Nevada Legalizes Online Poker

Yesterday the Nevada Gaming Commission unanimously approved regulations that will allow online poker and other forms of Internet gambling within the state's borders. The Wall Street Journal reports that "the new rules were designed to put the state in a position to move quickly to become the center of a lucrative new part of the gambling industry should Congress pass one of several laws overturning the ban on Internet wagering, making the state the de-facto national licensing body." In the meantime, poker sites with Nevada licenses, which could be operating by the end of next year, will be limited to players in Nevada. Licensees will have to satisfy regulators that they have a reliable system for excluding out-of-state customers. The Journal says it's not clear the Nevada market is big enough on its own to attract much interest:

Mr. Bronson's company, U.S. Digital Gaming, estimates a network of online-poker sites would need at least 70,000 active users to be viable and would likely be able to get to that size within 1½ years, producing about $180 million in revenue. Getting there isn't a sure bet. Before a federal government crackdown on allegedly illicit poker websites this spring, the state had around 25,000 online-poker players, according to PokerScout.com, a website that tracks online-poker play.

Even if Congress does not act, it should be possible to enlarge the market without violating federal law. Why can't Nevada-based sites serve customers in other states where online poker is legal? While the Wire Act of 1961 prohibits using "a wire communication facility" to accept bets "on any sporting event or contest," offering online poker is a federal offense only when it violates state law. The Justice Department claims otherwise, but it has never successfully used that theory in court. In 2002 the U.S. Court of Appeals for the 5th Circuit ruled that the Wire Act applies only to sports betting, and all of the Justice Department's online gambling cases have either involved sports betting or hinged on violations of state law. (Last April's indictment of 11 people associated with PokerStars, Full Tilt Poker, and Absolute Poker, for instance, cites violations of New York law.) If several states agreed among themselves to allow online poker—so that sites based in Nevada, say, could serve customers in Arizona and California—what legal basis would the feds have to interfere?

Nevada is not the only state where poker sites could soon be legal. The New Jersey legislature seems likely to legalize the business, assuming if it can find a route that satisfies Gov. Chris Christie's constitutional objections. The Journal notes that California, which should have plenty of poker players even if out-of-state customers are barred, is also mulling legalization.

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  • Mainer||

    If several states agreed among themselves to allow online poker ... what legal basis would the feds have to interfere?

    Because fuck you, that's our basis.

  • Loki||

    Since win did the government ever need a legal basis to interfere?

  • ||

    The government only interferes with gambling when they can't tax it. Once this is established in Nevada they will start lobbying some congressmen and legalize online poker for Americans playing on American sites. It will be seen as a win for liberties, but really it will be yet another way for government and business to take our money.

  • ||

    Small correction, government takes your money and you exchange your money for a business' product.

  • davidstvz||

    Right, because the Nevada gaming establishment exists in a free and competitive market.

  • Jerry||

    Will they be allowed to attract international poker players online?

  • ||

    No, because then skilled international players will be able to take money from American schmucks without returning anything of value to the U.S. (such as when American schmucks by crap made in China).

  • Zeb||

    What about when American schmucks buy nice things that they value that were made in China?

  • CatoTheElder||

    When American schmucks buy crap from China, an IPad for example, an electron or two gets shifted on computer chip at the Federal Reserve. I'd argue that an IPad is worth far more than the change of position of an electron or two, even if that position change represents some amount of debt denominated in fiat currency that will never be repaid.

  • Some dude||

    What? There was a kind of gambling that was illegal in Nevada?

  • Untermensch||

    If several states agreed among themselves to allow online poker—so that sites based in Nevada, say, could serve customers in Arizona and California—what legal basis would the feds have to interfere?


    Interstate commerce, duh. It allows Congress to do whatever it wants, remember?
  • ||

    This is like terrorism and secession rolled into one.

    Of course, if the Nevada National Guard gets their hands on the fleet of extraterrestrial attack ships at Area 51, the whole thing might end differently.

  • protefeed||

    If several states agreed among themselves to allow online poker—so that sites based in Nevada, say, could serve customers in Arizona and California—what legal basis would the feds have to interfere?

    I think the correct phrasing here is "what constitutional basis ...", not "what legal basis ..." Can't find anything in Article I, Section 8 giving the federal government the power to interfere with people choosing to gamble.

  • Commerce clause||

    Cant hear you w/ your mouth full-o-me

  • ||

    The new rules were designed to put the state in a position to move quickly to become the center of a lucrative new part of the gambling industry should Congress pass one of several laws overturning the ban on Internet wagering

    I could summarize that statement in two words: rent seeking.

    The politicians don't have a problem with online poker. They have a problem with not getting "their" share.

    Once the established casino companies are on board, the politicians will get their share.

    P.S. I'm sure Harry Reid being the senate majority leader has absolutely nothing to do with this.

    Why would it?

  • Fist of Etiquette||

    I don't even online know her.

  • ||

    I know he's an online poker player, so this ought to make dunphy happy. Maybe not as happy as the guy in Fla being murdered consequence-free by the cops, but happy nonetheless.

  • Anonymous Coward||

    Procedures were followed.

  • Mike M.||

    So the state which has by far more 24 hour brick and mortar poker rooms than any other state in the country is going to allow online poker, but only state residents can legally play? Yeah, that makes all the sense in the world.

    Just kidding; that last sentence was totally sarcastic. This is one of the dumbest things I've ever heard. Nevadans will get far more action in the casino than they will online.

  • Neva Dan||

    Heh. He said "get action"!

  • yogi||

    ...Internet gambling within the state's borders

    There's a contradiction in that.

    Will I be able to legally play online poker in Nevada with GoToMyPC if my PC is in Nevada? Will online gambling sites in Nevada be allowed to operate if they connect to a payment system server located in Utah?

