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One State Carries Online Poker's Hopes In 2015

CA Has Strong Chance Of Legalization, But People Say That Every Year

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The only real chance for more online poker in America next year is California. According to research earlier this year from financial services firm Morgan Stanley, the Golden State will be the only U.S. state to authorize the activity next year.

However, that is actually no sure bet.

In early December, a new online poker bill hit the California legislature. It was introduced by Assemblyman Mike Gatto, a Democrat from Glendale. The bill is dubbed the “Internet Poker Consumer Protection Act of 2015,” and it would establish a framework to authorize intrastate Internet poker—and poker only—for those physically within California’s borders. It is worth noting that one tribe was looking to launch its own online poker site under tribal sovereignty because, basically, it grew tired of waiting for the state to pass legislation for online betting. It ended up launching online bingo instead and then was sued by California.

Gatto said in a statement that his bill “is different from previous proposals, in that it endeavors to address both the external criticisms of the industry, and expand the pie to obtain accord amongst competing gaming interests.” Online poker efforts in California have failed for years.

His comments sounded pretty promising, but there’s actually debate about whether the language in the proposal (it’s still in its early stages) will be acceptable for some; most notably PokerStars and its potential partners. A coalition of PokerStars, the Morongo Band of Mission Indians, the San Manuel Band of Mission Indians, the Commerce Club, the Hawaiian Gardens Casino and the Bicycle Casino came out with a statement not long after the new bill was introduced and basically condemned it. The coalition has criticized other efforts before.

“Unfortunately, [the bill] is a rehash of previously unsuccessful proposals,” the coalition wrote in its public statement. “Any bill that seeks to establish artificial competitive advantages for some, while denying Californians the best online poker experiences, will only serve to divide the community and will be opposed by our coalition.”

The coalition is concerned about the so-called “bad actor” provisions that they think limits the competition the industry needs to thrive. The issue stems from the fact that PokerStars, under prior ownership, fell into hot water with the federal government. However, that case has been settled and PokerStars never was found to be guilty of wrongdoing. Still, that case could hurt its California chances.

Despite what Gatto says, there is still a long, long way to go before California sees online poker. The PokerStars et al. coalition has a lot of political power in the Golden State, and it appears unlikely anything could pass without that group signing off on the language in the legislation.

So, if one had to bet on California, it would probably be better for your money to not be too hopeful about 2015. It wouldn’t be too surprising if nothing happens there next year, given billionaire casino boss Sheldon Adelson’s continued efforts to ban the activity nationwide, or at least prevent it from being legalized in any additional states. Nevada, New Jersey and Delaware currently have ongoing online gaming industries, and revenues have been lackluster. Though, California is said to be large enough to support its own intrastate industry, so performances elsewhere probably aren’t too scary if anyone in California is worried about online poker succeeding there.

The one great thing about California is that there is so much money to be made, which would make one think that it’s just a matter of time before competing groups find a way to share.

According to a study done last year by Academicon and PokerScout which analyzed the California market during 2009-2010, a total of 178,300 online poker players in California generated an average of $867 per year in revenue for offshore poker operators, creating a $155 million market. California players accounted for 16 percent of U.S. revenue and four percent of worldwide online poker revenue, the study also found.

Gatto said that “millions” of people “regularly” play poker in California. It’s hard to imagine it being quite that many who play regularly even if you factor in free-play games like ZyngaPoker. Politicians far and wide do sometimes throw out numbers to help their legislative projects. Take Chris Christie in New Jersey, who once estimated that online gaming in the Garden State would yield $1 billion in its first year.

Morgan Stanley predicts that California’s online poker market will be $610 million by 2020, assuming it legalizes the activity in 2015 and the ball gets rolling. The fact that Californians would only be able to play poker on the Internet does limit the overall size of California’s online gaming market. For example, Illinois is predicted to be about the same size as California one day, because the former will likely authorize a slew of online casino games, in addition to peer-to-peer poker play.

After California, the U.S. states most likely to legalize online poker in 2015 or 2016 are Illinois, New York and Pennsylvania, according to the Morgan Stanley research. All three have well-established gambling industries and have flirted with online gaming in the past. New York might be the last one to do so of the bunch, given that officials there are in the middle of overseeing the state’s first non-tribal Las Vegas-style brick-and-mortar casinos. Gaming-friendly states Colorado, Iowa and Massachusetts could legalize online gaming by 2020, Morgan Stanley predicts, which probably also makes them dark horses for 2015.

The year 2014 saw no additional states legalize or debut online poker industries. It could be the same for next year, but let’s hope that isn’t the case and California legalizes, kicks off a hugely successful industry, and as a result convinces other states to embrace online poker.

It could happen.