At Halfway Point of 2015, U.S. Online Gambling Expansion Remains Elusive

July 7, 2015
At Halfway Point of 2015, U.S. Online Gambling Expansion Remains Elusive

At the start of 2015 several states were pegged as potential candidates for internet gambling expansion.

California and Pennsylvania were widely considered to be the frontrunners for iGaming legalization, with states such as New York, Massachusetts, Washington State, and Mississippi landing in the long-shot category.

Over the past six months, movement in these jurisdictions has varied. In Pennsylvania progress has been made, yet most other efforts have stalled or suffered setbacks.

Here is an examination of where these states now stand when it comes to online gambling expansion efforts.

California: Early optimism but status quo remains

Following what can best be termed as a tumultuous year in 2014 that saw the creation of several factions among the state’s varied gaming interests, 2015 brought about hope that this was going to be California’s year for online poker expansion. The story went that in a nonelection year, and following the sale of PokerStars to Amaya, the tribes, racing, and card rooms would reach a consensus and finally get a bill passed.

Thus far, anything resembling a consensus has been elusive.

Looking back at 2014

Online poker expansion started out pretty messy in 2014, and seemed to only get messier as the year went on.

In early 2014, former iPoker champion Roderick Wright resigned from the legislature following his conviction on eight counts of voter fraud. Wright’s iPoker push was picked up by Senator Lou Correa (who would be term-limited out of office at the end of the year) and Assemblyman Reggie Jones-Sawyer.

In the spring PokerStars partnered with the Morongo tribe, Commerce Casino, Bicycle Casino and Hawaiian Gardens, which led to a faction spearheaded by the Pechanga tribe forming to counteract the PokerStars coalition. This sparked a heated debate over so-called “bad actor clauses,” a debate that became even more convoluted when PokerStars was purchased by Amaya Gaming in June of 2014.

Last year also saw the role of racetracks in California’s online poker industry turn into a central point of contention.

Even amidst all of this turmoil, there was some progress made. Aside from the prickly issues of bad actor clauses and racetracks, California’s gaming interests were pretty much on the same page.

2015 brings about a new hope

The general feeling was these two issues could be solved in 2015, particularly with the sale of PokerStars to Amaya somewhat washing away the bad actor argument and 2015 being a non-election year. People were also hoping PokerStars expected licensing in New Jersey would further erode the bad actor argument.

Alas, July is approaching, and PokerStars has yet to be licensed in New Jersey.

There were several early indications that bolstered the point of view that 2015 would be different in California.

San Manuel split from the Pechanga coalition in late 2014, and in February of 2015 several tribes — Rincon, Pala and United Auburn — followed suit and broke away from the Pechanga faction.

At the same time, Caesars and PokerStars decided to set aside their differences and work together for iGaming.

On the legislative side, another iPoker advocate emerged in the Assembly in the form of Mike Gatto. And Isadore Hall III took over as the Senate Governmental Organization Committee chairman. Both Hall and his counterpart in the Assembly, Adam Gray, later introduced identical online poker bills in February of 2015.

Faux progress

Adam Gray’s AB 431 has been steadily moving through the legislature, first passing the Governmental Organization Committee and later the Appropriations Committee. The legislation — a shell bill with no real policy points — now finds itself in uncharted waters, as it’s the first online poker bill that could be voted on by the full assembly.

However, as noted above, the bill lacks any specifics, and based on the general feelings coming out of the hearing on June 24, the issue of bad actor clauses and the role racetracks will play is far from solved.

Furthermore, a new issue has also arisen, as many people have begun questioning the state’s ability to regulate online poker.

There is also some debate regarding Hall III’s appetite for online poker expansion.

Pennsylvania: Steady progress leads to frontrunner status

Pennsylvania first began looking at online gaming expansion in 2013 via a bill introduced by Representative Tina Davis. 2014 saw some progress as a study commissioned in December of 2013 was submitted that painted a fairly rosy picture of online gambling should Pennsylvania decide to go down that road.

A half-hearted attempt was made to pass online gaming expansion as part of the 2014 budget by Senator Edwin Erickson.

It wasn’t until 2015 that the state really got serious about iGaming expansion, thanks in large part to Representative John Payne taking over the chairmanship of the Gaming Oversight Committee. Payne’s predecessor, Tina Pickett, was an iGaming skeptic, while Payne is a strong supporter.

Payne and his Democratic co-chair on the GO Committee, Nick Kotik, introduced HB 649 and held multiple hearings on online gaming expansion throughout the year.

Now the issue is being discussed in the state senate as it continues its sojourn towards being included in the state budget, which has missed its soft deadline of July 1st.

The senate’s online gaming bill, SB 900, is part of a larger gaming reform effort, but unlike Payne’s HB 649, SB 900 has a number of flaws and points of contention.

Had the senate proposed a measure similar to Payne’s bill, Pennsylvania would be a strong contender for iGaming expansion. Because of the senate bill’s flaws, iGaming expansion is starting to look more like a 50/50 or even 40/60 proposition in the Keystone State.

There has been a report that an iGaming-only bill will be introduced, however.

It’s up to you… New York

Despite a strong lobbying push by MGM via their Let NY Play campaign, at the moment, New York’s lawmakers seem content with having cursory discussions on the topic of internet gambling.

After two bills were introduced in 2014 (one by Senator John Bonacic and one by Assemblyman J. Gary Pretlow), Bonacic reintroduced his poker-only bill in 2015, while Pretlow said online gaming wasn’t on his or the legislature’s agenda in 2015.

This apathy could change when the state’s newly licensed brick and mortar casinos open for business, but until that happens in 2017ish, or until Pennsylvania passes an online gaming bill (something that might accelerate New York’s timetable), the state will remain a pretty weak candidate for expansion.

Massachusetts lost its iGaming champion

With State Treasurer Steve Grossman making an unsuccessful bid for the governorship, Massachusetts lost its biggest iGaming supporter, as Grossman had spearheaded most online expansion efforts in Massachusetts. The State treasurer oversees the lottery in Massachusetts.

Adding insult to injury, Grossman’s replacement as treasurer, Deborah Goldberg, seems focused on brick and mortar lottery sales, and not on opening up new revenue streams.

Further muddying the waters, the state’s new Attorney General, Maura Healey, is fervently against online gaming expansion.

Still, the state doesn’t lack iGaming supporters, as several members of the Massachusetts Gaming Commission seem interested in online gaming expansion, and new Governor Charlie Baker appears to be open-minded on gaming issues.

A bill was quietly introduced in April by State Senator Michael Rush that would legalize online lottery and online poker, but the bill has barely been mentioned and seems destined for the scrap heap.

Mississippi swings again and misses

Mississippi isn’t a very strong contender to pass an online gaming bill, but the state has to be mentioned, considering its reliance on gaming, as well as Representative Bobby Moak having (as he has done every year since 2011) introduced legislation that would legalize online gambling.

As was the case with his previous attempts, the bill was left for dead in the legislature.

Mississippi Gaming Commission chair Allen Godfrey considers iGaming expansion a long shot in his state.

Washington state emerges as a dark horse

A grassroots effort by poker advocate Curtis Woodward saw a bill that would legalize online poker in Washington state introduced in early 2015.

The bill was not acted on and died in committee, but Woodward sees it as an important first step, and expects it to be reintroduced next year.

Photo by used under license CC BY-SA 2.0.

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