  • ||

    Bring on the interstate gaming compact! Surely it will fare better than the seemingly stillborn interstate health care compacts touted as the work around for PPACA.
    Better yet, get fedgov out of my internet, my bedroom, my wallet.....

  • ||

    Gotta wonder who comes up with all that stuff. Wow.

    www.real-web-privacy.tk

  • ||

    http://reason.com/blog/2011/12.....nt_2715375

    That's my problem, too. Nobody gives two shits about the fact that government should have precisely ZERO involvement in gambling, and these considerations to legalize are only coming up because it's an opportunity for revenue. The only thing I hate more than the various state governments is the federal government.

  • not exactly||

    "Nobody gives two shits about the fact that government should have precisely ZERO involvement in gambling"

    theppa.org

  • State Lotteries||

    Nobody gives two shits about the fact that government should have precisely ZERO involvement in gambling

    Why do you hate us?

  • IceTrey||

    All you have to do if you're out of state is sign up with a VPN provider who has a server in Nevada and you can gamble even if your on the other side of the world.

  • A Poker Writer||

    Technically this is true. But the biggest poker sites - PokerStars, for one - have terms of service that say they can close your account if you try to outmaneuver their geographical restrictions. Sort of defeats the purpose of circumvention.

  • A Poker Writer||

    Jacob - The DOJ just overturned its own opinion on the Wire Act applying to things other than sports betting. Not sure how it will affect online poker just yet, since it's still fresh. But one way or another, it's a big change.

    http://www.lvrj.com/business/f.....60928.html

  • Commerce Clause > God||

    Raw milk, Marijuana, Obscenity, Gambling, et al. -- all must bow down before the omnipotent Commerce Clause

    Remember, it's not just exporting your in-state legal goods out of the state: if any of the components used in producing your in-state work comes from out-of-state, the Feds can still use that interpretation of the ICC to fuck you over

  • KW6||

    Gee, I wonder how all of those casino employees feel about their votes that put Whorehouse Harry Reid in office and kept him there all these years? After all, if people can gamble online, they won't need to visit casinos, so they won't need the services of housekeeping, cooks, security, taxi drivers etc.

  • A Poker Writer||

    Two things, KW6:

    1. You say "if people can gamble online they won't need to visit casinos." The American Gaming Association, which represents the largest casino corporations, used to be completely opposed to online gambling in all forms for this exact reason but has since changed its stance. Over the years the casinos have discovered that online gambling actually reinforces their brick-and-mortar business. Online poker can bring dozens (if not hundreds) of moneyed players to the casino for a week at a time when they qualify for land-based tournaments at home. The World Series of Poker is even bigger - now up to 7 weeks in length, it essentially keeps Vegas hotels and casino pits humming during what would otherwise be a dreadfully slow season. (Only poker players are insane enough to endure 115-degree weather for such a long stint.)

    2. Poker is the only form of gambling that has been legalized here. Other forms of gambling are still illegal. Poker isn't a high-margin product for the casinos like slot machines and table games are; in fact, up until the online poker boom transformed everything it was something they offered mostly as a loss leader, drawing the poker players in the casino so they might get sloppy on free drinks and dump some of the money they took off other poker players at the craps or blackjack tables. The idea that offering such a game online could seriously impact a casino's bottom line just doesn't hold up.

  • ||

    If people can gamble online, they won't need to visit casinos.

    It works in exactly the opposite way.

    The more people there are who learn to play poker online, the more poker players there are. The more poker players there are, the more likely they are to go to Las Vegas when they go on vacation.

    It's like saying the more people see Disney characters on television and at the movies, the less likely they are to go to Disneyland on vacation. It works exactly in exactly the opposite way.

    The Indian casinos that have sprouted up all over are the same way. They may have cut into Atlantic City's revenue stream, but they didn't really cut into Vegas' revenue stream. Anything that makes more gamblers out there is good for Vegas. The emergence of Macau may cut into Vegas' revenue stream, but even that just whets people's appetite for Vegas.

    Oh, and if employees of casinos want anybody making that money, they'd rather it was their employer--rather than some offshore or unaffiliated website that doesn't market to people to come to Vegas.

    By the way, poker is the least profitable game a casino can offer. You're not playing against the house, and the casinos aren't making much money from the small cut of the pot they take--especially considering the floor space they're giving up that could be slot machines or something else.

    Considering all the layoffs there have been in Vegas over the past few years, most casino employees think anything that adds to the bottom line of the casinos they work for is a good thing. They think more business for Las Vegas--that used to be going elsewhere--is a good thing.

    You should also consider all the financial services and data center jobs there already are in Vegas. The amount of financial activity there is in Vegas is unreal--it's like a slightly smaller version of Wall Street's financial services and data centers. If all the online gambling in the U.S. were funneled through Vegas, there would be a lot more of those jobs, too.

  • Sanity Clause||

    Well, sure. The feds put all of the online poker sites out of business already. That opens up the door for someone like Steve Wynn to have a near monopoly on it. Wasn't that the "plan" from the beginning?

  • ||

    Harry Reid isn't stupid.

    Vegas is still the worst hit MSA in the country. Worst unemployment, most foreclosures, etc.

    You think a guy in his position that just survived the Tea Party express isn't gonna push for something the casinos that drive the economy in his state want? Online poker wasn't hurting Vegas--they just wanted that revenue stream for themselves.

    Why compete in the market for that revenue stream when one of the most influential politicians in Washington is your man in Washington?

  • Steven||

    Thanks for an interesting post. I recently wrote a new article on my page with some additional information about the legalization of online poker in Nevada and thought you might be interest in reading it and maybe participating in the discussion there:
    http://onlinepokeraccess.com/n.....e-approved

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