Tuesday, December 14, 2010

What Are the Odds?

What are the odds that online poker will be legalized?  That is harder to figure out than if I am likely to catch a flush after the flop if I have two spades in my hand and there are two on the table (playing hold'em, that is).  Harry Reid just jumped out of nowhere to push a bill forward that would eventually legalize online poker in the US.  To be clear, it is not illegal to play poker online in the US (although it is in the state of Washington), but there are laws limiting the transfer of money to and from the poker sites.  It is not a regulated industry, and the servers tend to be offshore (including on the land of First Nations in Quebec).

So, there are no regulations and no recourse if one is cheated.  And lots of money that could be taxed is not.  The most recent legislation was snuck into another bill and that created some serious mandates for banks to try to find the "bad" checks.  Good times.  The new legislation would create a holiday of sorts for 15 months or so, so that pokerstars and full tilt and the other big, successful online sites would not be able to be open to American players until licensed. This would allow other actors to get into the act and be competitive--Vegas casinos, Native-American groups, race tracks and perhaps even states.  Right now, the big online sites have a big leg up for their years of software development, hardware investments, PR strategies, player bases, and so forth.

So, who is against this legislation?  Well, on average, various Republicans tend to be since they can get all self-righteous about gambling as a sin.  The problem is that online gambling will occur anyway--there will always be firms that can set up on the net to process people's wagers.  So, the question is whether regulated online gambling is better or worse than non-regulated gambling, rather than whether regulated online gambling is better or worse than no gambling.  In the past, the casinos opposed online poker because they saw it as competition.  I think they finally caught on that (a) they can make money from doing it; and (b) it is great marketing for casinos.  The World Series of Poker has become huge precisely because of online poker.  The state of Washington has made online poker illegal precisely to protect the Native American gaming industry.  This is not about the morality of gambling but about competition or protection.

The proposed legislation is not perfect (I would prefer a much shorter period for licensing), but it would be better to pass it now before the Republicans take control over the relevant committees in the next Congress.

Would I bet on the legislation being passed?  Um, depends on the odds you give me.

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