Joe-

What is your take on the eventual licensing and regulation of online poker in Florida?

HB425. which passed last session of the Florida legislature and was signed by the Governor last month, included authorization of a study of online poker. This was brought about by the same lobbyist who is behind the current licensing and regulation bill in California - Jim Tabilio. The intent for HB425 is to eventually pass a licensing and regulation bill for intrastate poker in Florida.

Won't this limit our access to online poker in Florida? Doesn't such a bill restrict all offshore poker sites, such as PokerStars and Full Tilt, from legally offering play to Florida residents?

Do you have any idea who is funding Jim Tabilio's lobbying efforts? Could it be the Seminole Tribe, who might want to get into intrastate online poker?

I've spoken with Jim in the past. I don't what if any funding he has, or where it would come from.

Here's the bottom line on states legalizing intra-state online poker: it would be to solely to realize revenue from existing commerce. The question, after affirmative legislation may not be, as a practical matter, how do sites like Stars and Tilt continue to offer play in Florida, but how does FL either 1.) license and regulate existing providers' offerings (because that is where critical mass and - most importantly - the money is, or 2.) create an incentive for players to migrate to whatever entity FL licenses and regulates.

The 2nd is the harder question to answer, because licensed sites will possibly take a bigger slice out of player winnings, have higher operating costs (due to compliance), and would take time to reach critical mass of online players.

What is the trade off? This is a question we are considering as we work with New Jersey on the question of legal intra-state online sports wagering (ed. note: please, no booing of "degenerate" sports bettors).

When reporters ask me about the "expansion" of sports betting, I correct them and say that what we're proposing is instead a "migration" of existing sports betting from off-shore sites and the underground, to state-regulated (and taxed) alternatives. BUT, what incentives do you offer players to make the switch?

Some people have a kind of "If you build it, they will come" mentality, based on some heavy assumptions. State-licensed operators cannot assume that just because they offer a so-called "legal" alternative that existing players will flood into the new offerings without incentives that satisfy the players' self-interest.

This is a critical question, because if it is not answered, then licensed sites will perform poorly, the expected tax revenue will not be realized, and a political backlash will no doubt occur.

Joe@iMEGA

Thanks for your answer, Joe, but I disagree with you on several points.

It would be this, yes, but not "solely." I think part of the idea is to make the activity "legal" so that more in-state players will participate in online play than there are now, for the benefit of in-state licensed businesses (probably the ones already licensed for live pokerrooms).

I also do not see this issue as equivalent to the legalization of intra-state online sports wagering. In the case of online sports betting, we have an activity that has already been deemed illegal under Federal law. Online poker is not, plus we have the likelihood of licensing and regulation of online poker sites on a Federal level in the near future.

Hence the efforts to "legalize" intra-state online sports wagering will result in a greater freedom of the use of the internet, as it will legalize what is currently an illegal activity. By contrast, the efforts to "legalize" intra-state online poker will result in much more restricted freedom of the use of the internet as it will: 1. make the activities of un-licensed sites (which likely will include the sites we all currently use) illegal; and 2. exclude all sites that don't have state licensing even if they have new federal licensing.

I'm pretty sure this bid to legalize intra-state online poker is an effort by some B&M casinos to gain a virtual monopoly of intra-state legal online poker. At least that is my take on it. I think this needs to be investigated as if we aren't careful, this will undermine the freedoms we now have in regards to playing online poker, and will also undermine the gains we expect to make through passage of the Barney Frank bill. Don't let this one pass without careful consideration of its true intents and effects.

I appreciate your view, but you misinterpret my point. "Legal" is in the eye of the beholder when it comes to government. CA state government would make online poker "legal" solely to realize revenue. That is the reason it is being so strongly considered now, and frankly, that is how it is being marketed in Sacramento. Pro-poker people are using the CA economic woes to press for "legalization".

The affect on the existing sites will be determined not by any branding of "illegality". Most politicians do not possess as nuanced view as to make those distinctions right now. Most think online poker is illegal, because that is what gets repeated over and over and over by the media. Is perception reality? I guess it depends on who's reality we're talking about. To us, online poker is legal; to politicians, it is illegal.

And how will non-licensed sites be excluded? Blocking? Filtering? Baring US banks and credit card companies from processing payments? None of that will work, or has worked. They are mere speed bumps, more inconvenience than anything else.

The real challenge is for the licensed sites. How do they attract players, since there really will not be an effective way of blocking the existing sites, and it is in those sites where critical mass lies. How do Cali sites "migrate" existing players, what incentives will they offer to make the move worthwhile?

Other than perhaps easier movement of money (though with the over-blocking that UIGEA is producing, don't expect that to be a slam dunk), there is not much motivation for player X to move from Tilt or Stars, etc. to "Cali Poker", unless Cali poker can attract enough players.

Joe@iMEGA

You have pin-pointed my trepidations. If "legalization" means that only intra-state poker sites will be lawful, the state might eventually implement technological solutions to force in-state players to use nothing but licensed sites since the state realizes revenue only from licensed sites. Blocking by state-wide internet censorship is not out of the realm of feasability.

So, this legislation could take two different tacks:

1. Legalize intra-state online poker only, and make unlawful all interstate or foreign-based sites, which will eventually lead to restricted access; or

2. Offer licensing and regulation for intra-state sites, but not make unlawful other sites, thus giving players a choice of playing on either a licensed site or an un-licensed site.

