Top-10 wish-list items for U.S. online poker regulation

Two weeks ago, the American Gaming Association began a concerted lobbying effort to push for regulation of the online poker industry in the United States. Last week, the U.S. Attorney for the Southern District of New York released an amended civil complaint accusing Full Tilt Poker’s owners of paying themselves more than $440 million over the past four years and leaving players in the lurch for $390 million.

It’s been a rocky time for the online poker industry. Americans who enjoyed playing the game on their home computers are demanding regulation so they can get back in the game without fear of having the balances in their accounts seized by the feds.

But there is danger in the rush to regulate. Good public policy is essential for all regulations. And if Congress doesn’t get online poker regulations right, everyone (the players and the industry) will suffer the consequences.

So here is my plea to Congress: get it right. My top-10 wish-list items for online poker regulation will be a good start.

10. Allow direct registration to live events from online satellites
It seems unlikely that any legislation regarding online poker in the U.S. would address this issue, but if it did, it would probably be to ban it, which would be a mistake. The World Series of Poker’s heyday came in 2006, when Jamie Gold won the Main Event in a field of 8,773 players for a record $12 million first-place prize. However, in the wake of the passage of the Unlawful Internet Gambling Enforcement Act in late 2006, the WSOP stopped permitting online poker rooms that allowed U.S. players to directly register their satellite winners, and as a result, the sites had to give satellite winners cash in their accounts and let them decide whether they wanted to play or just take the money. The result was that many players chose to take the $10,000 payday, and attendance at live events suffered. Sure, having the option was great for players, but I want to see enormous fields at live events. If you don’t want to play in a live event, then don’t play in the satellite. If players were directly registered by poker rooms and didn’t have the option to take the cash, the WSOP Main Event would have more than 10,000 players, and I’m all for that.

9. Eliminate rakeback
There are quite a few multi-table online grinders who will take umbrage with this suggestion, but I’m an equal opportunity kind of guy. I didn’t know about rakeback when I signed up for my first few online poker accounts, and as a result, I could never get rakeback on those sites without creating a second account, something I was unwilling to do. (It’s against the terms and conditions of sites to have more than one account.) I’m not a high-stakes or high-volume player, but over the course of seven or eight years, that probably cost me a few hundred dollars. I don’t think that’s fair. I’d prefer a system with a lower rake charge for all players and/or a more robust player loyalty system. Reward players with bonuses and freerolls, rather than a rakeback scheme that rewards only those in the know.

8. Regulate the staking marketplace
There have been too many scandals of late involving the staking of players, with the most recent being Nick Rainey’s alleged scam to get investors to stake him for the WSOP Main Event and then, after getting together enough (or perhaps more than enough) cash, deciding not to play. (According to a thread on twoplustwo, Rainey is now paying players back.) The current system, based on a code of ethics and reputation, is not working. It’s too easy for cheats and scammers to steal from people (or at least try … poker sleuths are notorious at uncovering scandals). However, if online sites allowed players to sell pieces of themselves through their own software, they could make sure any payouts went to the right people, at the right percentages. And if a player decided not to play an event, the money would simply be returned to the backers. Perhaps most importantly, from a Congressional point of view, this would allow for accurate tracking of winnings for tax purposes.

7. Allow casinos to link loyalty programs
This is a no brainer, and I can’t imagine that any online poker regulations in the U.S. would not allow casinos to link loyalty programs in their online poker rooms to their brick and mortar properties. Can you imagine paying for the WSOP Main Event with player points? I can, and I’d do it in an instant.

6. Prevent minors, allow self-exclusion
There are too many stories about underage players gaming online poker rooms and finding a way to play. And I’m sure there will always be underage players who will try to play online. But they need to be stopped. Require social security numbers if you have to. But online poker should be an adult-only game. Additionally, should Congress regulate online poker, there should be a place where people can go to sign up for a self-exclusion list, and all sites should be required to make sure that no one on the self-exclusion list is able to play on their sites.

5. Allow global play
This may be a much harder sell to Congress, unfortunately. I fear that Congress will only allow U.S. play in a segregated market, such as France does. And while the U.S. will certainly be able to produce a robust online poker market, it likely won’t match what PokerStars currently offers its players, thanks to its global reach. (The U.S. market represented only about 25 percent of PokerStars’ player pool before Black Friday.) Online poker players are used to being able to play against anyone in the world at any time of day. Please, Congress, don’t take that away from us.

4. Ban data mining, hand histories sales and HUDs
I hate the fact that you can buy hand histories online. I hate that people use information that they didn’t personally gain at the table against you. I hate that players use software that takes all that information and neatly package it so players can see your tendencies right there, in black and white, as they play against you. If you pick up information on how I play because you’ve been sitting at the table and playing against me for an hour, then put something in your notes about me. But don’t let a computer crunch the numbers and determine that I’m a rock preflop who puts out a continuation bet 85 percent of the time, only to fold to a raise 75 percent of the time. I don’t even mind if you have software that aggregates information on your play and that of opponents in hands you’ve played together. But that information should not be overlaid on the table; make players go back into the software and search out the player in question if they want to see some stats.

3. Stiff penalties for cheaters and colluders
Online poker has existed for more than a decade and millions have been stolen from players by cheaters, thieves and colluders (and no, I’m not talking about Full Tilt Poker). And I can’t tell you one cheater, thief or colluder who has spent a day in jail for it. Sure, some players had accounts banned, balances seized, and lost their reputations. Not much of a deterrent, is it? But imagine if someone got fined $5,000 for multi-accounting, in addition to having their account balance seized. Imagine if someone spent six months in jail for collusion. Now THAT would be a deterrent.

2. Tax deposits, not action
This is probably the suggestion that has the least chance of success, but I hope Congress is willing to listen. When Rep. Jim McDermott (D-Wash.) introduced legislation that would tax the industry, he suggested a tax on deposits (2 percent federal, up to 6 percent state). Online poker operators were salivating at the proposal, for while they paid no taxes at the time, the idea was much preferable to France’s 2 percent tax on all action. And as a player, I want a regulated environment, and I do want the government to get a piece of the pie to pay for some of the policing that will inevitably result from the new gaming environment. But I also don’t want to see the house’s cut of tournament buy-ins increase to 20 percent, or rake increase to 10 percent with a $5 cap to offset the revenues needed to pay the Tax Man. Taxing action results in an onerous amount of money leaving the online poker economy. The sites are happy to part with 8 percent of each deposit; let’s leave it at that.

1. Require sites to hold player funds in segregated accounts
No surprise here, I want to make sure that if a site goes out of business, they have funds on hand to repay me my balance. Clearly, this wasn’t being done at Full Tilt Poker, and that’s why players around the world are still awaiting payment of the $390 million in their accounts. Keep the money separate. I don’t mind if you earn interest on my money. But keep my money safe; don’t use it for marketing, to pay big-name sponsored pros, to pay shareholders, or for credit default swaps.