With the three biggest online poker companies in the U.S. shut down, traditional American casino companies hope to quickly cash in on an industry worth billions of dollars. Casinos hoping to fill the void created by a federal crackdown are pushing louder for legalization and regulation so they can line up tens of thousands of likely regulars. They say thousands of Americans are playing poker online despite attempts to stop them, including the federal indictments this month of Internet poker executives on money laundering and fraud charges.
Regulating online poker makes more sense than the 5-year-old federal ban, they say, especially because governments could gain millions of dollars in tax revenue. Billionaire casino mogul Steve Wynn and his counterpart at Caesars Entertainment Corp., Gary Loveman, both have spoken out in favor of legalizing online play. And they’ll have an advantage if lawmakers ultimately see things the same way: It’s unlikely PokerStars, Full Tilt Poker or Absolute Poker will be allowed back into the U.S. market while their executives face allegations of bank fraud, money laundering and running illegal gambling businesses. Loveman told The Associated Press the change would benefit an industry that has struggled as consumers keep a lid on their spending. “Our industry has to modernize itself in a way that allows its services to be provided electronically and not in these massively expensive brick-and-mortar facilities,” Loveman said. “To speak to a younger audience, this is increasingly necessary.”
A 2006 federal law effectively banned online gambling by prohibiting banks and credit card companies from processing online payments from gambling companies to individuals. But the law didn’t say what kind of gambling was illegal, and many believe it left the door open for states and companies to consider the issue. “The policy up to now, which is no surprise to anybody, has been murky and arcane,” said Wynn, the chief executive of Wynn Resorts Ltd. Wynn Resorts had a pact with PokerStars to offer online poker to Americans if federal laws changed, but it nixed the arrangement the day the indictments were announced. “Most everything in Washington is mysterious and unfathomable,” Wynn told investors last week as his company reported its first-quarter earnings. “We’re trying to figure out what the hell the public policy is, and then we can have a corporate policy.”
The Department of Justice has yet to pursue legal actions against anyone for playing poker online based on the 2006 law. The recent charges dealt with allegations that the poker sites were creating third-party operations that tricked banks into thinking gambling transactions were legitimate. “What they’re indicting was the illegal activity of foreign operators in the United States,” said Loveman. “The solution to that problem is not simply to send our law enforcement people out chasing foreign operators. The solution is to take a very simple pastime that’s been around this country for hundreds of years, and allow licensed, regulated providers to provide it.” Senate Majority Leader Harry Reid, a former Nevada state gambling regulator who supported the 2006 law, agrees. Reid unsuccessfully pushed a bill to legalize online poker at the end of last year, but it fell short. He said it’s important to clamp down on unregulated operators but offer the entertainment through legitimate sources. “It’s something that has to be regulated,” Reid told the AP. “The commodity is cash, and we have to be very, very careful that we do it the right way when it deals with interstate commerce.” Players have heard that before, and while many have followed legislative developments, others didn’t care as long as they could gamble online.
John Pappas, executive director of the Poker Players Alliance, said the indictments served as a wakeup call for serious players. “They feel like they’ve been trampled on by their government here, and they want to restore what they were enjoying,” Pappas, whose Washington-based group of poker players pushes for legalization of online poker. Alexander Ripps, a legal analyst for Gambling Compliance, a consulting firm in Washington, D.C., said traditional gambling companies that have been opposed to online play are reconsidering their position because they think regulation is inevitable. Some smaller commercial casinos still fear online poker will make them obsolete, however. American Indian casino operators also are split, Ripps said.
Loveman, Pappas and others prefer legalization at the federal level because the business is increasingly profitable and more appealing to players with more people participating. But Pappas said that the longer lawmakers wait, the tougher it will be to make online poker a success in terms of raising tax revenues. “If lawmakers are serious about job creation and economic growth and reducing the deficit, we are handing them something on a silver platter that can help with all three,” he said.
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