Category Archives: Poker

Nevada Poker Bill Looks to Allow Other State’s Residents to Gamble on Their Online Gambling Sites

Casino Watch Focus reported that an Obama Administration ruling allowed for each state to introduce online gambling if gambling was legal in that state.  Much discussion has taken place as to whether the same ruling actually applies between states. The current legislation making Federal online gambling illegal is the Unlawful Internet Gambling Enforcement Act (UIGEA).  However, after the Obama Administration’s ruling, states have been pushing the envelope.  Now it looks like the attention is on Nevada as they are considering legislation that allows other state residents to gamble on their online gambling sites.  Bloomburg’s Business Week reports:

Soon after the Nevada Legislature begins its four-month session on Monday, lawmakers are expected to begin debating a bill that would let companies offering online poker in Nevada accept wagers from players in other states.

Such betting is essentially banned in most of the nation, but several states, including California and New Jersey, are weighing bills that would legalize some types of online gambling. The Nevada proposal, known as Assembly Bill 5, is intended to position Nevada-based companies to expand their customer base as other states ease restrictions. It’s one of a handful of gambling bills lawmakers will be asked to consider but it’s by far the most important.

Republican Gov. Brian Sandoval requested the change in his State of the State address in January and the Nevada Gaming Control Board drafted the legislation, which officials see as a potential moneymaker. Nevada currently permits online poker but no other type of internet gambling, so the agreements would apply only to poker.

Past Nevada legislation to allow online poker stipulated that their companies could not accept interstate wages until the federal government makes such online gambling legal.  However, this bill removes that stipulation, essentially acknowledging their belief that a federal bill will not pass soon.  However, this is also an acknowledgment that the practice is still illegal.  Much debate will take place as to the constitutionality of the bill given UIGEA and the current federal laws.

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After Failed Federal Attempts, Online Poker Efforts to Shift from National to State Platforms

Casino Watch Focus has reported on the numerous attempts to legalize online poker, including a recent report explaining that Senator Harry Reid’s latest, yearly-attempt to legalize online poker at the national level, had failed again.  After so many failed attempts at the federal level, it looks like the new goal of the online poker lobbyists will be to focus on passing State legislations. An online source explains:

Ever since the movement for legalized online poker grew out of the threat from the Unlawful Internet Gambling Enforcement Act six years ago, the poker lobby’s focus has been to obtain regulation at the federal level. This focus will change in 2013 as the future of online poker in the U.S. moves to a state-by-state basis.

The proposal last year from Senate Majority Leader Harry Reid (D-Nev.) and now former Senator Jon Kyl (R-Ariz.) would have regulated Internet poker while prohibiting other forms of online gambling to get support from liberals and conservatives. This proposal was the best chance for legislation at the federal level. Reid’s office claims there might still be an opportunity to pass the bill this year, but passage will be difficult without Kyl in office to deliver Republican support. Poker lobbyists aren’t going to completely abandon Capitol Hill, but it’s become clear that their focus is better placed elsewhere.

For those looking to protect families from the dangers of easy access and unsecured online gambling, it would be wise to be wary of local lobbyist efforts, as they have indicated a great deal of money and resources will be spent to win on a these smaller battlegrounds.  The online source continues:

With the PPA’s focus moving to the states, expect to see more grassroots campaigns at the state level in 2013. “We certainly could mimic some of the things we’ve done at the federal level in terms of fly-ins, paid advertisements, letters to the editor, op-eds and media placements in a variety of papers throughout the states from a poker players perspective,” Pappas said. “There are a number of ways to ramp up the grassroots and activity, and we’re considering all of those.”

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UPDATE: Online Poker Bill Said to Lead to Unintended Criminal Consequences dead in 2012

Casino Watch Focus reported that a new online poker bill was filed by Sen. Harry Reid and Sen. Jon Kyl. The bill, known as the “Internet Gambling Prohibition, Poker Consumer Protection, and Strengthening UIGEA Act of 2012,” attempts to legalize online poker. However, as explained by Professor John W. Kindt in an online article, the bill allows for a variety of nefarious activities:

University of Illinois emeritus professor John W. Kindt says the Reid-Kyl Internet gambling bill would facilitate money laundering by terrorists and organized crime through new encryption technologies, which would allow for the potential abuse of banks’ abilities to process payments to offshore gambling websites.

“What the bill allows makes it easier for mobsters and even terrorists to launder money,” said Kindt, a retired professor of business and legal policy at the U. of I.

