Online Poker Report

Multi-State Legal Online Poker

The US online poker industry is still reeling from the fallout of Black Friday and the Unlawful Internet Gambling Enforcement Act. The 2006 UIGEA essentially shut down the operations of unregulated sites offering games in the US for a time.

Since then, a few states have since managed to build regulated online poker industries from the ground up, but progress has been slow. In each case, the markets have initially been ring-fenced before expanding via multi-state agreements.

What started as a two-state online poker compact between Delaware and Nevada has recently expanded to three with the addition of New Jersey. What’s more, Pennsylvania recently legalized iPoker and could eventually make it a four-way alliance.

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Nevada and Delaware join forces for online poker

Delaware was the first state to legalize online poker in 2012, and Nevada followed shortly thereafter. The two marketplaces began independent of one another.

In March 2015, though, the state’s governors signed a deal to share online poker liquidity. State revenue was to be retained based on the players’ location, but everyone would be playing in the same pool. The Multi-State Internet Gaming Agreement was the first of its kind in the US.

Although it didn’t really affect either state’s revenue, it did establish the framework for further interstate expansion.

Multi-State Internet Gaming Agreement

During the legislative process, Delaware positioned itself as a hub for interstate gaming. Partnering with other states was always going to be a necessity for a state of less than a million residents.

As part of the agreement with Nevada, the Multi-State Internet Gaming Association was established within Delaware.

The MSIGA created a uniform set of rules and the system for governance of them. It has open membership, and each state that joins is given one seat on the group’s board.

At the time of its inception, the Association had two members.

New Jersey online poker joins interstate agreement

New Jersey also legalized online gambling in 2013, becoming the third state to do so.

It was also the largest, about three times as large as Nevada. As such, it had enough liquidity to (mostly) support an industry with a handful of licensees. Online poker has not grown quickly as the honeymoon phase has worn off, though.

In October 2017, Gov. Chris Christie added his signature to the MSIGA, creating a three-state pact.

In April 2018, WSOP announced plans to launch its multistate platforms on May 1. The pooling went live a day early, on April 30. The timing allowed New Jersey players to compete in four online bracelet events from home this year. Matt Mendez won one of the bracelets from New Jersey in 2018.

It’s too early to tell what the exact benefits will be for all three markets, but total liquidity stands to see a significant boost.

Will Pennsylvania online poker join?

Late in 2017, Pennsylvania pulled off the surprise of the year in the gaming industry and finally passed a sweeping online gambling package. The Keystone State became the fourth to legalize online poker.

For the time being, only PokerStars has gone live with a poker room in the state. Meanwhile, the question on everyone’s mind is whether Pennsylvania will join the MSIGA. The state has a top-ten population, and the addition of those players would make the US iPoker market much healthier.

Regulators haven’t taken a public stance on the issue, but the expectation is that Pennsylvania will join the interstate agreement. Officials have already been working closely with New Jersey, and the gaming director says they’re going to “strike hard” with Pennsylvania.

The language of the law allows for interstate pooling as long as the servers are located in Pennsylvania. New Jersey has similar language in its own regulations.

West Virginia and Michigan legalize online poker

In 2019, West Virginia and Michigan became states number five and six to legalize online poker. West Virginia did so in late March, and Michigan beat the buzzer in December, just before year’s end.

No online poker rooms have yet gone live in either state. West Virginia already has some online sportsbooks active and may not get its first online casinos until early 2021. Even then, its small population may mean that online poker will be contingent on being able to share liquidity with other states.

There’s currently no timeline for any sort of online gambling in Michigan because the law was passed so recently. Some time in mid- to late 2021 seems most likely. Unfortunately, a last-minute change to the bill forbids the state regulator from striking deals with out-of-state entities, which will likely make shared liquidity impossible, at least at first. Unlike West Virginia, however, Michigan likely has a large enough population to go it alone if need be.

New Jersey eyeing national, international markets

In November 2017, Sen. Raymond Lesniak introduced a bill that would pave the way for expanded agreements across borders.

Lesniak aimed to repeal the portion of New Jersey’s gaming code that requires servers to be located in Atlantic City. By removing that roadblock, the state would be in a position to partner with out-of-state and international operators. Essentially, it could open the world back up for online poker players in New Jersey.

Unfortunately, Lesniak retired at the end of the 2017 legislative session without the bill gaining any movement.

Department of Justice moves to intervene?

Early in 2019, the federal government moved to interfere with legal interstate online gambling.

The DOJ Office of Legal Counsel reversed its standing interpretation of the 1961 Wire Act, reverting to an older stance that covers online gambling more broadly. If the revised interpretation is enforced to the fullest extent, interstate liquidity sharing such as currently exists between New Jersey, Nevada and Delaware would be prohibited. This would seriously harm the viability of online poker in less populous states like Delaware and West Virginia.

The good news is that before the compliance deadline arrived last summer, the New Hampshire Lottery Commission (NHLC) filed suit against the DOJ. Its fear was that the new opinion would make lotteries with interstate jackpots illegal. The outcome of the case was that US District Court Judge Paul Barbadoro sided with the lottery, and the opinion was vacated.

Most recently, however, the DOJ has taken the case to First Circuit Court of Appeals. It is fighting Judge Barbadoro’s decision on two fronts. It is challenging the correctness of the opinion, but also whether it the issue should have been brought to court in the first place. The DOJ claims that it never instructed the NHLC to cease interstate iLottery activities and thus the court was ruling on a nonexistent threat.

This is still an ongoing case, with the next relevant court date coming up later in January.

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