You can Bet on It
Blog Post | 108 KY. L. J. ONLINE | Nov. 7, 2019
You Can Bet on It
Christian Farmer
Where there is competition and chance, those willing to wager will be watching. Many games of chance may be enjoyed today. However, there is one particular game that has not survived Federal legislation: online poker.
With the eruption of the internet, online poker soon followed, with the first real money game being played in 1998.[1] The industry quickly boomed, but the Federal government made other plans when they passed the Unlawful Internet Gambling Enforcement Act of 2006 (UIGEA).[2] While the Act was not a direct ban of online poker, it effectively rendered the game unplayable in the United States; it prohibited financial institutions from allowing wire transfers from their institutions to internet gambling sites.[3] However, online poker platforms continued to operate in the United States in direct defiance of the Act.[4] On April 15, 2011, the day deemed “Black Friday,” the industry was dealt a death blow when the Department of Justice indicted the three largest poker sites operating in the United States, causing these sites to leave the American market.[5] The industry crumbled and has since been unable to return to its former prominence in the gaming world.
Until 2018, sports betting had enjoyed a similar ban in the United States under the Professional and Amateur Sports Protection Act (PASPA).[6] The Supreme Court’s monumental decision in Murphy v. NCAA reversed the Congressional prohibition on sports betting, holding that PASPA is not consistent with the Constitution. [7] The Supreme Court ruled that PASPA included direct commands to the states in violation of the anti-commandeering doctrine.[8] As a result, state lawmakers are now able to decide if they would like to legalize sports betting within their borders.[9]
Does the defeat of PASPA provide any hope for online poker to return to its former prominence in America?
Possibly. The Poker Players Alliance (PPA), a large non-profit poker advocacy group, sees the ruling as an important mark of change regarding online gambling as a whole. Following the decision in Murphy, PPA President Rich Muny stated, “This is a great decision for consumers who for years have had no alternative to wager on sports other than the black market. It presents states with the perfect opportunity to establish sensible policies not only to regulate sports wagering, but also other forms of gaming, including internet poker.”[10] Muny’s comments point to a collective change in the minds of many lawmakers.
Now that lawmakers are willing to pass legislation regulating sports betting, the future is brighter for legalization of other games. Lawmakers recognize the societal benefits of gambling include capturing tax revenue generated from its regulation. This revenue would otherwise be lost to the “black market” Muny referred to.[11] In fact, thirteen states have already implemented full-scale sports betting and many more have active legislation working toward legalization.[12] For example, in Indiana’s first month of legalization, sports betting generated revenue of $8.6 million, which allowed the state to collect over $813,000 in taxes.[13]
Even in a state as hostile to online poker as Kentucky, there is a great chance that legalization will come to the Bluegrass State in the near future. The current Governor, Andy Beshear, is advocating for online poker’s legalization in Kentucky.[14]
The Governor also has the Kentucky legislature on his side. On the first day of the new lawmaking session in 2020, Representative Adam Koenig introduced HB 137 which purports to legalize sports betting, DFS, and online poker.[15]The bill stipulates that sports betting will be overseen by the Horse Racing Commission, while online poker will be overseen by the Kentucky Lottery Corporation.[16] The bill includes a 6.75% state tax attached to all online poker revenue.[17] Following the default rule in Nevada, players who would like to bet online will have to register in person with a licensed organization—likely one of the state’s racetracks.[18] Kentucky has multiple racetracks and brick-and-mortar locations where players will be able to register, including candidates such as Churchill Downs, Keeneland, Derby City Gaming, the Red Mile, and Turfway Park.
Ultimately, the grip of the UIGEA is still strong and online poker remains illegal and unregulated. As a result, American poker players have turned to offshore sites, which offer little in terms of player protection and security of funds.[19]However, with the defeat of sports betting’s ban, there is a greater possibility that online poker’s ban will be lifted as well. Legalizing online poker would present states with an influx of tax revenue as well as provide players better protection within their borders. Now is the time for lawmakers to work toward establishing sensible policies to regulate online poker in America.
[1] Eric Smith, Planet Poker Era, Poker History (Aug. 10, 2011, 5:15 PM), http://www.pokerhistory.eu/history/planet-poker-first-online-poker-room.
[2] 31 U.S.C. § 5363.
[3] Id.
[4] See Andrew M. Nevill, Folded Industry? Black Friday’s Effect on the Future of Online Poker in the United States, 2013 U. Ill. J.L. Tech. & Pol'y203, 204 (2013).
[5] Id.
[6] 28 U.S.C. § 3702; See John T. Holden, Prohibitive Failure: The Demise of the Ban on Sports Betting, 35 Ga. St. U.L. Rev. 329, 334–37 (2019).
[7] Murphy v. NCAA, 138 S. Ct. 1461, 1484–85 (2018) (There is no U.S. Reporter source available yet for this recent decision).
[8] Id. at 1481.
[9] Supra note 7 at 1484.
[10] Jon Sofen, PPA Hopeful Supreme Court’s PASPA Ruling Will Elevate Online Poker’s Chances, Cardschat News (May 15, 2018), https://www.cardschat.com/news/ppa-hopeful-that-paspa-ruling-will-elevate-online-pokers-chances-63397.
[11] Id.
[12] Ryan Rodenberg, United States of Sports Betting, ESPN (Aug. 2, 2019), https://www.espn.com/chalk/story/_/id/19740480/the-united-states-sports-betting-where-all-50-states-stand-legalization.
[13] Andrew Clark, Indiana Sportsbooks Accepted $35.2M in Bets During First Month of Legal Sports Gambling, IndyStar (Oct. 11, 2019), https://www.indystar.com/story/sports/2019/10/11/indiana-sports-gambling-data-september-2019/3945010002/.
[14] Jennifer Newell, Online Poker Remains in Kentucky Gubernatorial Debates, Poker News (Oct. 17, 2019), www.legaluspokersites.com/news/online-poker-kentucky/19482.
[15] Alex Weldon, Kentucky Online Poker Bill Clears First Committee Hurdle with Ease, Online Poker Report (Jan. 22, 2020, 8:00 PM), www.onlinepokerreport.com/39654/kentucky-online-poker-bill-advances.
[16] Id.
[17] Id.
[18] Id.
[19] See BettingUS, https://www.bettingus.com/offshore-gambling/ (last visited Nov. 5, 2019).