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Would-Be Online Poker Sites Attempt  to Bypass Regulations

After a promising rollout in three states in 2013, online gambling expansion in the United States hit the proverbial brick wall in 2014. This stalled expansion has led to several “creative,” somewhat far-fetched attempts to launch what are ostensibly being called legal online poker sites in the U.S. without having to wait for states to pass legislation.

From the use of cryptocurrencies, to challenging the application of older gaming laws with respect to Internet gambling, there have been no shortage of imaginative efforts by investors and companies as they attempt to cash in on the current online gambling void in the U.S. and bypass the current legal hurdles in place.

Santa Ysabel’s Class II gambit

For several months, the industry has been following the much ballyhooed – but little to show for it – online gaming developments of a small tribe just outside of San Diego in southern California, the Iipay Nation of Santa Ysabel.

After closing their land-based casino in early 2014 (which left the tribe with tens-of-millions of dollars of debt) the Santa Ysabel tribe has been threatening to launch an online poker room (PrivateTable.com) dating back to July. While they never made good on that promise (you know, setbacks and delays) they did launch an online bingo site in early November that was hit with a Temporary Restraining Order from California Attorney General Kamala Harris just a few days after it was unveiled.

Until the case is settled in court, the TRO issued against the tribe’s online bingo site pretty much puts to rest any notion that the Santa Ysabel’s PrivateTable.com online poker site will be launching anytime soon.

The tribe asserts they have the right to offer Class II gaming (which in general terms refers to bingo and non-house-banked card games like poker) over the Internet. This is, of course, in dispute as the Indian Gaming Regulatory Act of 1992 doesn’t address online gambling.

Several key issues include the location of the site’s servers (the Santa Ysabel online poker room would be regulated by the Kahnawake tribe in Canada, which is where the servers would be housed); whether or not players gambling off-reservation can be considered on-reservation for Class II gambling purposes and how this relates to the aforementioned server location; and whether or not online software falls under the “facsimile” definition in Class II gaming laws.

That’s a clown currency BRO

In addition to Santa Ysabel’s efforts in California, 2014 also saw the hyped launch of a cryptocurrency online poker room, dubbed Breakout Gaming.

Unlike the typical Bitcoin poker sites that already exist, Breakout Gaming was going to offer their games in a new cryptocurrency called Breakout Coins or BroCoins for short – a name that admittedly doesn’t ring of legitimacy in my mind – that players would receive in exchange for their deposits on the site.

Breakout Gaming assembled a sizable roster of sponsored players to rep their site, and was even offering an ICO (Initial Coin Offering) from October 21st through November 19th. According to reports, the company raised 387 Bitcoins, or about $136,000, well short of the 1,000 Bitcoins they were hoping for.

The added level of confusion caused by exchanging one cryptocurrency for another (as if cryptocurrencies weren’t confusing enough to most people) will likely hold Breakout Gaming back, but Breakout Gaming’s success will depend heavily on a number of factors outside the company’s control, as they are at the mercy of the tumultuous Bitcoin market, as well as banking on cryptocurrencies gaining wider acceptance among the general population.

If cryptocurrencies do gain acceptance, Breakout Gaming may be on to something, but there are still many unanswered questions.

Grinder’s gonna grind

The launch of yet another Bitcoin-powered online poker site was first announced by PokerUpdate’s Lee Davy in an interview with Mike “The Grinder” Mizrachi that appeared on CalvinAyre.com. Davy asked Mizrachi about the difficulty of being sponsored in modern poker and received the following answer:

I have decided to make my own luck. I am opening my own online poker site. We will have a few pros on there. It will be called GetLuckyPoker.com and we will be using bitcoins… Hopefully, it will be up before the beginning of January and it’s going to be exciting.”

How GetLuckyPoker will differ from other BTC poker sites like the more established SealsWithClubs is unclear, and it will of course be at the mercy of the same forces as Breakout Gaming. Not to mention what appears to be an increasingly crowded market with a very small customer base.

Meet the new boss; same as the old boss

So far there is little to show for any of these efforts and the U.S. online poker void remains.

This may very well be a good thing, considering these efforts are little more than a continuation of the unregulated markets (masquerading as something else) that wreaked so much havoc pre- and post-Black Friday due to a lack of real regulations and oversight – Absolute Poker, Ultimate Bet, Full Tilt Poker, Lock Poker, Everleaf, and so on.

I’m not saying any of these endeavors are scams, my point is there is little in the way of real regulation preventing another fiasco from occurring.

So, unlike the quick payments Ultimate Poker players received when the site decided to shut its doors in both Nevada and New Jersey, players at any of the above sites would be at the mercy of the sites themselves, as any regulatory body in place is at best a paper tiger, and incapable of recovering player funds or forcing sites to segregate player funds.

For instance, the Kahnawake’s, who were chosen by Santa Ysabel, licensed Absolute Poker and Ultimate Bet. Not exactly the regulatory body that would set my mind at ease.

 

 

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Steve Ruddock

Steve is veteran of the the poker industry, first as a player and now as a writer focusing mainly on the regulated U.S. markets and the politics of poker. Follow Steve on Twitter @SteveRuddock and at Google+.

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