Harry Reid Online Poker Bill Currently Stalled

A curveball was thrown the online poker community’s way when Harry Reid attempted to get an online poker bill through Congress during the Lame Duck session. Despite attempting to get the legislation attached to must-pass legislation -- such as the Tax Cut Extension Bill – Reid has so far been unsuccessful. At this point, the bill remains stalled, and with Congress set to adjourn before the Christmas Holiday and a new Congress to be sworn in January 4th, it will almost certainly not happen in 2010. Expectations are high that the bill will be on the agenda during 2011 but the environment to get it passed will become more difficult – primarily because the loss of Democratic supporters in Congress due to the November elections. Of course, anything can happen in Congress, so 2011 could still prove to be an interesting year.

Many independent lawyers do not believe that online poker is illegal in the United States on a federal level. Opponents of online poker often site the Wire Act when saying the game is illegal, however that has only been proven to apply to sports betting. The UIGEA attempted to enforce existing laws on “unlawful internet gambling” but because unlawful internet gambling has not been defined as applying to poker – except when it is expressly done on a state level -- the debate rages on. Despite this view, there is enough of a grey area to keep all brick and mortar companies located within the United States from offering online poker in the US.

So, new regulation is needed in order for US-based companies to provide online poker games to citizens of this country with the full backing of the USA government. The Harry Reid bill would make online poker legal in the United States to be offered by established large brick and mortar casinos -- which would initially apply to casinos in Nevada and New Jersey. A dozen or so states would automatically be opted in to the intrastate poker system, with all states given the choice of opting in or out. It is the hope of proponents that states would opt-in for revenue reasons, but undoubtedly many would opt-out on moral concerns, to protect the children, prevent problem gambling, and avoid competition from smaller casinos and the like.

With the bill stalled, it is unknown exactly what a final bill would look like, but given the versions of the draft that were leaked, we do have a fairly good idea of the type of bill we could see:

-- Online poker would be illegal in all 50 states for 15 months. The bill would be enacted 30 days from the time the bill is signed by the president. Sites would then have an additional 30 days to stop accepting play from USA players. There would be a 15 month “blackout” period before games could be legally offered under the new regulation.
-- Any poker site ignoring the new law would never be allowed to legally offer games to US players (they would never receive a US license). Sites would face significant fines and penalties. Players would not be subject to penalties.
-- Sites that leave the US market within the outlined time frame (probably PokerStars and Full Tilt, maybe some others) could be eligible to enter the US market 2 years after the blackout period, along with other foreign operators.
-- There would be a 20% tax on rake to be paid by the poker site. Players would have no new tax.
-- Players would only be allowed to play against players located in the US for a period of at least three years from the end of the blackout period.


Obviously, there would be positives and negatives to such a bill. Despite drawbacks such as the 15 month blackout and state opt-outs, the bill is seem by many as the best way to get the full backing of the US government and is what legislation would likely have to look like for it to pass. Many players are currently content with the so called status-quo, but insiders say that the payment processors are under attack, which could make it even more difficult or impossible to fund your poker accounts in the future.

This is certainly an issue we will be following closely in 2011.