“The bill’s supporters argue that the Reid-Kyl legislation is worded in a way that allows for poker while prohibiting most other forms of Internet gambling,” he said. “But regulatory technologies can now be circumvented by cheaters and, even worse, by international criminal enterprises. Furthermore, gambling is gambling, whether it’s poker or some other game. And Internet gambling is the crack cocaine of gambling. It would place gambling at every school desk and workstation, in every living room, and on every cellphone.”

Given the current state of the fiscal cliff negotiations, the bill is not expected to pass this year. As an online source explained, even Sen. Harry Reid has conceded the bill’s passage this year as there is no consensus. However, this process does lend itself to being used as leverage in the fiscal cliff negotiations or during next year. Professor Kindt explains:

Although the bill doesn’t appear to have much momentum behind it now, Kindt cautions that both senators are very influential in their respective parties. “That signals to me that it could be part of a fiscal cliff deal,” he said. “But the lame duck legislative period also would be an opportune time for pro-gambling lobbyists to band together and pass it.” But passing such a bill through political horse-trading would be a huge mistake, Kindt says.

“Internet gambling in particular shrinks the consumer economy and destroys consumer confidence by promoting a ubiquitous gambling philosophy,” he said. “Legalizing online gambling would allow dubious parties to create a queue of speculative bubbles in international stock markets that could collapse the already fragile financial systems and destabilize essential international economic security.” Kindt likens gambling to “an economic cancer” that would only metastasize with more Internet gambling.

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New Federal Online Poker Bill Expected to be Filed and Raise Constitutional Concerns

Casino Watch Focus reported many times on the failed attempts of the federal legislature to pass a bill to remove UIGEA and fully allow online gambling at the federal level.  Most attempts have been lead by Senator Harry Reid. A new bill is once again being introduced by Sen. Reid and Les Bernal of Stop Predatory gambling provides a summary of the bill: 

A draft of the online poker bill that Sen. Harry Reid (D-Nev.) and Sen. Jon Kyl (R-Ariz.) plan to introduce was released this week. The bill, known as the “Internet Gambling Prohibition, Poker Consumer Protection, and Strengthening UIGEA Act of 2012” would legalize online poker at the federal level, a step that became possible last December when the U.S. Department of Justice released an opinion stating that the Wire Act does not apply to online poker.

The bill provides an opt-in structure, in which states have to affirmatively choose to participate in the online poker program. A state would be considered to have opted in if it has passed a law legalizing online poker. Thus far, only Nevada and Delaware have passed such laws. An Indian tribe is considered to have opted in if a designated authority of the tribe submits written notice to the Secretary of Commerce saying so. Money could only be accepted from players located in those states or tribal lands at the time they are playing.

No game other than poker would be allowed under the bill, even if it is licensed by the state. A state could still legalize other games under their own laws, but this law would not allow them to operate those games interstate. The bill has a carve-out that allows interstate bets on horse racing to continue to operate legally, as well as an exception to allow lotteries to sell tickets online.

Other portions of the bill seek to establish a criteria to determine how licenses are issued and tax issues are handled.  The Las Vegas Review Journal explains how parts of the bill could violate due process:

A bill to legalize online poker that is being written in Congress and that Nevada senators are trying to pass by the end of the year could be challenged in court and found unconstitutional, according to a legal analysis by a former top government attorney.

The bill would set up a framework to license and regulate Internet poker companies, and to nourish a U.S.-based online poker industry. But former U.S. solicitor general Paul Clement said he found flaws in segments of the bill that seek to punish overseas providers that ran games in the United States and continued to take bets from U.S. players even after Congress passed online restrictions in 2006.

The so-called “penalty box” provisions would prohibit those companies from applying for an online poker license for five years, and from selling their trademarks or software to others seeking a license.

Clement said the bill being formed by Sens. Harry Reid, D-Nev., and Jon Kyl, R-Ariz., “raises serious due process concerns.”

He said it would deprive the providers of “significant property interest,” and could be considered an unconstitutional “bill of attainder” because it effectively singles out a group for punishment without adequate protections for their rights.

This bill could be its own worst enemy as it closes off several forms of online gambling in order to establish a legal framework for poker.  Those party to gambling online outside of just poker will certainly object.  The Las Vegas Review outlines both the National Governors Association and the National Conference of State Legislatures as groups who oppose due to restricting states opportunities to benefit financially. 

