Bryan in Washington DC sends along an update from PPA lobbyist Jeff MacKinnon (of Ryan, MacKinnon, Berzok and Vasapoli, LLP) on the current legislative landscape for online poker as seen by those working the hallways of Capitol Hill. It’s apparently all about gearing up for a lame-duck-session smackdown, and riding our net-positive revenue potential onto an appropriate bill.

MacKinnon explains:

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Calm before the storm.  That’s what it feels like on Capitol Hill these days.  There’s a certain melancholy feeling around here – sort of like a lull between battles during the Civil War. Coming off a year of budget deficit/debt/payroll tax crises, Congress is quietly putting all pending skirmishes off until an end of the year legislative battle royale. If one were in college - it’s sort of the equivalent of taking an incomplete in every class the whole year then having to do a year’s worth of work in 25 days at the end of the year.

Before everyone rushes to E-Trade and shorts the market, in Washington I’ve found that things are never as good or as bad as they appear to be. The one thing Congress is good at is kicking the can down the road. This will be a test of wills like no other – especially for lobbyists like me.

The breadth and number of contentious issues to be decided after the election is overwhelming and quietly has garnered the attention of many CEOs and financial industry leaders. A few of the issues that must be addressed before the end of the year: expiring Bush tax cuts; extending the debt limit; stopping drastic reimbursement reductions for physians in the Medicare program; an unemployment insurance extension; a transportation bill to fund highway programs in 50 states; changes to the alternative minimum tax; tax credit extenders for renewable energy and research and development; and the expiring payroll tax cut. Combined, these issues on the table are equal to 3% of our GDP.

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I have terrific breaking news to report. The National Fraternal Order of Police sent Senator Harry Reid, Senator Mitch McConnell, Speaker John Boehner, and Rep. Nancy Pelosi a letter in support of “a strong regulatory framework for legal gaming”! As FOP supported the Unlawful Internet Gambling Enforcement Act of 2006, this is significant for us. Click here to read this important letter.

Check it out … while some have been saying federal online poker legislation is near death, not all are willing to abandon hope that Sen. Reid might-could have something up his sleeve so hey poker players, keep it kinda hush, yo!. Here’s American Gaming Association chief Frank Fahrenkopf on the Reno wonkcast Nevada Newsmakers (Home Base for Nevada’s #1 Political Show!) refuting the suggestion (at about 2:40) that online poker is done-for in 2012.

FWIW: Fahrenkopf’s sway in the overall-world-is-bigger-than-just-poker political discourse extends far beyond gaming, as he currently serves as co-chairman of the Committee on Presidential Debates. So that’s one to grow on, obv.

Online poker may be a difficult issue to either defend or fight in an election year. At least one hedge fund manager and one analyst are betting Congress will fail to act on online poker this year.

Rumors reached fever pitch last week that a bill to legalize and regulate online poker in the U.S. would be tacked on to legislation extending payroll tax cuts. Senate majority leader Harry Reid (D-NV), however, denied the rumors on Thursday. Congress passed the payroll tax bill sans online poker legislation on Friday.

Poker players are all too familiar with gaming-related bills getting tacked on to other legislation. In 2006, the UIGEA was snuck on to the “must pass” Safe Port bill in the dead of night. Last week’s speculation gave full measure to the adage “turnabout is fair play.” 

But U.S. players (and casino interests alike) remain hopeful that online poker legislation is still in the cards for 2012 despite the false alarm and Wall Street’s long odds.

Poker continues to gain ground on Capitol Hill! On Monday, Gambling Compliance reported some excellent news (click here, subscription required) in an article entitled Reid Says DoJ Opinion Gives Congress Incentive for Internet Poker Bill.

The article quotes Senate Majority Leader Harry Reid (D-NV) as follows: “It [the Department of Justice’s clarification of its interpretation of the scope of the Wire Act as not including online poker] (will) give us an incentive to get something done. We cannot have a series of laws around the country related to [Internet] gaming, I know a lot about gaming. I’m a former chairman of the Nevada [Gaming] Commission, and I think it’s very important that we have a national law.” The article further states that Sen. Reid has confirmed that he is negotiating with Sen. Jon Kyl (R-AZ) on a federal online poker bill bill!

