RE: Legislative Pulse

More PartyGaming, Poker Beat

by , Apr 9, 2009 | 6:22 pm

On today’s episode of The Poker Beat, BJ and I lightly sparred about the significance of Party Gaming’s $100+ million settlement with the US Department of Justice. I’m pretty sure I beat him in everyone’s mind but his own … but still, I also know I got a few things wrong that might unsettle the Insider, so it’s good to know the Washington Post pretty much agrees with my take on the fluid situation:

Today’s news sent online gambling stocks soaring overseas. That’s because some financial analysts see the settlement as possibly leading to others, thus reducing uncertainty in the industry and opening the door to industry consolidation and expansion outside the U.S

Moreover, it’s taken some hard work to educate the masses on our semi-complex issue, but it’s good to see the message the (super-influential) non-poker media is putting out there:

… some legal scholars and Internet gambling proponents see the government crackdown as a disconnect between 21st-century technology and the 20th-century laws used to protect Americans from gambling.

The Justice position is considered controversial with some members of Congress and gaming analysts arguing it has steered U.S. players to unregulated offshore sites. “The U.S. government has now succeeded in driving out the reputable publicly-traded Internet gaming operators,” said Joseph M. Kelley, a professor of business law at the State College at Buffalo, who has also served as an expert witness for gaming and government interests. “It has not decreased online gambling, but has reduced the ability to monitor suspicious transactions.”

11 Comments to “RE: Legislative Pulse ”

  1. BJ Nemeth

    Did you even read the last three words of the quote you pulled from the Washington Post?

    “… outside the U.S.”

    This settlement, while good for PartyGaming, isn’t pointing to any pending legislation to regulate online poker in the United States. Here’s the next sentence after the ones you quoted: “Some analysts said PartyGaming also had now increased its chances of gaining a license from any future regulated U.S online gaming market.”

    That’s exactly what *I* said. The U.S. government isn’t on the verge of licensing online poker, but PartyGaming is now on the short list if there ever is a “future regulated U.S. online gaming market.” Just don’t hold your breath for it to happen in the next 12-18 months.

  2. BJ Nemeth

    Joseph Kelly, that professor of Business Law that you quote in the bottom of this post, also had this to say about PartyGaming’s settlement:

    “They may be paying a huge fine to get this behind them, but it won’t get them any closer to online betting here anytime soon.”

    Link to the New York Post article with this quote:

  3. DanM

    i was going to remind you, BJ, that on air you were talking 24+ months. but the other quote you got is pretty good. i hadn’t seen that.

    However, you may want to note that the Joseph Kelly quote you cite comes from an article that is nearly a year old, where the one I’m referencing is only a few days old.

  4. BJ Nemeth

    FYI, my $500 bet on legalized online poker in the U.S. is set for November 15, 2011 (31 months from now). I have the over. I only used the timeframe of “12-18 months” because you were talking like this settlement was pointing to something happening in the near future.

    Yes, my Joseph Kelly quote is nearly 11 months old, but it’s about the then-rumored, now-confirmed settlement between PartyGaming and the U.S. Department of Justice. And I haven’t seen anything from Mr. Kelly to indicate that he’s changed his mind. Nowhere in the linked article you provide is anything mentioned about pending legalization, or this even being a step in that process.

    This settlement merely opens the doors for PartyGaming to apply for an online poker license, should such regulation ever take place. (And I literally bet that it won’t in the next 31 months.)

  5. DanM

    ***This settlement merely opens the doors for PartyGaming to apply for an online poker license, should such regulation ever take place.***

    Dude, I’ll use your quote. That’s my whole point! It brings us closer. These things aren’t happening in a vacuum, ya know. It wasn’t just the completion of a shakedown. What do you think they’ve been talking about for the past year? Someone has to come up with a structure for how stuff will work.

    I’ll give you $1k on the under for the same date. (Seriously.) Howevever, I suspect we’d have to clarify what the definition of “legalized online poker” is … because I can almost guarantee when we do “win”, tons of poker people will be going, “WTF? This isn’t exactly how we want/need it” … at which point it will probably take a year or two to correct and clarify. (See Florida 2007-2009.)