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Video Game Company First to Enter US Online Gambling Market

Casino Watch Focus has been reporting on the ongoing saga of expanded online gambling in the US.  A ruling by the Obama Administration has opened the door for some states to engage in online gambling.  Legal questions still loom as to how far online gambling’s jurisdiction lies, and Congress is still debating proposals to allow full scale federal online gambling.  In preparation, several social media and gaming groups, such as Facebook and Zanga have looked into expanding their business to real money gambling. Most recently, Apple decided to allow real money gambling on their iPhones and iPads, albeit in the UK, not in the US.  Now, an online source is reporting that a Nevada-based video game company seeks to become the first to enter the federal online market:

Video game developer 3G Studios filed with the Nevada Gaming Control Board for multiple Online Service Provider’s licenses, making them the first video game company to move into the U.S. online gambling market. With this move, 3G Studios will be the first video game company to be approved for real-money gambling in the U.S.

3G Studios plans to launch one of the nation’s first licensed, for-money U.S.-based poker sites. The site will initially be restricted to Nevada residents, and geo-location software will ensure that gamblers are located in Nevada at the time of the wager. The site will also feature other casino-style games that can be played for virtual currency, and as U.S. gambling restrictions loosen, may be also played for real money in the future.

An August decision by a Federal Judge ruled that poker was a game of skill opened the door for online poker sites to surface in states that legalized the practice. Nevada joined Delaware in legalizing online gambling, and at least 10 other states are expected to follow suit next year.

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UPDATE: Zynga Confirms Real Money Poker to begin in 2013

Casino Watch Focus has reported that Zynga has been heavly considering offering real money online gambling.  They have worked with social media company Facebook to offer games to online users of the social media site.  They have a full infrastructure in place to have people purchase credits to use in their various games, the most popular being Zynga Slots and Zynga Poker.  An online source is now reporting that Zynga has decided to launch real money online Poker in 2013:

Following a late afternoon collapse of Zynga’s share price Wednesday, CEO Mark Pincus confirmed reports featured on Gambling911.com earlier in the week that the company will be offering “real money” online poker in the first half of 2013.

Pincus stated that the launch will be subject to individual country regulations.  “Real money” play may not immediately be available within the US, although some states have begun legalizing online poker while a bi-partisan measure is currently being considered at the federal level.  Sponsors of this legislation have suggested it will likely be attached to an upcoming bill.

This sudden and quick move seems to smell of desperations as the companies stock has plumited and its users have dropped by millions.  The online source continues:

The company expected full-year EPS of 4 to 9 cents vs. estimates of 26 cents (for 2012).  Earnings were significantly less than those projections, however.

The company reported earnings of 1 cent a share on revenue of $332 million.Analysts had expected 5 cents a share on revenue of $344 million, according to an estimate from Thomson Reuters.

Since buying OMGPOP for about $210 million, Zynga’s daily users have fallen from about 70 million to just more than 55 million.

Following trading, Zynga shares had dropped to an all time low at press time, falling by as much as 36 percent.

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Zynga to face legal challenges if they leave Facebook and pursue online gambling

Casino Watch Focus reported that online social media giant Facebook was looking into online gambling.  Their partnerships with other developers like Zynga has provided an infrastructure for dealing with payments that could translate to real money gambling.  Casino Watch Focus then reported that developer Zynga was seriously considering entering the online gambling arena as well given they have a similar infrastructure and already offer free versions of gambling games like Poker.  Now, a online legal source is reporting that such a move will be met with serious legal hurdles:

Zynga Inc. is thinking about making a big bet on gambling, a step that analysts say could help end its dependence on Facebook Inc. It certainly won’t end its dependence on legal counsel. The technology may be simple, but lawyers say the company probably isn’t prepared for the intricate maze of regulations it will have to navigate to cash in on the action. Add to that the exhaustive financial and background checks Zynga executives and some shareholders might have to endure, and the company’s legal department is facing a huge undertaking.

I think they may be underestimating the difficulties they are going to face,” said Whittier Law School professor I. Nelson Rose, an expert on gambling law. “I know even European gaming operators are always surprised when they find out how invasive the U.S. regulators are in trying to find out everything.”

And if and when Zynga does start offering online gambling, dealing with compliance related to issues such as money laundering will have to become a top priority for its legal department, and that will likely mean hiring more in-house counsel. Many regulated gaming companies have substantial internal legal departments, Dayanim said. But whatever route Zynga decides to take, it will be new territory for all involved. “We haven’t seen a situation anywhere where a social gaming company has moved into the gambling space,” Dayanim said. “I can’t think of any company that has done it.”

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