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Internet Poker Legislation Analysis: Why Poker Players are Better Off if Reid Bill Passes

Internet Poker Legislation Analysis: Why Poker Players are Better Off if Reid Bill Passes 0001

Since word began spreading last week that Senate Majority Leader Harry Reid was pushing for legislation to legalize, license and regulate Internet poker during the lame duck session, many poker players have been vocal in their opposition to a bill that would prevent them from playing on big-name sites for 14 to 15 months.

They've questioned why the Poker Players Alliance would support a bill that would temporarily shut down the Internet poker industry in the U.S. and then separate American players from the international player pool for at least a few years. Such a reaction is understandable when one's means to earn a living is being threatened.

The assumption is that the status quo is better for players. That view may be accurate, but it is shortsighted. It's difficult in a game where everything is about the next tournament or next session or next hand, but poker players must look at the long-term impact of the Reid bill.

Sure, that you can easily log into PokerStars or Full Tilt right now and check-raise to your heart's content is better than not being able to play on those sites six months from now.

But the Internet poker industry is going to get worse before it gets better whether the Reid bill passes or not. Under the Reid bill, at least it is guaranteed to get better.

Over the past two years, poker lobbyists have been on the offensive and have been making progress on Capitol Hill. It will be much more difficult to continue making progress in the next two years with the Republican gains in Congress.

Somewhat lost in all the discussion of the Reid bill was that Spencer Bachus (R-Ala.), Internet gambling's No. 1 enemy in the House, was named chairman of the House Financial Services Committee on Wednesday. This is the same committee that has been the catalyst for online gambling legislation under the leadership of Barney Frank. It's the one federal committee ever to vote favorably on legislation to legalize online poker, and it is guaranteed that a similar vote will not come up in the committee over the next two years.

Bachus joined future chairs Dave Camp (R-Mich.) of the Ways and Means Committee and Lamar Smith (R-Tex.) of the Judiciary Committee in writing a letter opposing Reid's effort to push through a bill during the lame duck. These are three of the most important committees in the House. Financial Services and Ways and Means are the only two committees to address Internet gambling over the past two years, and now both are led by people vocally opposing poker's legislative efforts.

When the upward trend of poker lobbying stagnates during this period, poker's enemies could become more brazen. Depositing and withdrawing already is becoming more difficult and less reliable under the UIGEA. Bachus could make efforts to strengthen the UIGEA. The DOJ could become more aggressive in attempting to shut down processors and seize money. There was a report by The Financial Times earlier this year of a grand jury investigation of Full Tilt. If the status quo continues, it is possible that an indictment comes down and forces Full Tilt out of the U.S. market, and that the DOJ then turns its attention to PokerStars.

In that two-year period, it is likely that states will break off and begin their own intrastate online poker. This could be a good step, but that depends on the bill. The California bill introduced by State Sen. Louis Correa this week would criminalize play at sites not licensed within California, meaning poker players in California could be subject to a misdemeanor charge with a maximum punishment of $10,000 and a year in prison for playing a hand on PokerStars or Full Tilt if the bill passes.

The future could be much more grim than the one presented by the Reid bill. If the Internet poker industry were better off under the status quo, PokerStars and Full Tilt Poker wouldn't be backing Reid's proposal.

In the long run, there are many positives of Reid's bill. It would create a competitive marketplace, perhaps even more competitive than today, with many sites vying for players and a reasonable tax rate for the sites to endure without passing the expense down to the customers. It would make deposits and withdrawals simple, attracting more casual players who might have stopped playing after the UIGEA was passed. And it would eliminate many of the potential issues poker players face today or that could arise in the future. There will be no worries about whether money is safe on a site or whether payouts will arrive. Sites will be better regulated and there will be legal avenues for complaints if you think a site cheated you.

Imagine it this way, if you had a regular desk job and your boss gave you the choice of (1) continuing to work under the conditions that your paycheck may not arrive in a timely manner (or at all) and that your job could end for good at any moment, or (2) taking a 15-month furlough and returning with a job guaranteed for life, which would be your choice?

As PPA executive director John Pappas said, "It's not going to be 100 percent of what players want, but I don't know if any bill would be."

The PPA isn't the enemy here. It has tried to lessen the blackout period and fight for what poker players want. It seems that if poker's opponents allow the bill to get through, they are demanding the blackout period remain at 15 months as a concession.

Fifteen months, or 14 if existing sites use the full 30-day grace period before closing to the U.S., isn't that long. The time would fly by quickly. Certainly some offshore sites with no plans of applying for licensing would remain open to the U.S. market. Online poker pros could play live, perhaps moving temporarily to Las Vegas or Los Angeles if need be. They could leave the country and play online abroad. If you have money put aside from past poker success, it might be a good time to take a vacation and travel. Even a temp job delivering pizzas for a year wouldn't be so bad.

My sources in the industry tell me the Reid bill is a long shot at this point. Reid's plan was to compromise with Republicans by bringing the Democrats together behind the Bush tax cut extensions if online poker was attached to the bill. But when President Obama worked out a deal directly with Senate Republicans, Reid lost his leverage. The House Republicans rejecting the tax extension bill Thursday may have opened up the door for more negotiating to be done. There's still an outside shot Reid could manage to pull off the amendment. Reid could also try to attach online poker to another bill in the lame duck, but that will be a more difficult proposition because it has to be something in which he can offer a compromise to Senate Republicans that they consider more important than gambling.

Poker players should hope that the Senate Majority Leader pulls off some slick political maneuvering, because this window isn't likely to open again any time soon.

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