Legalise It? -- Is U.S. Poker Turning a Corner?

When it comes to online gaming, the UK seems to offer few restrictions, wide choice, and lenient attitudes to personal funding and withdrawing on gaming sites, which with large notable exceptions welcome players of most nationalities – for now. This might be why when I asked some online poker playing friends to tell me what Unlawful Internet Gambling Enforcement Act stood for, they were hard pressed to do so.

“Untaxable Income Generator Except America?” was my favourite guess. Similarly HR 2267 sounds like someone’s sort code, and House Financial Services Committee Chair Barney Frank is hardly a household name in a country which Annie Duke, spokesperson for the Poker Players’ Alliance (PPA), holds up as an example of a population which has seen numbers of people participating in online poker (and other sorts of gaming) steadily rise but in which problem gambling hasn’t rocketed in the manner in which opponents of reform see as unavoidable.

The UIGEA, attached to the Port Security Act in October 2006, burst an online bubble in the United States, which had seen companies like Party Poker, Pacific Poker and Poker Room grow more swiftly than anyone playing poker for matchsticks in their kitchens in the 1980s could possibly have predicted.

The backlash was instant, and groups like the PPA (now boasting over a million members) have been lobbying incessantly for the removal of what comes under the heading in their mission statement of “egregious government intervention and misguided laws.” The laws they advocate are “favourable” ones, “…that provide poker players with a secure, safe and regulated place to play.” HR 2267 (the Internet Gambling Regulation, Consumer Protection, and Enforcement Act) was passed by the House Financial Services Committee at the end of July and seems to have set a precedent for precisely this, although even more questions have been raised in the wake of this most recent vote.

You can actually watch Frank in action in the HR 2267 Markup Hearing (all three hours of it) on the PPA’s website, or just read their summary press release, applauding the new approach which “demonstrates that sensible regulation of Internet gaming is gaining support in Congress while prohibition continues to fail.”

The recorded deliberations of committees might be light years away from the televised, glamorised, and cunningly marketed world of poker as it is presented to the casual or professional player these days, but the repercussions of these debates mark an interesting turning point in online poker and possibly set a precedent which could eventually affect the currently oblivious (and untaxed) UK punter.

Even the form of prohibition undertaken in the USA in recent years isn’t something recreational British players have looked into, aside from a few visiting the States who have experienced first hand the frustration of being unable to play, and often the added trouble of having their accounts locked for attempting to get in on a disallowed IP.

The opinion that for an American citizen to play online poker is straight up illegal is prevalent. At the end of July, Annie Duke appeared on MSNBC talking about this very matter, emphasising that it was banking legislation only which had cracked down on online poker (fairly successfully – many networks stopped accepting American players at all over the last four years), and noting that online sports betting was in fact the only online gaming activity which is currently illegal.

She, of course, has a clear agenda, and interestingly played down the part which the estimated $10 to $42 billion of tax revenue is going to have in the ongoing affair, citing it as merely “a by-product of regulating the industry.”

The aspects of the bill being played up are instead the protective regulations to protect minors, flag and restrict problem gamblers, prevent money laundering and tax avoidance, and an amendment dealing with strong enforcement against unlicensed operators, introduced by Rep. Brad Sherman ⎯ “Sites which knowingly and wilfully broke online gaming laws in the wake of the UIGEA” are to be denied licensing, which raises the question of whether the big two Stateside (PokerStars and Full Tilt) are going to have a new battle on their hands when this goes forward, but that’s a whole other issue.

So how might this affect the UK? If “similar licensing models in Italy and France” as mentioned in a statement by Paul Telford (PokerStars’ General Counsel) are to be the USA’s basis for its ongoing reform, might the coming years see Americans only able to play against Americans on sites based in the country?

Italian sites can now only accept Italian taxpayers and the operating site’s servers must be located in Italy. Site offshoots or homegrown companies ending .it and .fr have to obtain licensing and operate solely within these countries, which is leading to a fragmenting of the international umbrella sites which have stumped government legislators on the issue of how to regulate (and, of course, tax) them.

Surely the huge number of American players who have found themselves unable or unwilling to play online in the last few years, when added to the number who have calmly carried on doing so represent a huge chunk of the market share of online poker worldwide.

Will .com sites have to remove a large proportion of their players and host them in a U.S.-only format? The repercussions in countries with lower numbers should they find themselves locked out of the USA could shatter the illusion many UK players are under that a large school of recreationally playing, communally hosted fish, which drove the initial success of online poker (and created a strange nostalgia for the good old days pre-UIGEA) are about to hit the water once again.

The days of playing (legally, or in the present grey area) at a table on which every player hails from a different country, and the liquidity on a site is maintained by its international skins or hub operated outside of individual governmental control could well be numbered.