Online Poker Report

Online Poker’s Compact Conundrum

This article may be outdated. Get the latest news on US Online Poker here.

John Mehaffey has a good rundown of the hurdles facing online poker compacts between U.S. states over at USPoker.com.

Mehaffey articulates a list of just under a dozen potentially sticky issues (more on that in a second).

But first, two additional inherent barriers to interstate compacting that also deserve mention:

It takes two to tango

One issue that didn’t make the list is a more fundamental conundrum: The lack of synergy between the states that have regulated online gambling (or are close).

To put it in plainer terms: There’s not much reason for California to compact with Nevada. California has plenty of regulatory experience and a potential market that dwarfs Nevada. And there’s similarly little motivation for New Jersey to sign on with Delaware.

That’s not to say the U.S. is completely bereft of mutually advantageous compact opportunities.

Small-population states have reason to team up, as do states with asymmetrical regulatory experience. But among the crop of states poised to offer online gambling in the near-term, obvious partnerships are few and far between.

Poker myopia

It’s easy to make the mistake of assuming that online poker is central to the plans of online gambling regulators and operators. But the fact is that online casino games:

  • Have a broader potential market.
  • Are far easier to regulate.
  • Have a lower barrier to entry.
  • Require effectively zero liquidity.
  • Have a higher effective profit margin.
  • Do not require the management of a player ecology.

I could go on. In short: For regulators and operators, poker is hard, casino games are easy.

And as a result poker – and the compacts potentially necessary to support it – may take a backseat to other offerings, especially in smaller states.

Delaware’s reported launch plans for online gambling make the point. Nevada is an exception of sorts, but an odd one as the legislature chose to authorize only poker.

Additional impediments await potential compacts

Back to Mehaffey’s article.

He identifies pressing – and complicated – issues such as conflicting rake models, asymmetrical regulations & security procedures and interstate fraud / jurisdictional complications.

Read more here.

Those are all real concerns and it’s not clear that any of the work needed to solve them is being done.

Until we see more evidence of such solutions emerging, it will be difficult to take any talk of even limited compacting – let alone nationwide compacting – seriously.

Sign Up For The Grove Report – US Online Gambling Industry Insights Delivered To Your Inbox:
Chris Grove
- Chris is the publisher of OnlinePokerReport.com. Grove also serves as a consultant to various stakeholders in the regulated market for online gambling in the United States.