Whenever the topic of a federal online gaming bill is broached the conversation inevitably shifts towards talk of a poker carveout, a prohibition of online gaming with an exemption for online poker.
This is a rallying cry for poker players who are quick to differentiate the game they love with regular old gambling, saying things like, “Forget all this online slots and online blackjack talk, we should be pushing for a poker carveout,” or, “Who cares if people can’t play slots, poker is different, it’s a game of skill.”
On its face it certainly seems like a convenient compromise. And it’s a compromise that virtually every poker player (including myself) would agree to in a heartbeat if it was offered. But it hasn’t been offered, and there are several problems with a poker-only approach that make it an unviable option.
Starting with the simple fact that…
Most people conflate poker and casino games
To professional poker players and poker enthusiasts there is a clear line of demarcation between poker and house-banked games of chance. Unfortunately, for the majority of people poker is gambling. You can argue until you’re blue in the face and at best they are going to simply attach an asterisk to it. But for all intents and purposes, poker is gambling, and most people see no discernible difference between poker and blackjack or poker and roulette.
For most of these people it’s not a two-part question asking if we should legalize or prohibit online poker and if we should legalize or prohibit online gambling. For most people, legalizing online poker is legalizing online gambling. It’s little more than semantics to them.
Convincing these people (particularly lawmakers of this mindset) that poker is not gambling and therefore should be legalized is a harder sell than convincing them online gambling should be legalized. The case shouldn’t be made by debating what games are “gambling,” the case should be made on its fiscal and regulatory merits.
Casino games are the revenue generators
In New Jersey, 75% of the online gaming revenue the state tallied in 2014 came from online casino games, and just 25% from online poker, according to the New Jersey Division of Gaming Enforcement.
And here’s why this so important.
When a politician is presented with the idea of legalizing online gambling the first thing they likely consider is the political fallout (believe it or not, a lot of people are averse to gambling), then they move on to the legitimate reasons for and against gaming expansion.
One of the biggest selling points for iGaming expansion is the additional revenue that can be generated. So, prohibiting online casino games (75% of your potential revenue) while legalizing online poker (25% of your potential revenue) is like cutting off your nose to spite your face, since the politician will have to deal with an angry subset of their constituency if they limit legalization to just online poker, or take a comprehensive approach. It’s all the blame with 1/4 of the reward.
And then there are…
The Libertarian problems of a poker-only approach
As noted above, it’s hard enough to get politicians on board with expanded gaming of any kind, but if you go to poker-only you not only lose the people who would explain their decision to expand gaming as one of revenue, but you also lose the support of libertarians and the states’ rights community who don’t care one iota about poker or gambling. This crowd doesn’t care about revenue or the designation of a particular game, they simply believe people should be able to make their own decisions on how to spend their money, and/or gaming is a decision that should be left up to the states.
Banning online casino games at the federal level (with or without a poker carveout) is anathema to libertarians and states’ rights advocates.
And don’t forget about the providers who…
Need a reason to get involved
By limiting online gaming to poker you make it hard for online operators and land-based casinos to make money off the enterprise. With comprehensive online gaming these companies stand to make 2-3x more than they would through online poker alone.
Without online casino games to bolster their coffers, there simply aren’t too many companies who are going to see online poker as a cash cow (in some states it will likely be a losing venture), particularly if they have to apply for and receive a license in each state they operate in.
We can’t forget that if it’s legalized at the federal level online poker regulation and implementation will still be left up to state commissions and boards. Some may form interstate compacts and some may not, which means multiple licenses and multiple, varying, rules to follow.
All that aside, for the most part, there’s simply…
No appetite for it
Congressman Joe Barton (R-TX) has been pushing his poker-only bill for several years to no avail (HR 2366 in 2011 and HR 2666 in 2013), and then-Senate Majority Leader Harry Reid (D-NV) tested the waters for an online gaming ban with a poker carveout in 2012 – Reid didn’t even sense enough support to introduce legislation, and Barton’s bills garnered just 30 cosponsors in 2011 and just a single cosponsor in 2013, although the 2013 bill did lead to a hearing.
You leave the door open for black market operators
By legalizing poker but prohibiting online casino games you create a void that will be filled by black market websites. This void will be filled by online casinos, and you can bet your last dollar that these casinos will also offer online poker games, siphoning off players from legal sites and catering to players in states that opt-out of online poker expansion.