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Why the US Needs More Online Gambling Expansion in 2015

2013 saw legal online gambling gain a solid foothold in the United States.

Despite a lot of talk and a lot of optimism, 2014 saw iGaming expansion stopped dead in its tracks.

Now we sit on the precipice of a new legislative session for 2015 that may decide the fate of U.S. online gambling. I cannot stress enough how important the next 12 months will be for online gambling in this country.

Is 2015 a watershed moment for iGaming?

Because 2016 is a presidential election year we are less likely to see any movement (for or against) something as controversial as gambling expansion. It could happen, but history says it’s less likely to happen during a presidential election cycle.

This means if progress is going to be made it will likely have to happen over the next 12 months or so. And for the online poker community’s peace of mind we should all be hoping that progress, however small, is made.

Here is why.

If an anti-online gambling administration takes over the White House following the 2016 election, they could quickly move to reverse the 2011 Wire Act opinion offered by Virginia Seitz that allowed states to consider online gambling expansion. The 2011 opinion is just that, an opinion. It’s the current interpretation of an already existing law.

On a positive note, even if this action is taken, or if Congress passes some variation of Sheldon Adelson’s Restoration of America’s Wire Act (RAWA) bill, you can expect court battles to follow from the states that have passed online gambling bills. Furthermore, I’m fairly confident the states would win these fights but I’d rather not leave that up to chance.

Currently, only Nevada, Delaware, and New Jersey offer online poker or casino games, but there has been talk of expansion in several other states from Pennsylvania to Mississippi to New York to California.

If more states pass online gambling expansion bills in 2015, we leave less up to chance and make the road much tougher for the opposition to repeal online gambling laws and/or block further expansion.

If the status quo remains in place through 2015, not only is legislation unlikely, but even if it does pass, states will not have time to pass a bill in 2016 and get their industry off the ground.

This is why 2015 will be a very important year for iGaming expansion in this country – assuming we don’t get a Lame Duck surprise in regards to RAWA this year.

The genie is not quite out of the bottle

iGaming supporters are fond of saying the genie is already out of the bottle. And to some extent this is true.

Right now the three states that offer online gambling account for roughly 5% of the total U.S. population. It’s safe to say that the tipping point where the federal government (either through a new law in Congress or a reversal by the DOJ) can no longer consider stepping in has not been reached.

So I would caution that only the head and shoulders of the genie have passed beyond the rim of the bottle at this point, and I’m not entirely certain the genie can’t be pushed back in. Even if it is too late and the genie is out, the federal government could always put up a fence and contain it to a limited area – New Jersey, Delaware, and Nevada.

Additionally, the fewer states with online gambling legislation in place, the more emboldened federal lawmakers may be to roll the dice and try to rollback their iGaming industries, even if it means a court battle. Another possibility that could bypass the courts altogether is if they pass a federal ban that includes a Grandfather Clause allowing Nevada, Delaware and New Jersey to continue to offer online gambling – and I would assume limiting it to just those three locales (5% of the population) would certainly be a win for iGaming opponents.

On the other hand, the more states, and the larger the population base of those states, the less likely the federal government will be able to step in and rollback or stop further expansion – in this case the genie would already be out cavorting across the country.

Lottery could provide cover

One factor that could help save online gambling from a potential adversarial DOJ is online lotteries.

Several states (Minnesota, Georgia, Illinois, and Maryland) have already approved the sale of lottery tickets online, and several more are waiting in the wings to join them.

If only lottery sales proliferate in 2015 and 2016 it could prevent the DOJ from reversing the 2011 Wire Act opinion, which was offered by Seitz in response to inquiries by New York and Illinois regarding the sale of lottery tickets online.

A RAWA-type bill could carve out an exemption for lottery sales (and would almost certainly have to in order to gain the necessary level of support), whereas a Wire Act reversal by the DOJ doesn’t necessarily have this luxury.

 

 

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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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