When articles like this goes public, lawmakers always look at public reaction. So, let’s all do our part and tell both that we wish for them to push forward with appropriate online poker legislation! Fortunately, we can do this quickly and easily.

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It feels like we’ve been talking about Caesars going public since before they were Caesars (we have) … but their latest S1/A filing with the SEC suggests not only that CZR really is might be ready to kick it Zynga-style with a big fat IPO … but also that any public offering from the worldwide gambling empire may be in preparation for imminent legalization of US online poker.

While such hefty levels of high finance are still probably a little beyond my ken … you can read the nearly 300 pages of Big Casino corporate speak and decide for yourself. Somewhere in here, I’m pretty sure, is a blueprint for the future of poker and/or online gambling.

At a minimum, I found this snippet on page 7 suggesting that Caesars is getting ready for something big related to online gambling poker:

We believe that additional jurisdictions will legalize online gaming due to consumer demand, a broader understanding of the need to regulate the industry and to generate income through taxes on gaming revenue. As such, we support efforts to regulate the online gaming industry to ensure that consumers are protected. We believe that the potential for online gaming is substantial and believe that we will command, at a minimum, our fair share in any legal jurisdiction. An H2 Gaming Capital study conducted in 2010 projects that the global online gaming market will grow to $36 billion in revenues by 2012. We believe that the largest opportunity in online gaming in the near term is the legalization of online poker in the United States. [emphasis added]

There’s tons more in this document worthy of perusal … some of which I’ve already skimmed. And it doesn’t take much to see how an actual Caesars IPO — not just talk of it — could-well coincide with legalized American online poker hubbub (finally!) reaching critical mass.

Caesars, after all, formerly known as Harrah’s, was a publicly traded company until going private shortly after passage of the UIGEA in 2006. Changed their name to Caesars in November 2010 — the last time they prepped seriously for an IPO (right after their boy Harry Reid won re-election and owed them a favor) only to withdraw plans for a public offering of stock shares right after someone told them the lame-duck online poker Reid bill was just a farce for other political purposes a couple weeks later.

I wish to thank the entire poker community for the outstanding work in telling our elected officials that we demand action on the online poker issue. We as individuals have sent more than 100,000 letters and made countless phone calls to lawmakers this year alone. Let’s keep it up!

Additionally, Senate Majority Leader Harry Reid (D-NV) has ASKED for questions via Twitter for an upcoming town hall. You can send him pro-poker questions in under thirty seconds:

1. Send a prefilled, editable pro-poker Twitter question: CLICK HERE
2. Send a second Twitter question for good measure: CLICK HERE
3. You can track the pro-poker messages here.

I also wish to discuss the ongoing issue with player funds locked up at Ultimate Bet, Absolute Poker, and Full Tilt Poker. As someone with around five figures locked up on Full Tilt Poker, I certainly empathize with the situation.

PPA has issued statements demanding that Full Tilt Poker, Ultimate Bet, and Absolute Poker refund player balances. Additionally, PPA representatives – including me – have made statements in several interviews with various poker media sources with demands for repayment. PPA does not accept the Department of Justice fund seizures as an excuse. We have also publicly praised PokerStars for doing the right thing in refunding its U.S. players.

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It really would be kinda selfish to hoard all the knowledge in poker, let alone any insight gleaned from all the uninformed and/or misinformed Twitter-fueled forum banter. Things are moving so fast these days in poker it’s hard to keep up, let alone have time to post after filtering through the muck. Actually, that probably explains the continued love/hate in poker for QuadJacks … accuracy shmacuracy, if there’s new hubbub in poker, Zac and Marco and crew are on top of it, and occasionally the middle of it — with informed insiders and ignorant blowhards alike contributing — while SrslySirius makes a rap video.

