West Virginia Players May See State Regulated Online Poker in 2018

Joss Wood January 28, 2018 3237 Reads
West Virginia

Attempts to get an online gaming bill passed in 2017 failed, but West Virginia has a much better chance of legalizing online poker this year.

Delegate Shawn Fluharty has reintroduced last year’s H3067 bill with the support of Delegates Sean Hornbuckle, Mike Pushkin, Joseph Canestraro and Mick Bates. All are Democrats in the state which is one of the poorest in the US.

The bill will allow registered casinos to offer online poker

H3067 amends existing legislation to establish a new licensing system for online gaming. Licencees must be state licensed casinos, and the licenses will be regulated by the West Virginia Lottery Commission.

“Current gaming facilities, whose licenses to offer video lottery games and table games are in good standing, are suitable to be issued an interactive gaming license by the commission.”

Poker is explicitly listed and defined:

“(l) “Poker” means any of several card games traditionally known as poker, in which players compete against each other and not against the person operating the game, including a game using an electronic device that simulates a deck of cards. The term includes cash games and tournaments. Licensees may assess a rake or any other type of fee associated with the game, contest or tournament but may not wager with or against any player.”

The definition seems to be broad enough not to discriminate against any of the poker games offered by current online poker providers, but some of the new hybrid varieties may not come within the definition.

The recent “Power Up” innovation from PokerStars may not fit the definition since it is not “traditional” and uses extra non-standard cards to give players “powers” to influence the game by, for example, changing a card on the flop or in a player’s hand.

West Virginia recognizes the need for a larger player pool

West Virginia’s population is less than two million, and median household income ranks only 48th. Online poker is legal in Delaware which has only half the population of West Virginia, but the experiment can in no way be judged as a success.

Poker revenues are extremely low, and on a per capita basis lower than in any other state or country where online poker has been specifically regulated.

The primary reason for this is the fee structure of the licensing system which completely disincentivizes operators from investing in online poker expansion. Any additional profits which the three racino operators might make would go 100 percent directly to the state.

Even after agreeing an interstate compact with Nevada, poker participation rates barely improved. The most recent interstate compact signed with New Jersey may make a difference, but it will likely be marginal.

West Virginia’s bill contains specific features which should ensure that Delaware’s failure is not repeated.

The license fee for participating casinos has been set at a low $50,000, and new gambling tax rates on online gaming will be 14 percent of gross gaming revenue. This will give operators a chance to make attractive profits on the investment they make and ensure that poker rake and player benefits can be offered on a similar scale to those offered in Nevada, New Jersey and even in the dot-com market.

The bill anticipates that West Virginia will want to join the existing and any future interstate compacts to share its online poker player pool:

“Authorized interactive gaming, once fully developed, will allow persons in this state to participate in interactive games, not only with other persons in this state, but with persons in other cooperating jurisdictions in the United States where interactive gaming has been authorized.”

The pressure is mounting on West Virginia casinos

In the last ten years there has been a considerable expansion in competition from casinos in West Virginia’s neighboring states.

West Virginia casino revenues have moved in the opposite direction to the national trend. The casinos saw revenues drop around 2.5 percent in 2016, and by over 7 percent in 2017. Now that neighboring Pennsylvania has approved a casino expansion which includes more locations and the introduction of online gaming, the situation is set to worsen in 2018.

According to the American Gaming Association;

“Over the past decade, West Virginia’s casino industry has seen an explosion of competition from surrounding states. In 2006, none of its neighbors had casinos.”

Over the period reported casino revenues have fallen from $1 billion in 2006 to only around $600 million in 2017.

Unsurprisingly the casinos have been exerting what political influence they have and rather than worrying about possible revenue cannibalization from online gambling, they are now seeing its introduction as a significant opportunity.

Last year’s gambling bill ran into time constraints

The other factor which should increase the chances of Shawn Fluharty’s bill passing is that this year there will be more time to lobby politicians who may still be undecided.

The first legislative session for 2017 ended on April 8 and the bill was introduced on March 15, giving very little time for its supporters to make their case. It is also noteworthy that House of Delegates Speaker Bill Armstead was opposed.

Armstead hasn’t yet changed his opinion, but he is now faced with a House where the delegates are concerned with the loss of revenue from licensed casinos and fully aware of the new law in Pennsylvania.

In a separate bill, the state is also considering the introduction of sports betting. According to the West Virginia MetroNews, the text of the sports betting bill states:

“The Legislature finds that in order to protect the residents of the state who wager on sports or other events and to capture revenues and create jobs generated from sports wagering, it is in the best interest of this state to authorize its citizens to regulate this activity by authorizing and establishing a secure, responsible, fair, and legal system of sports wagering immediately when the federal ban is lifted.”

One of the bill’s sponsors is Senate Majority Leader Ryan Ferns – a Republican. Since the bill is using virtually the same arguments as the online gambling bill, West Virginia may have managed to get both Democrats and Republicans to agree, at least on the arguments.

From this position it is still a big step before legislation can be passed, but at least the political trend is moving in the direction of regulation.

West Virginia’s online poker players can finally see the light at the end of the tunnel and look forward to a real possibility that their favorite game will be both available and safely regulated.

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