D.C. becomes first U.S. jurisdiction to regulate online poker; other states fold efforts

Poker players in the United States hoping to see legislation licensing and regulating their pastime on the Internet have been on quite a rollercoaster the past few weeks.

Bills that would have regulated intrastate poker in New Jersey, Hawaii, Iowa and Florida have failed to materialize. Meanwhile, a half-page provision in Washington, D.C.'s 2011 budget that never even uses the word poker made the city the first jurisdiction in the U.S. to adopt legislation regulating the industry.

The provision, included on page 28 of the budget bill, gives the D.C. Lottery and Charitable Games Control Board the authority to set up "both games of skill and games of chance," and to offer games on the Internet. The game would most likely be provided by Intralot Interactive, which has an existing relationship with the D.C. Lottery.

"The reason (for the provision) was for us to help close the budget gap we have here in our city," said Councilman Michael Brown, who introduced the measure. "I was trying to figure out how to bring in as much revenue as possible to limit the impact of budget cuts."

Brown believes that the site will be up and running by the end of this year, though he says the Council isn't expecting any revenue before the site really gets ramped up in 2012.

Congress, which has ultimate authority over Washington D.C.'s budget and had 30 days to respond, did not eliminate the online gaming provision, thus allowing it to become law.

While D.C. residents may be the first in the nation to have an opportunity to play Internet poker on a site regulated by a jurisdiction within the U.S., Poker Players Alliance Chairman John Pappas doesn't believe that the model is one that states should be striving for.

"I just don't think they'll have the liquidity to sustain a desirable online site," said Pappas. "I don't think the lottery model will be a very good one for other states to try to adopt. Maybe in a small place like D.C., the lottery was the most appropriate vendor, but overall, having this take the form of another extension of government is probably a bad idea."

Pappas did say, however, that having online poker in Congress' "back yard" may open some naysayers up to the possibility that the industry could be regulated. That said, it is unlikely that a bill that would regulate online gambling at the federal level submitted by Reps. John Campbell (R-Calif.) and Barney Frank (D-Mass.) will receive much attention in this session of Congress, since Spencer Bachus (R-Ala.), the chairman of the House Financial Services Committee, is an avowed opponent of online gambling.

Pappas, however, said that despite "serious challenges" the Campbell/Frank bill faces in the Financial Services Committee due to Bachus, the PPA is pursuing other methods of moving a bill through Congress in other committees.

Meanwhile, legislation that would have created a regulatory framework for online casinos in New Jersey was vetoed by Gov. Chris Christie, and legislation to regulate intrastate online poker in Hawaii, Iowa and most recently, Florida, failed to advance through those states respective legislatures.

Yesterday, Nevada lawmakers amended what had been the most radical online poker bill in the nation. The original legislation directed the state's Gaming Commission to create regulations for the online poker industry and to allow any online poker room — including those that currently accept real-money play from U.S. customers — to apply for a license. But amendments made yesterday essentially neuter the bill, forcing the Gaming Commission to receive clarification from Congress and the Justice Department before granting licenses.

"They've punted to Congress to act first," said Pappas. "I think Gov. (Brian) Sandoval and the legislature's decision to look for guidance from the (federal government) is really the right approach. The PPA has always advocated a federal solution to Internet gaming so we don't have this kind of piecemeal approach to legislation on a state-by-state basis."

So it appears that there will be little progress in the effort to regulate the industry in the United States outside of the nation's capital until at least 2012, with the exception of California, where an online poker bill still has a chance to pass through traditional means.