Now that 2010 is about to be put into the record books, I figured it was time to take a look at the top online poker news stories of 2010 that most affected online poker affiliates. Harry Reid Introduces Poker Bill During Lame Duck Session My number one story of the year is unique in that nothing substantive happened – at least that we can measure now. Still, it represented online poker’s best chance yet of being regulated in the United States. The bill, if passed, would have been a game-changer for affiliates. With so many details up in the air, some affiliates are left wondering if that would have been a good or a bad thing, though. Momentum for regulation could swing into 2011, leaving an outside chance of passage sometime in 2011. New Ring Fenced Markets France became the latest country to regulate online poker within their borders. Poker rooms from Poker Stars, Winamax, Everest, Ongame and Party represent the top five rooms offering games to French-only players, according to PokerScout. Segregating player pools by country has been seen by many players as a negative of regulation, but France and Italy have each been able to maintain peak traffic of over 1,000 real money cash game players at four or five different rooms. PokerStars.it is even the 6th most popular room in the world, behind longstanding international rooms such as Cereus, Microgaming and Entraction. The ring-fenced markets appear to be where regulation will take us, especially in the short term. Payment Processors Under Attack In November, eWalletxpress was the latest major payment processor to effectively be shut down. The US-facing e-wallet allegedly had their funds seized by the US government and players have since been unable to withdraw funds that are located there. In addition, many smaller processors were shut down throughout the year, which resulted in bounced checks or bank transfers that were not received by US players. Poker sites generally still honored withdrawals from these seized processors. Affiliates can expect that their US players will have increased difficulties depositing and withdrawing in 2011. Online Poker Traffic Shifts There were some interesting shifts in traffic during 2010. The year represented the first in recent memory where traffic was mostly flat, so sites were thankful to have a small gain during the year. With the exception of Merge Gaming -- which tripled in size due to some network acquisitions -- no other site grew by more than 10%. There were a handful of rooms that got hit hard in 2010, however: Everest (67% loss of traffic), Cake (60%), iPoker (31%), Party Poker (27%), Cereus (26%) and Boss (26%). Reasons for the losses range from views that online poker is now a mature market, to a loss of network sites (Cake) to the migration of players to regulated ring-fenced sites (Everest, iPoker, Party etc.). All of these figures courtesy of PokerScout. Gambling Bill Goes Through House Financial Services Committee Until Harry Reid’s attempt at a Hail-Mary in December, this was the top legislative story during 2010, which represented online poker’s biggest victory since the UIGEA was passed into law. HR 2267 passed the House Financial Services Committee in July by a vote of 41-22, an impressive victory from many of the same representatives who four years earlier voted on a more aggressive version of UIGEA. The bill effectively stalled for the rest of the year but represented a moral victory going forward. Supreme Court of Washington State Upholds Internet Gambling Law Online gambling is still a felony in the state of Washington. The Washington State Supreme Court upheld a 2006 law making playing online poker in the state a felony. Lee Rousso, a PPA state director for the state of Washington, had sued and argued that the law was unconstitutional due to a violation of the Commerce Clause. The decision resulted in Poker Stars and Full Tilt both leaving the Washington State market within 5 weeks of the decision.
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.
Updated 12-21-2010 at 03:08 PM by TimPAS
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