States now look towards regulated on the internet
At least a half-dozen states -- including Nevada -- and also the District of Columbia have enacted laws or are contemplating regulatory changes that would allow some form of Internet poker inside their boundaries.
States that operate lotteries may also proceed with On-line 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 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 Ny and Illinois lotteries, Justice Department attorneys said the Wire Act applies simply to sports wagering, to not the sale of lottery tickets on the internet. The reinterpretation seemingly cleared a path for federally regulated On-line poker websites catering to American gamblers.
Not too fast, Deutsche Bank gaming analyst Andrew Zarnett said.
In a recent research report, he told investors that the hyped-up enthusiasm expressed by many people 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 changed from "whether" some forms of the game will be legalized to "when" Americans could gamble for money on their home computers.
NO CONCLUSIONS YET
Las Vegas gaming attorney Jennifer Carleton, a shareholder with Brownstein Hyatt Farber Schreck, cautioned that future Justice Department opinions could turn back latest interpretation.
"Without any doubt, the opinion has significantly altered the gaming landscape with regard to the placing and receiving of wagers over the Internet and possibly paves the way for states to permit online poker and other types of Internet gambling," Carleton said. "Gaming practitioners and entrepreneurs thinking about Internet gaming must remain alert, attentive and proactive throughout 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 is a significant transfer of policy understanding," Lipparelli said. "But it's too soon to leap to any final conclusion."
With Congress showing little outward movement toward passing any gaming legislation -- lawmakers are looking at two On-line poker bills -- Zarnett said the attention has turned toward individual states.
Using history like a guide, Zarnett said On-line poker would unveil on a state-by-state basis very much the same as other forms of gambling, including lotteries, horse racing and casinos.
"Already some states are working tough to prepare for-profit on the internet," Zarnett said. "It is clearer now that not-for-profit state lotteries is going to be involved, possibly even have a first-mover advantage."
Nevada approved Internet poker regulations on Dec. 22 to take advantage of a company opportunity should Congress overturn a ban on the internet wagering. Their state would serve as the licensing and regulatory arm for online poker providers.
The regulations also permit the state's casino companies to operate Internet poker sites limited to in-state players.
Lipparelli said the company 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 require proper vetting.
