THE FIGHT: Taking Stock as the WSOP Begins

Massachusetts statehouseThe Memorial Day holiday created a short week in the United States. It was one surprisingly devoid of news related to online gaming legislative measures. Even California, which created a stir this month when the tribes released their own intrastate online poker proposal, didn’t have anything to say this week.

Maybe that’s just as well. On Wednesday the 44th annual World Series of Poker kicked off in Las Vegas, drawing the attention of anyone and everyone connected to the poker industry. It will run for the next seven weeks, during which more roughly two hundred million dollars will be redistributed from losers to winners. WSOP organizer Caesars Entertainment Corporation’s will be one of the winners, with a cut of the pie equal to about 5%.

In some ways, the WSOP represents the poker industry on a cellular level. There will be winners and losers in the regulatory fight, and it will mostly be about money: money from taxes, money from profits, money from and for players.

While the Series rages on for the next seven weeks, industry representatives will be lobbying politicians in states across the country. Their pitch will be to legalize and regulate online poker, and to do so in a way that will benefit the organizations doing the lobbying.

By any definition, the game is going poorly for market leader PokerStars. The site has effectively been shut out of Nevada by law and out of New Jersey circumstance. States that are currently considering online poker legislation – states like Illinois, Massachusetts and California – are all contemplating “bad actor” language that would prohibit PokerStars by law from being licensed. While that’s definitely good for new market entrants like Caesars Interactive Entertainment (parent of WSOP.com) and Fertitta Interactive (UltimatePoker.com), whether it’s good or bad for players remains to be seen.

The entrenched brick-and-mortar casino interests have clearly been the winners in the high-stakes poker games being played in statehouse across the country. At nearly every step of the way, they have used their considerable influence and money to create a regulatory framework that is favorable only to them. They have the perception of being “in the right” on their side – none offered online games in either the pre-UIGEA or post-UIGEA eras – and have been pressing that advantage to the maximum.

A federal bill might represent the last hope for the industry to welcome sites like PokerStars, and to effectively leverage the collective knowledge of ten years of online poker, rather than trying to re-invent the wheel. There’s still some faint hope that the federal government will step in and put an end to the piecemeal, state-by-state regulation of online poker, but the farther we venture down the regulatory road, the less likely that will be to occur. Currently no bill to legalize online poker is pending in either chamber of Congress.

By the end of the summer, we’ll know who the big winners and big losers of the WSOP are. If there’s any luck, we’ll have a head-start on the regulatory winners and losers too.

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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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