The first I would oppose; the second I would support.

Also, please remember that any state that creates state licensed intrastate online poker sites and then prohibits other online poker sites from serving its citizens will have a Dormant Commerce Clause legal problem for discriminating against out-state sites in favor of in-state sites; just like the US WTO problem.

The difference is that federal courts can, and do, actually enforce the Dormant Commerce Clause legal doctrine against the states, but the WTO is not able to enforce its rulings against the US.

Joe has more than adequately addressed the limitations and difficulties of having an in-state online poker system. Still, a state as big as CA might be able to pull it off. A state the size of FL is a closer call. A state the size of mine (NH) would never have a player base big enough to run a profitable site.

So how about a more creative solution? Instead of an instate poker site, how about an in-state poker FUNDING site? A state licenses one or more financial companies to be THE authorized method of funding online poker. By specifically stating that any online poker funded through this licensed company is perfectly legal, the state has exempted the activity from the reach of any Federal law (including the UIGEA). The state requires this financial company to assure no underage players participate, and to take steps to identify and help problem gamblers. The state also requires this company to assure that the sites it sends money to are regulated adequately in their home jurisdiction and otherwise reputable and honest. The state also takes a cut of the money that passes through this company. If the state wanted to be an ass about things, it could also legislate that funding through a non-licensed method is illegal.

Everybody continues to play on their favorite existing sites openly and legally. The only thing that changes is how the money is passed from player to site. And the state makes money 3 ways (a cut of the action, the company pays taxes, and the company reports results so the players pay their taxes too).

Have I missed something?

What do you think of this idea, Joe and everyone else?

Skallagrim

I think that's great! I'm not sure how it would play politically as compared to licensing and regulation of intra-state sites, but it is certainly a much more logical and better solution. You should pass it on to Jim Tabilio, of Poker Voters of America, who is the lead lobbyist for intra-state licensing in both California and Florida.

Skall, I'm afraid that you missed the fact that the poker sites may, probably won't, use the state licensed funding site. PS does not have any ewallet options for US players. FTP has one Click2pay, but does not permit withdrawals to it. The rest use ewalletxpress, usemywallet or Click2pay, but may, or may not, permit withdrawals to them. None of these ewallets have easy methods to get your money to your bank account. IMO, the poker sites are trying to avoid the fees charged by ewallets. Some deduct deposit fees from rakeback. Maybe their fees exceed those charged by the old Neteller or Epassporte. Could a state licensed ewallet charge less fees and still pay taxes to a state?

FWIW, this year, unlike past years, I have been able to deposit on 3 online poker sites by credit card. However, moving funds between sites is difficult and it is impossible to move funds from another site to PS or FTP which is likely their intention. It seems to me that the US online poker sites are trying to make it easy to deposit, encourage withdrawal by check, echeck or bank wire and make it very difficult to transfer money to another site. IMO, all of them would be better off cooperating with each other to facilitate transfer of funds between the sites. Then more US players would play at multiple sites rather than one. IMO, FTP and PS are attempting to restrict transfers from their sites to other sites, but they may just not be willing to pay ewallet fees.

allot of trouble to get a damn license it took me 4 months to get it

Could they have a state "skin" on an established site?

i.e. If you live in Florida, you can only sign up for "FloridaStars", but you play against the entire Stars playerbase.


IIRC, this is how Stars is dealing with demands by the Italian and French governments for intra-country sites.

That would work. But it isn't necessarily the way state intra-state licensing would go. More likely the legislators will only license current b&m facilities to offer in-state online poker. We will have to watch the legislative proposals and get very vocal to get something we like.

P.S. I don't think the Italian PokerStars skin lets Italian players play against the entire PS playerbase - just other Italy players afaik.

This seems like a good idea but I see a potential problem. If this funding site was allowed to accept deposits and withdrawals from residents of this online poker "legal" state to regulated sites, how would the "funding site" know that after a depsoit the player only played in this "legal" state. If a player goes to another state and plays where online poker is not legal does this become the responsibility of the funding site to know when a player withdraws funds? Would not UIGEA still apply if the funding site processes online poker transactions where a player was playing out of state, the funding site could never be sure if this was the case. If legally they determine that the location of the player (where the computer is located) is the jurisdiction the bet or wager is placed then this might cause legal problems for any state specific "funding site", in which case such a site may not want to set up to begin with and avoid any legal trouble.

The sites would likely have to offer a state-specific skin which allowed only in-state play to solve this issue. This would be fine as long as:

1. The playerbase is combined with the full international playerbase of the site.

2. The state is not allowed to impose limits to the buy-ins, stakes or game selection.

Such provisions were not part of the Mass. ballot initiative, but would need to be incorporated into any new state initiative.

I have done a little more research on getting a state initiative on the Florida ballot. Will follow up as I can. It would take large amounts of petition signatures throughout the state counties and I've no idea on how to go about this. Anyone experienced in this that can lend a hand? I would guess that there are services that take of this for a price. Anyone interested in helping to fund such a project (in Florida)?

If the PPA has a Florida state director maybe you can contact them and try and set something like this up, and help in raising the money needed.