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In a US election that is already being called historic, the next president of the United States, Donald Trump, will be the first president ever to have shown a willingness to invest in online poker.
Back in 2011, Donald Trump announced a partnership with hedge fund manager Marc Lasry to set up an online gambling company. The decision was made after Black Friday in anticipation of new federal legislation to legalize online poker that never came.
As my colleague Dustin Gouker has pointed out, since then five years have passed, and the online poker world cannot rely on Trump not to have reversed his position:
“For anyone who knows Trump and his presidential campaign, what he has said in the past sometimes has little bearing on what he believes or says now.”
Nevertheless, there are real grounds for optimism that a Trump presidency will both remove the current threat to state regulated online gambling, and maybe reduce Republican opposition to a federal bill.
The Restoration of America’s Wire Act (RAWA) bill, as drafted by Republican Representative Jason Chaffetz, would have put an end to state regulated online gambling if it had passed into law.
The bill died in December 2015, after it became clear in the House Oversight and Government Reform Committee hearing that committee members themselves were opposed. Even as Chairman, Chaffetz couldn’t get the committee to unite behind RAWA.
Rep. Bonnie Watson Coleman (D- New Jersey) made her opposition clear during the hearing:
“The evidence clearly demonstrates that with proper regulation, in-state online gambling poses no more challenges to law enforcement or risk to consumers than brick and mortar casinos.”
Now that the Republicans have control over the Senate and House of Representatives, one might conclude that RAWA could well be back on the table.
However, some of the most important issues on which Trump ran his campaign militate against a return of RAWA.
RAWA was a classic example of pay-to-play politics. Gambling mogul and 14th richest man in the world Sheldon Adelson bought support for RAWA with large political donations to both Democrat and Republican politicians.
In the rhetoric of the Trump election campaign, Chaffetz was bought and paid for, a puppet of his billionaire master. The chant drain the swamp which became a meme of the campaign, meant putting an end to the type of influence Adelson has over policy.
Adelson donated $25 million to anti-Clinton super PACs, but for him Israel is a much bigger issue than online gambling, and he will surely be happy if Trump maintains a pro-Israel stance.
The Trump transition team, which until recently was headed by New Jersey Governor Chris Christie, is in full flow publishing the policies which a Trump presidency will attempt to enact. In the section on constitutional rights, the website states:
“He will defend Americans’ fundamental rights to free speech, religious liberty, keeping and bearing arms, and all other rights guaranteed to them in the Bill of Rights and other constitutional provisions. This includes the Tenth Amendment guarantee that many areas of governance are left to the people and the States, and are not the role of the federal government to fulfill.”
A cynical interpretation may take this enthusiasm for the tenth amendment to be a way of opposing the Affordable Care Act (Obamacare), abortion, and maybe gay marriage. Even so, it looks unlikely that Trump will override state rights to authorize online gambling.
He would be kowtowing to big money lobbying, and breaking state rights under the tenth amendment. If he signed off on RAWA, Trump would look like a fool.
Chris Christie, who is now vice chairman of the transition team, was the governor of New Jersey who signed online gambling legislation into law. He too has dallied with Sheldon Adelson, but in helping to prepare Trump policy documents, he isn’t going to pen proposals to deny his own state online gambling.
New Jersey has just taken financial control of Atlantic City. There is no way Christie is going to risk the online gambling revenues going to the AC casinos given the financial crisis that is ongoing.
Put Trump and Christie together as the most important drivers of presidential policy and RAWA is dead.
The Republicans could still put RAWA forward again, and dare Trump to veto the bill. To do this they would need to get the bill through House and Senate, and yet the Trump victory now has Republicans revisiting their political positions.
The support for RAWA may now be less than there was even though Republicans have more control.
The Republican National Committee (RNC) has spent the last few years poring over demographics that looked worse and worse for the party.
Analysts and advisers have warned the Republican Party that unless the organization broadened the base to attract more black voters, more young voters and more women voters, the party might never regain political power.
Trump has blown that analysis away. He has broadened the base but in a completely different direction.
The only demographic within white women that Hillary Clinton won was the group of college educated women, and even then she only took 51 percent of their votes.
Trump took the votes of the non-college educated whites, both male and female, and brought them to the polls in droves. He showed the RNC that the party could win without surrendering on social issues like homosexual marriage, or immigration.
Trump has shown the way for the Republicans to win and every senator and representative must now look at how that vote can be turned out again after Trump has gone.
The question with regard to online poker is whether opposition will alienate the new Republican working class voters or whether they will support RAWA. If anything, Trump’s voter base, which now includes a lot of former working class democrats, may well be more pro-online gaming than the traditional Republican base.
In 2006, the UIGEA passed as part of the Port Security bill, taking one leg out of the poker boom. The UIGEA was driven by Bill Frist, former Senate Majority Leader, as part of his preparation for a presidential campaign.
He needed to shore up support with the religious right within the Republican Party, and an attack on the online gambling industry was his route to secure their support.
Donald Trump has become the poster boy for the religious right with his opposition to gay marriage and commitment to put anti-abortion judges on the Supreme Court.
He has absolutely no need to further attack online gambling to secure his position with that ideological branch of the party.
Put all these factors together and RAWA hasn’t got a chance of coming back.
Trump himself has pointed out that the US economy is in real trouble. He says there is a bond bubble, stock market bubble and real estate bubble. He is not alone in this analysis, and any rise in interest rates risks bursting the bubbles in spectacular fashion.
The recovery since the recession of 2008 may have been anaemic, but it has now gone on for much longer than most recoveries. Whether it is this year, next year or even the year after that, Donald Trump will have to deal with a recession which may be even deeper than the one of 2008.
He’ll have to respond to the next recession without much help from the Fed. With interest rates at almost zero, the Fed can’t cut rates any further to stimulate the economy.
In 2008 interest rates stood at 5.25 percent, over the next year they were cut to 0.25 percent, where they have remained bar a tiny increase at the end of last year.
Fiscal crises are good for online poker. The urgent need for tax revenue has been the political motivation for introducing legalized online poker in states and countries around the world.
The next recession may be enough to motivate more states to tap a source of tax revenue which can be presented as a consumer protection measure rather than a tax increase.
There’s an outside chance that it may even be enough to get a federal law on the statute books.
The looming recession may make the presidency a poisoned chalice for Donald Trump, but the political environment for online poker may just be looking a bit better.