THE FIGHT: Nevada Lines Up for Interstate Poker

It was a week of expected developments in THE FIGHT to legalize online poker, with one unexpected development thrown into the mix. Let’s start with the expected.

Yesterday, Nevada Gov. Brian Sandoval signed an amendment to Nevada’s intrastate online poker law that allows Nevada to enter into online poker agreements with other states without waiting for explicit authorization via federal law. It’s another small but important step in the re-opening process for the U.S. market.

Prior to this amendment, the Nevada Legislature only had authorized online poker within the bounds of the state. The previous law specified that interstate licenses would not become effective until either a federal law authorizing online poker was enacted or the Department of Justice gave its written blessing to interstate online poker.

Then New Jersey Gov. Chris Christie changed the game by indicating his support for broad-based online gaming, including the ability to negotiate agreements for shared player liquidity with other states. That spurred the Nevada Legislature into action.

In a blow to Rational Group, “bad actor” language made it into the final version of the bill. Although not as draconian as first proposed, the language still broadly prohibits operators and service providers who served the U.S. after December 31, 2006 from being found suitable for licensure for five years. Even then, those operators would have to submit to the jurisdiction of the federal government and of every state in which they operated post-2006. There are some exceptions to the bad actor language, but they are extremely narrow.

The new amendment effectively prohibits PokerStars, Full Tilt, and any other site that operated in the U.S. after 2006 from being licensed for five years – enough time for Caesars, MGM and the other casino groups to establish dominant positions in the market.

Despite the clarity in the law, there still are many questions surrounding interstate poker. Would Nevada insist on bad actor provisions in the interstate agreements? How long will it take to negotiate these agreements? How much does this really matter until a large-population state passes an internet poker law? Where do the tribes fit in?

As you can see, the Nevada amendment is another small step down a still-long road.

The other top story of the week wasn’t directly related to legislation or regulation. Chris Ferguson tentatively settled his Black Friday civil suit with the DOJ.

The settlement had been expected ever since Ferguson’s pal, Howard Lederer, settled back in December. In the settlement, filed Wednesday in Federal court but not yet approved, Ferguson forefeits his claim to certain funds seized by the DOJ and to all unpaid dividends owed to him by Full Tilt. He also agrees to pay a penalty of $2.35 million.

In truth, this is little more than cleaning up the loose ends of Black Friday. With Ferguson’s settlement seemingly in hand, the last loose end left is the disposition of Ray Bitar’s case. Once Bitar agrees to a deal, the Black Friday prosecutions will effectively be over, allowing the industry to put that cloud behind it for good and to focus on positive regulatory developments moving forward.

News of the settlement comes just as outgoing American Gaming Association president Frank Fahrenkopf unexpectedly claimed that Rep. Joe Barton (R-TX) will introduce a new federal online gaming bill in the House of Representatives by the end of March. While most in the industry still prefer a federal solution, and Barton has long been friendly to online poker, it’s difficult to see how such a bill has any chance of passage in the Senate.  Senate Majority Leader Harry Reid (D-NV) encountered repeated difficulties trying to legalize online poker in 2010 and 2012. He also lost one of his primary Republican allies when Arizona Senator Jon Kyl retired after the 2012 session.

But in order to have even a puncher’s chance, you have to get in the ring. Here’s hoping that Barton is able to succeed where Reid has not. After all, after Black Friday, nobody expected THE FIGHT would be easy.

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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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