THE FIGHT: Setback in Iowa but Hope in Illinois

Some wins and some losses this week. I feel it’s always better to get the bad news out of the way first, so let’s start in Iowa and Hawaii. Online poker-only bills in both of those states died quiet deaths this week.

Despite Hawaii’s conservative stance on gambling – it is one of the few states without a lottery and almost unique in the United States that it prohibits all forms of gambling – the Aloha State’s online poker legislation made it past some early committee votes. It bogged down in the House Finance Committee, where legislators from both political parties showed little interest in advancing the bill.

The online poker industry had higher hopes for Iowa’s legislation. The bill at issue, sponsored by online poker proponent Jeff Danielson (D-Cedar Falls), was largely identical to one that passed the Iowa Senate last year on a 29-20 vote before stalling in the House. This time around, however, the bill didn’t even make out of a subcommittee, scuttling the chance for regulated online poker in Iowa for at least another year.

That’s the bad news for the week. We’re all probably used to legislative defeats by now, but after the success in New Jersey last month these defeats have a little extra sting to them.

On to the good news – amendments to the legislation pending in Illinois have significantly modified that state’s bad actor language. In its new form, it prohibits the licensure of “any applicant who has been convicted of accepting wagers via the Internet in contravention of… United States law in the 10 years preceding the application date.”

The critical change here is that the new language requires a conviction. Previous language that did not require a conviction would have ensnared nearly every operator in the market today, including several that left the U.S. after UIGEA was enacted in 2006 and that have partnered with U.S. brick-and-mortar casino groups. It’s also noteworthy that neither PokerStars nor Full Tilt were ever convicted in their respective Black Friday cases, nor have any of the executives associated with those two companies.

In fact, the only online poker company in history to ever admit any wrongdoing in the United States is PartyGaming (now bwin.party), which left the United States after 2006 and then voluntarily entered into a settlement with the Department of Justice in which it admitted to taking bets in violation of U.S. law. bwin.party has partnered with MGM and Boyd Gaming to serve as their software provider in the United States. Bad actor language like that in Illinois could cause some complications for that tri-partite partnership.

Overall, these amendments will allow the maximum amount of competition in the Illinois marketplace – assuming, that is, that the legislation makes it into law. As we saw with Iowa and Hawaii this week, THE FIGHT for online poker legislation is far from decided.

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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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