THE FIGHT: DiCristina, California and Reid Spell a Bad Week for Poker

Last week I noted that the dog days of August have arrived and said there likely wouldn’t be much legislative activity for a few weeks. So of course this week there was a flurry of rumors. Rumors don’t usually count for much, especially in the subterfuge-filled realm of back-room politics, but this week they feel a little more substantiated than usual. They’re also all we’ve got.

The week started off on the wrong foot when the 2nd Circuit Court of Appeals reversed U.S. v. DiCristina, the June case that declared poker a game of skill and gave hope to supporters of poker legislation across the country. The 2nd Circuit reinstated DiCristina’s IGBA conviction, in the process soundly trashing the logic of the District Court judge, Jack Weinstein, who originally vacated that conviction.

“The question of whether skill or chance predominates in poker is inapposite to this appeal. The language of the statute is clear that it contains only three requirements… all of which were met in this case,” said the court.

The outcome was not a surprise for most legal-minded observers of the case, who felt that Weinstein went for a joyride (legally speaking) when he made the original decision. One Iowa trial lawyer with connections to the poker industry noted, “If a Federal Court of Appeals needs less than two months and 23 pages to rule against you, your argument sucked.” Indeed.

While the DiCristina reversal won’t directly impact poker legislative efforts, it does leave Rep. Joe Barton (R-TX) looking a bit foolish for citing it in the preamble to his Internet Poker Freedom Act. If IPFA weren’t already DOA, I’d expect that cite to disappear during the mark-up process. But let’s not kid ourselves – IPFA won’t ever make it to the mark-up process.

CaliforniaThings only got worse in the middle of the week. CardPlayer, citing an unnamed source close to the California political process, reported that the two bills to legalize online gambling that are pending in California are unlikely to be passed before the legislative session finishes in early September.

If true, the death of the California bills would be a harder blow than the DiCristina reversal, though once again few industry observers seemed surprised that things are headed in that direction. Despite being ripe for online poker legislation due to its extensive land-based poker culture and 38 million residents, California has never been able to get its online gaming act together. The tribes that control all the Class III gaming in the state have battled fiercely not only to protect their monopoly on Vegas-style gaming but also to halt the spread of poker licenses.

That tribal stance has caused squabbles with other gaming interests, notably large casino groups and the racetracks. Although a tribal consortium seemed to signal a moderation in the tribal position a few months ago, it now appears that talks have broken down once again.

To date, the only states that have legalized online gambling are two states that historically are known as gambling states (Nevada and New Jersey), and one of the least-populated and easiest-to-ignore states in the nation (Delaware). Getting California on board would have been a big momentum push for online poker, especially after Pennsylvania decided to table its own bill in order to watch things unfold in New Jersey.

Instead, the poker-playing nation turns its lonely eyes back to Congress for that momentum. It will only find more disappointment there. Global Gaming Business magazine, citing a “high-ranking source”, reported yesterday that Senate Majority Leader Harry Reid (D-NV) is threatening to re-tighten the Wire Act of 1961 if Congress doesn’t pass any federal online gambling legislation.

Reid’s supposed aim is to stop the spread of intrastate online gaming – especially in California – that was unleashed in December 2011 when the Justice Department determined that the Wire Act only applied to sports betting.

It’s no secret that land-based casino groups prefer a federal solution to online gaming, rather than a patchwork quilt of state regulation. I’d almost go so far as to say they’d even be happy to see a federal poker-only bill that excludes all other forms of gaming, so that they don’t have to evolve and adapt to the digital 21st century. Reid still owes them a debt of gratitude from 2010. Is he finally trying to discharge it?

For the moment, Reid and the casino groups don’t have much to worry about on the state-by-state legalization front. With the California bills likely dead, the Pennsylvania bill tabled for the foreseeable future, and Massachusetts and Illinois busy dealing with land-based casino expansion, no state is actively considering an online gambling bill.

But Reid also has shown exactly zero progress in Washington. A year that started off with such promise when New Jersey enacted online gaming is poised to end much as the previous four did – with THE FIGHT to legalize online poker looking as tough as ever.

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Kevin McGrady

Legislative and Politics Beat Writer: Kevin McGrady practiced corporate law in New York City for eight years before moving to Las Vegas in 2008 to join the gaming industry. Kevin is a graduate of New York University and Columbia University School of Law.
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