Yes, I've come to terms with the fact that this post may be outdated by the time I submit this for public viewing, but here goes: the Harry Reid Internet Poker bill is dead. For now. Credible reports were first released late last week from ESPN and then from other news outlets that the bill was effectively killed, which was then subsequently followed up by a PPA statement on Friday saying that “Congress has failed to regulate poker and protect consumers.” The options for attaching the bill to “must-pass” or other important legislation have dwindled.

It had its best chance of being attached to the tax bill; then Jon Kyl insisted it be left off (it passed late last week). Then the Omnibus spending package died in the Senate. And despite the fact that there are homosexual and Russian poker players, there just isn’t enough synergy to get it attached to something like Don’t Ask, Don’t Tell (which also passed over the weekend) or the START Arms treaty. It’s been said that anything can happen in Congress, but barring a "Christmas miracle" a regulated poker bill will not go through in 2010.

Congress

So what does this mean for online poker going forward? Recent history has shown us that Democrats support our cause far more than Republicans, despite the GOP’s traditional platform of less government. Far too many congressmen and women either oppose online poker on moral grounds or believe it should be an issue for the states to regulate, exclusively. As an aside, it should be noted that the Reid Bill does, in fact, give the states all the power to decide the fate of iPoker in their state.

On January 4th, the new congress will be sworn in. On this day, the House of Representatives will swing from a Democratic majority of 75 seats to a 49 seat Republican majority. Elections have consequences and as result of the House moving to the Republican side, all House committees will now be chaired by Republicans instead of Democrats. This includes the House Financial Services Committee, currently headed by Barney Frank, who has been extremely favorable to online poker interests. His leadership was instrumental in helping pass an online gambling bill through the committee in July by a margin of 41-22, an impressive victory considering the House four years earlier had approved an anti-gambling bill (with more teeth than UIGEA) by a landslide vote of 317-93. The committee will now be chaired by Spencer Bachus, one of online poker’s staunchest opponents.

There is better news in the Senate. Democrats maintained their majority in the upper chamber of Congress by a slim margin of 51-47 with 2 independents (who will caucus with Democrats). This means Harry Reid will still be Senate majority leader and can still conceivably introduce a similar bill in the next year or so. There does seem to be some optimism from the PPA and others that this is not a longshot of happening in 2011, despite less favorable conditions. Maybe, just maybe, if it were to be attached to the right bill at the right time, with arguments that resonate with the right people, something could get done. The industry has one thing going for it: it wants to be regulated. Putting this on top of the fact that the US government and states need revenue really does make this seem like a no-brainer, especially with the industry trucking along without it.

States

One thing you can be sure about in 2011: states will make serious efforts to regulate online poker within their borders. We could easily see one or two states offering online poker by the end of the year. New Jersey is on the fast-track to be the first state to regulate, with a final vote taking place as early as January 6th. Operators must be physically located in Atlantic City in order to offer games to New Jersey players.

In Florida, there is a bill circulating that is less eminent to pass. The Florida bill currently allows for one network, with each operator – which is required to be located in Florida-- effectively acting as a skin on the network. Poker legislation on the state level could also come from unexpected places. The District of Columbia surprised everyone with a proposed amendment to their budget to allow online poker through the D.C. lottery. Online poker in DC is currently seen as a long-shot, but it does illustrate that some states that would otherwise be surprising participants, could join the online poker regulation bandwagon in light of budget issues.

Other states such as California, with their large population, are often seen as being a top candidate to run successful intrastate poker. You have to think that if a state like New Jersey is successful with iPoker that others will quickly follow.

By definition, players in intrastate markets would have to play poker against players in their state. These states would also ban operators from offering games outside of their state. Playing on PokerStars and Full Tilt would clearly be illegal in these states, likely meaning both sites –and possibly others—would leave these markets. Players also have legitimate concerns about player pools, competition, and taxes, among others.

Final Thoughts

I think it’s safe to say some affiliates will breathe a sigh of relief at news of this bill failing. Despite the potential benefits down the road, the uncertainty heavily US-focused affiliates would need to confront -- both during the blackout period (how would revenue be replaced?) and once the blackout period ended (will affiliates be allowed?) -- could be difficult to come to terms with. I do think it illustrates an important lesson that can be applied to any business, and especially one in this industry: diversify, prepare and don’t worry about what you can’t control. Remember: even if a similar bill does not pass within the next couple years, there is a real chance that all but the most hard-core USA players will have stopped playing due to payment processing issues. I think it makes good sense to prepare for something like that. If it doesn’t happen, great, but at least you were prepared.

If you had any stake in the outcome of this legislation, regardless of where you stand on the bill, it’s likely your emotions were tested. I bounced between reluctantly supporting it to not supporting it, especially with the final draft (at least the copy that was released last), since it didn’t include language to force intrastate poker to become interstate. I feel a bit guilty for my feelings since it is probably our best chance of ever lifting the grey, but even PPA reps came out with lukewarm to slightly negative views on final versions.

Let’s hope that the positive momentum gained over the last four years continues and maybe, just maybe, we can finally get an honest, educated debate on the merits of regulated poker in the US during the new year. Maybe this even translates to a better bill. The big B&Ms now appear to be on board, we have a powerful Senator on our side and government needs cash. Maybe 2011 is the year logic prevails.

Until that time, here’s to hoping that everyone has a carefree holiday season with their loved ones.