    Also, the when is key … I could also see, even if a bill does pass and is signed into law, it taking a year or more for all the mechanisms to be put into effect in a way that allows the fully legal online poker we are talking about.

  6. BJ Nemeth

    Dan said, “That’s my whole point! It brings us closer.”

    Wrong! It brings *PartyGaming* closer, not “us.”

    Full Tilt and PokerStars are no closer to legalization than they were before the PartyGaming settlement. The timetable for potential legislation is completely unaffected by this.

    If I had money, I’d happily take you up on the $1,000 bet, which was spelled out fairly clearly between me and my co-gambler (whom we both know). But $500 is a very substantial bet for me for something that is completely out of my own control. The terms of the bet are very fair to your side — it can’t be something goofy like ClubWPT or Duplicate Poker, but other than that, it’s pretty wide open. Even if the government is just testing out online poker regulations for a probationary period, I lose the bet.

  7. DanM

    You think Party Gaming execs talking with high-ranking government officials about billions of dollars doesn’t impact Full Tilt and PokerStars? That’s one of the things they have to work out … how to let these guys stay while welcoming back the likes of Party … not to mention all the WTO stuff with the EU.

    THESE are the complicated matters that are a little beyond our ken. But the wheels are clearly in motion. Nothing is in 2009 as it was in 2008, and nothing was in 2008 as it was in 2007 … I sense it all approaching critical mass, you see the wheels spinning a little more randomly.

    Even $500 is a big bet for me, but I’ll take you on at any stakes. (Might be funny for me to try to wrangle up backers for a big-big bet based on our prognostications.) But let’s discuss … because I definitely think it will either happen in 31 months or less or never … and if never is the answer, then i might as well start going on tilt right now. LOL.

    maybe the standard should be that a law or major enforcement change has to be signed sealed and delivered at its highest level, and you have to be able to make a direct deposit and/or withdrawal between a legitimate site (determined by TV ads maybe?) and your US bank.

  8. scott diamond

    Ok you two geniuses, question here. Do you think the scoop series being put on by PokerStars is going to bring attention to them by the US Government because some of these large payouts going to American Citizens, tax free?

    Or just because how many Americans are playing there?

    You two need to get your own radio show, good stuff gents.

  9. BJ Nemeth

    PartyGaming was in discussions with the *Executive* branch of the U.S. government, not the *Legislative* branch. Legalized online poker has to go through the Legislative branch — Do Not Pass Go, Do Not Collect $200.

    Yes, there has been a lot of good news for poker in recent court proceedings. But when it comes to online poker, you need to immediately disregard every state (rather than federal) case that is about live poker — they are apples and oranges. If Texas or South Carolina (or any other state) legalizes poker in home games, charity tournaments, or even full casinos, it has nothing to do with federal legalization of online poker.

    It seems like there has been nothing but good news for poker in courtrooms lately, but a lot of little pieces of good poker news doesn’t add up to the “big one” that we’re all waiting for. It just doesn’t work that way. Legalized and regulated online poker has to go through Congress. Period.

    And I hate to be the bearer of bad news, but even though our staunchest opponents are Republicans (who are in the minority), there are very few Democrats who want to spend political capital on this issue. It’s going to be an uphill battle for our side.

    Is it possible that online poker will be legalized and regulated by November 15, 2011. Sure. Is there even a 25% chance? No.

  10. BJ Nemeth

    Scott — SCOOP is irrelevant in the profile of poker in the mainstream; it’s all about the WSOP Main Event. That’s the only time the rest of the world pays attention to us. (Unless a celebrity wins something big, or there is a huge scandal.)

    And I think Pokerati and The Poker Beat is more than enough Dan/BJ arguments for anyone. No need for more shows. 🙂

  11. scott diamond

    Then why go after Party Gaming? You said it impacts PS and FT…splain 2 me BJ.