better understanding of just how extensive online gaming restrictions would become in the months following Black Friday, most would agree that the proposed moratorium would not have been such a bad offer after all. As John Pappas of the Pokers Players Alliance said, “The status quo was obviously untenable, yet many online players believed that even without legislative clarity online poker would exist.”


Support for the Legalization of Online Gambling in the United States

U.S. congressman Barney Frank stated that the U.S. Department of Justice is more concerned about prosecuting Internet gambling operations than those associated with the severe mortgage problem and the U.S. financial crisis. Many people around the globe share Frank’s sentiments and are in strong support for the legalization of Internet gambling in the United States.

A significant part of the drive behind the support for online gambling is that current legislation appears hypocritical. While the government allows bets placed in physical casinos, on the lottery, and on horse racing, the same is not true for online gambling. Many believe that these laws do not add up. In fact, other types of gambling operations such as the National Thoroughbred Racing Association have recently come out in favor of legalized Internet Gambling.

National Thoroughbred Racing Association

National Thoroughbred Racing Association

While support for online poker has traditionally come from the Democratic Party, a new group of Republicans are now voicing their support. Pappas said, “We now have a Republican lead bill in the House now and we are working with other Republican lawmakers to introduce more pro-poker legislation soon. It is also important to note that the new freshman class of Republicans have a different mindset than the social conservative Republicans that pushed UIGEA in 2006. The eighty-plus new lawmakers tend to be more libertarian-minded.”

The future of online poker and other forms of Internet gambling in the U.S. will depend on efforts made by advocate groups, individual supporters, and U.S. legislators in support of full legalization. Fortunately, there are several such groups and people in support of U.S. legalized Internet gambling, which has many people hopeful that the future is bright for online gambling in the United States. Of course, time will tell if the mindset of the majority of politicians casting their votes on relevant bills will be swayed in favor of the legalization of U.S. Internet gambling.

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Posted by on Jan 19 2012. Filed under Poker Legal News. You can follow any responses to this entry through the RSS 2.0. Both comments and pings are currently closed.

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