But a few recent stories of particular significance that might otherwise get buried amid PokerStars/WSOP/WPT press releases, 2+2 NVG threads, and the mashup of Jungleman cheating buzz:

Ring-fenced funds: Full Tilt debaucle explained
ALDERNEY
Check out this story in Poker Player Newspaper about a regulatory matter of new relevance called “ring-fenced funds”. It helps one understand a little better why Full Tilt found themselves in tighter straits than PokerStars post-Black Friday (even though PokerStars is the big boy the DOJ most wants) … and leaves one to wonder why senior executives and on-duty attorneys representing both Party Gaming and PokerStars flew in from Gibraltar, Israel, and the United States to observe the proceedings firsthand. Perhaps they thought they were coming in to witness an execution?

Online gambling goes national
WASHINGTON DC
Big talk all over the internet about a piece in the New York Post that points out how stars seem to be aligning for online gambling legalzation in the US — from the Kyl/Reid letter requesting DOJ assistance in squelching offshore operatives and state initiatives alike, to a Boehner aide taking on a VP role with the American Gaming Association, to a warming friendship between House Majority Leader Eric Cantor and Venetian pooh-bah Shelly Adelson.

It all supports my belief that online gambling will indeed be a national issue in coming months (assuming people behind a rumored Senate bill want it to be). There’s no mention, however, of the player-friendly Barton Bill, nor much anything about poker specifically — the writer talks of “gambling” — which suggests this story could be a plant by media operatives for the AGA, who we know, of course, represent Big Casinos and likely have Harry Reid’s office on speed dial. It also supports contentions that the effort to bring back online poker (thanks PPA and Joe Barton!) will likely become a push for full-on legal online casinos as bills move forward.

Nevada regulators prepping for Poker+ …
LAS VEGAS/CARSON CITY
Meanwhile, unbeknownst to many, Nevada Gaming authorities are in the midst of sweeping changes to state regulations — with very specific language updates on matters of foreign partners, “suitability”, server location, mobile gaming platforms, slot machine networks, money transfers, tax collection, you name it … The new rules currently taking shape in Nevada touch on just about every issue brought up in the online gaming political sphere over the past five years. Whether revolutionary or standard as far as procedure goes, if you really wanna know what the future of online gambling (and therefore poker) will look like — and/or place your bets on who the corporate winners will be* — follow the public work of the Nevada Gaming Commission and State Gaming Control Board here in coming weeks.

* for entertainment purposes only: smart bet is Caesars, William Hill, and Cantor-Fitzgerald.

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This week’s online gambling news includes an unusual bipartisan letter to the US Department of Justice. Plus, industry news from the United Kingdom, and a potential setback for regulated gaming in Washington DC.

We speak again to our friend Dan Pokerati Michalski about the WSOP and the recent developments with online poker as well as his conversation with Gary Johnson.

By letter to federal Attorney General Eric Holder dated July 14th of this year, US Senators Jon Kyl and Harry Reid have made known their views on Internet gaming. Or rather: they’ve let the AG know what they want the Department of Justice to do without exactly saying what their position is. (Thanks to Chris Krafcik for circulating the letter.)

This letter, from two senators coming from very different camps on the Internet gaming issue, is a very interesting document both for what it says and for what it doesn’t say.

What it says is that the Department of Justice has been lax in pursuing foreign private Internet gaming operators and that this has “led to a signficant and growing perception … that the Department of Justice thought that the case [against operating Internet poker and other Internet gambling websites] was uncertain enough that it chose not to pursue enforcement actions.” The senators state that it’s important for the DOJ to pursue “illegal Internet gambling” in the United States “aggressively and consistently.” Most notably in this paragraph, Senators Kyl and Reid assert that Internet poker websites have been offering online play to Americans for many years “with apparently no repercussions.”

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You can’t really claim to set the “gold standard” for gambling regulation if your licensees still have to submit their reports via fax. Thankfully, as Harry Reid’s home state of Nevada gets its regulations in order to accommodate online poker and probably more — not to mention the new NV law allowing them to regulate future legal online gambling… the Nevada Gaming Control Board just made a rather major shift not just by allowing email submissions, but requiring them.

