States now think about regulated online gaming LAS VEGAS, Nevada -- Federal prosecutors might have cracked opened the door for individual U.S. states to use Internet poker websites without Congress passing online poker legislation.
At least a half-dozen states -- including Nevada -- and the District of Columbia have enacted laws or are contemplating regulatory changes that will allow some type of On-line poker within their boundaries.
States that operate lotteries may also proceed with Internet poker initiatives.
How pervasive individual states become in online poker activities has been the subject of debate among gaming industry financial analysts and gaming attorneys.
The U.S. Department of Justice announced Dec. 23 that it revised a long-standing opinion around the federal Wire Act of 1961, which made all types of Internet gambling illegal. The new opinion, sought through the New York and Illinois lotteries, Justice Department attorneys said the Wire Act applies only to sports wagering, to not the sale of lottery tickets over the Internet. The reinterpretation seemingly cleared a path for federally regulated Internet poker websites catering to American gamblers.
online gamblingNot so fast, Deutsche Bank gaming analyst Andrew Zarnett said.
Inside a recent research report, he told investors the hyped-up enthusiasm expressed by many Internet poker proponents toward the prospects of federal legalization was misplaced.
"We don't feel it provides clarity the Department of Justice has softened its stance on all Internet gaming," said Zarnett, who analyzes and researches the high-yield debt of several casino companies.
Still, Zarnett said the controversy over On-line poker has evolved from "whether" some types of the activity will be legalized to "when" Americans would be able to gamble for money on their own home computers.
NO CONCLUSIONS YET
online casino gamblingLas Vegas gaming attorney Jennifer Carleton, a shareholder with Brownstein Hyatt Farber Schreck, cautioned that future Justice Department opinions could turn back latest interpretation.
"Without a doubt, the opinion has significantly altered the gaming landscape regarding the placing and receiving of wagers on the internet and possibly opens the door for states to allow internet poker and other types of Internet gambling," Carleton said. "Gaming practitioners and entrepreneurs thinking about Internet gaming must stay sharp, attentive and proactive during the period of rapid legislative and regulatory changes that is prone to follow."
Nevada Gaming Control Board Chairman Mark Lipparelli said further research into the opinion is required.
"Clearly, there was a major shift in policy understanding," Lipparelli said. "But it's too early to jump to the final conclusion."
With Congress showing little outward movement toward passing any gaming legislation -- lawmakers are sitting on two Internet poker bills -- Zarnett said the interest has turned toward individual states.
Using history as a guide, Zarnett said Internet poker would roll out on a state-by-state basis in the same manner as other forms of gambling, including lotteries, horse racing and casinos.
"Already some states will work hard to prepare for-profit on the internet," Zarnett said. "It is clearer since not-for-profit state lotteries will be involved, maybe even have a first-mover advantage."
Nevada approved Internet poker regulations on Dec. 22 to capitalize on a business opportunity should Congress overturn a ban on the internet wagering. The state would serve as the licensing and regulatory arm for internet poker providers.
The regulations also permit the state's casino companies to use On-line poker sites restricted to in-state players.
Lipparelli said the agency has gotten 10 applications for interactive gaming from casino operators, equipment providers and manufacturers. It's unclear how long investigative process will require. The technologies being proposed will need proper vetting.