Online Poker Legislation Languishes as DFS Sprints Across the Finish Line

Steve Ruddock : August 6th, 2016
Senate online poker bill

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*This article was updated to clarify the advocacy by online poker sites.*

The daily fantasy sports industry has made tremendous legislative inroads throughout 2016. Following New York Governor Andrew Cuomo decision to sign that state’s DFS bill into law earlier this week, seven states have now passed DFS legislation in 2016. And more progress is coming down the road.

Another eight states have active DFS legislation, and 17 other states considered DFS bills in 2016, with those efforts either on hold or failed.

All the more remarkable is the speed in which DFS has gotten state legislatures to act.

The spate of DFS legislation is nothing short of miraculous when you consider they typical lack of alacrity legislatures show, and that legalization and regulation of the DFS industry wasn’t on any state’s radar prior to the kerfuffle that began in October of 2015 following the accidental, premature releasing of data by a DraftKings employee – Note: Maryland and Kansas did pass UIGEA-inspired bills with (daily) fantasy language prior to October 2015.

By comparison, online poker bills, which have been introduced in state legislatures for at least five years and in some cases (California) longer, were considered in just four states this year, and not a single bill has passed at this point.

It’s basically the same thing

What has to be most frustrating of all for online poker advocates, is there is little difference between online poker and daily fantasy sports from a regulatory standpoint. The idea that a state would pass a bill legalizing and regulating DFS on consumer protections grounds, and not also act on online poker is, to put it mildly, maddening.

You could essentially take any robust DFS bill, cross out DFS and insert online poker, and have a robust regulatory framework for online poker (with some minor tweaking needed), or vice versa.

From a regulatory perspective, DFS and online poker both necessitate, among other things:

  • age and identity verification;
  • geolocation, if applicable;
  • anti-money laundering procedures;
  • responsible gaming policies;
  • taxation and licensing fees;
  • third party audits and verification of fund segregation.

Any state legalizing and regulating one of these industries could seamlessly do the same when it comes to the other. In the eyes of regulators, and when it comes to consumer protections, they are more or less the same product.

So how has DFS garnered legislative action in multiple jurisdictions after mere months, while online poker legalization continues to elude us?

I think there are several reasons.

Active advocacy base

Because there was no time between DFS blowing up huge and legislative efforts, when bills were being considered in state legislatures DFS operators were able to activate their player base, creating a strong grass roots lobbying effort.

On the flip side, online poker players began dropping off in late-2006 when UIGEA was passed, and the active player base was essentially made threadbare when Black Friday occurred on April 15, 2011. It would be a further one to two years before legislatures began introducing online poker bills, and when the Poker Players Alliance went to the grass roots activist cupboard they found it almost bare. Essentially, the level of engagement among players had eroded, and it’s much harder to reengage with these lost customers, particularly when they’ve seen their past efforts go for naught.

On this same front, since the sites are still active in most states, players logging on to their DFS accounts were prompted to contact their lawmakers directly, streamlining the process, and reaching as many DFS players as possible.

Compare this to poker, where there are no active online poker sites pushing for legislative action (author’s note: meaning, current operators in state’s where online poker has yet to be legalized aren’t calling on their customers to contact legislators when they log on to the software), so a person interested in contacting lawmakers and advocating for legalized online poker is required to follow the Poker Players Alliance or some other advocacy group, go to their website, and fill out some type of ‘contact your legislator’ form.

Every additional step in the process costs you supporters.

The difference between adding something and taking something away

Another key reason DFS has had success in state legislatures is because by the time legislatures started looking at online poker, the industry was considered illegal and had been all but eradicated from the U.S. landscape (with the exception of a few offshore scragglers).

On the other hand, when legislation was introduced in 2016 DFS sites were still up and running, and the industry was simply fighting for legal clarity in most states, or, as was the case in New York, to keep DFS legal.

It’s much harder to convince lawmakers to legalize something that is illegal (in the case of gambling it’s usually phrased as an expansion of gambling) than it is to prevent an existing product from becoming illegal.

Messaging

DFS also managed to get everyone on message, and somehow stay on that narrow message, even if it meant engaging in the proverbial *wink wink*.

DFS is a game of skill; it’s not gambling.

DFS is like a spelling bee, bowling league, chess, etc.

On the flip side, poker has trotted out a number of arguments. To name a few:

  • The same skill game argument as DFS was less effective since DFS was a new, pretty much unknown product, while poker has been around for nearly 200 years and intertwined with the word gambling.
  • It will be a revenue panacea for states. An argument that worked in 2012/2013 but was proven false when Nevada, Delaware, and New Jersey passed bills and started offering online gaming.
  • The libertarian argument of personal freedoms .

Poker has finally landed on what I think is the best argument for legalization and regulation. The current argument is a three-pronged approach:

  • First, is the need for consumer protections, and a focus on the current offshore operators still operating in the US.
  • Second, it will help bolster brick and mortar casinos, many of which are seeing their revenues decline as more and more competition springs up.
  • Third, and finally, there is money to be had for the state. The key is to focus less on the potential amount, and explain ANY money generated for the state in tax revenue is better than none, and currently that money is going overseas.

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