Seriously, this shift into the 21st late 20th century dramatically alters daily activity in every Vegas casino with a poker room … Wonder if Nevada Gaming learned about this “email” tactic on their junkets to Alderney.

The Alderney Gambing Control Commission — which will be making its own determination on the fate of Full Tilt Poker later this month — partnered with Nevada regulators in January, shortly after the Reid Bill somehow didn’t pass.

The political arm of America’s brick-and-mortar casino industry is working on its own federal online poker bill, Frank Fahrenkopf, CEO of the American Gaming Association, revealed yesterday at a press conference in Washington DC. The AGA bill will likely be a hybrid between inter- and intra-state, providing federal oversight of independent state regulations.

Joining Fahrenkopf at the press conference were Keith Smith, president of Boyd Gaming; Gordon Kanofsky, CEO of Ameristar Casinos; and Virginia McDowell, president of Isle of Capri Casinos. The lobbying push the AGA kicked off yesterday talked about online poker most immediately, but language used didn’t seem to exclude the possibility of online slots and other casino games becoming part of these efforts.

Senate Majority Leader Harry Reid (D-NV) is holding a lunch today with top Democratic leaders and casino executives to discuss, they say, a broad range of online gambling matters.

Gary Loveman, CEO of Caesars Entertainment (parent company to the WSOP), made note of the importance of online poker yesterday in an SEC filing yesterdayreporting Caesars Q1 2011 financial results. In the positive spin put on losing $147 million in the first three months of this year, he told Uncle Sam:

“Finally, we believe strongly that the recent federal indictments of illegal online poker operators should convince Congress to allow American citizens to play online poker and to allow American companies to compete in a multi-billion-dollar industry,” Loveman said. “By acting now to legalize a game enjoyed by millions of adult citizens, Congress can clarify ambiguous federal laws, generate tax revenues for federal and state governments and bring thousands of jobs to this country.”

Forbes associate editor Nathan Vardi published an article this morning entitled “How Casino Mogul Steve Wynn Went All In On Online Poker and PokerStars”, which despite the lame-o “All In!” header, is a compelling high-seas tale of how PokerStars founder Isai Scheinberg wooed and won the reticent Steve Wynn based on Vardi’s interview with the casino titan.

Because where else could billionaires come to grips with their future together but on a fabulous yacht in exotic locations and make the deal (surprisingly) even-steven 50-50?

I couldn’t help but think of Vardi’s post as if told in a novella….

When Scheinberg Met Steve

Chapter 1: The First Meeting

Nearly two years ago billionaire Las Vegas casino mogul Steve Wynn met Isai Scheinberg, the founder of PokerStars, the world’s biggest online gaming firm, for the first time. Scheinberg generally avoids traveling to the U.S., but the meeting took place on Wynn’s boat while it was anchored in the Mediterranean Sea. Over a three-hour lunch, Scheinberg tried to convince Wynn that the two of them should work together to regulate online poker in the U.S. with an eye toward setting up a joint venture.

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Much more to say on this one … but a lot of moving parts to get our arms around. And I have a feeling just like I took the wrong side on any Gov. Chris Christie (New Jersey) veto bets … that I may have to eat some words muttered on this week’s episode of Rabbit Hunt.

Nevada wants in on the regulating online poker game … and introduced a bill today to do just that. But many are curious … a Caesars legal counsel seems downright irked … about how the state the Harry Reid built could be pushing an intrastate measure, when they want interstate.

OK, yeah yeah, Harry Reid didn’t build the whole state, I know. He would have to be like 140 years old for that to tbe true. But you know this kinda thing isn’t moving to the point that it did today without him having at least some finger in it. Right? State and federal are usually different … but internet poker kinda became the US Senate Majority Leader’s baby … or at least his bratty nephew.

Line it up: the pre-regulation of online poker continues … and the game is just getting extra good.