Regulated Online Poker in the U.S. is Wishful Thinking

Calvin Ayre
Calvin Ayre
February 2, 2010
27 Comments
I wish I was big. No wait... I wish online poker was regulated in the US.

I wish I was big. No wait... I wish online poker was regulated in the US.

Rep. Barney Frank, the chair of House Financial Services Committee, could get a committee vote on H.R. 2267 as early as February 2010. If the bill is passed, it would legalize and regulate the online poker industry in the United States.

Over and over again…I don’t know how many times I’ve come across predictions of rule changes to the poker industry in the U.S. market in the newspapers. Clearly anyone in business knows that in order to run your business with success in mind you have to make some predictions, or at least have some foresight into the future. To use a hockey analogy, you have to pass the puck to where you think your teammate is going to be, not to where he is at that moment. And that is always the trick.

Anyone who is good at predicting the future disproportionally profits in business as there is so much lead time needed to be ready for future events. This is why a lot of media sites are so interested in predictions – and more specifically predictions about the U.S. online gaming market, which was significantly closed in 2006 (at least for the public companies) after the passing of the UIEGA.

Recently, the one prediction I’ve seen made over and over again is that online gaming, or more specifically, online poker, will soon be legalized in the United States. In fact, the most recent prediction comes from none other than Poker Players Alliance (PPA) Executive Director John Pappas, who says that U.S. Rep. Barney Frank’s poker bill could be up for a committee vote as early as next month, so we had better “get ready.”

Well, here’s what I think… (Drum roll please)…

I predict that it would be very unlikely for the legalization or regulation of online poker to happen within the next five years, and probably not in the next 10 years. Though it will happen.

Additionally, now that the public companies have been forced out of the U.S. market, I don’t think they will be allowed to come back – even if the UIEGA is repealed. That is, not until they have been submitted to some new formal regulatory environment in the United States. Once the market has opened up, the structure you have will not be an issue; though some of the private companies might have to sell their current U.S. facing operations to a regulated U.S. operator in order to gain free access to e-commerce and advertizing.

However, the recent 888 deal with Harrah’s proves that being in the U.S. market prior to the passing of the UIEGA will not necessarily be an impediment to future U.S. facing opportunities.

Going back to the early 2000s I predicted that being a public company was the wrong structure for the volatile environment of the global online gaming industry. This prediction has been proven right in spades and will continue to be right for years to come.

With the publishing of this article, I guess my newest prediction will be put to the test – the test of time, that is. Time will tell who is right…as is always the case.

I think anyone making business decisions on the basis or with the hopes of the U.S. market magically opening up in the next few years is just wasting their time…and they will likely miss their golden opportunity to make good on that break-out pass.

Need more convincing…click here for an extremely knowledgeable opinion from Las Vegas gaming lawyer Anthony Cabot, partner and gaming group leader, Lewis & Roca.

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Tags: Article, Barney Frank, Calvin Ayre
Views and opinions expressed are those of the Author and do not necessarily reflect those of CalvinAyre.com
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  • danielvc11

    Good!

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  • Peter

    Online gambling will in Denmark be legalized from January 2011 – and foreign (EU) operators must buy license in order to operate there.

  • http://www.majorwager.com/forums/poker-room/194331-calvin-ayres-prediction-online-poker-regulation-us.html#post1647297 Calvin Ayre’s Prediction for online poker regulation in the US – MajorWager Forums

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  • zeusslotmachine

    Hey nice blog Calvin thanks

  • http://slotfinder.org/ slot machine finder

    How about for sports betting?

  • sueschneider

    If one only knew…..

    I don't think it's as imminent as the rest of the world seems to be led to believe but 5-10 years? Perhaps something in the middle.

  • http://twitter.com/Bolcerek Michael Bolcerek

    If you look at the value of the market, let’s say $10B in US annually, you would invest $100,000,000 to obtain that market if you thought you had 1% of regulation enabling this market. I doubt that the industry spent less than $10M last year. I think that I saw it was around $6M. So I would agree with you that this is pretty optimistic given that only %0.06 of the potential market is invested in trying to achieve this goal. That is the EV calculation. Perhaps after more lotteries go online and accustom the average person to wagering online in a government sanctioned version, then the barriers will come down to other forms of i-gaming. Or perhaps the industry will consider the mathematics of the political equation.

  • Anonymous

    Are you saying that because you would be unable to establish a solid presence in the U.S. and the market would be ran by big casinos and American entrepreneurs?

  • http://CalvinAyre.com Calvin Ayre

    I am basing my 5 -10 on the 10 years it took them to pass the UIEGA…I remember back in the 90's their was another similar surge of popular opinion that legalization was around the corner. I went on the record on this one so I can point back to this in 10 years and say I told you so.

  • TylerRR

    So mr.ayre, do you think that the market will at least open for some new poker “companies” like you said, harrahs, to become active players in the online poker world even without the passing of the new bill to repeal the uigea?

  • zeizei

    Thanks for sahring !

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  • http://CalvinAyre.com Calvin Ayre

    TylerRR….There is going to be no opening of any market of any sort for a long long time and it will most likely be on a state by state basis as Anthony Cabot is suggesting. The Nevada licensed groups have to block US residents until this changes.

    iepstein…I say what I say because its my opinion. I was not aware that my opinion would affect US policy as you are seeming to suggest, but if I do see this I will be sure to publish it here :-) I am making my decisions based on my opinions….everyone is welcome to do the same…just like back 6 years or so ago when I told everyone they were nuts to go public and now they are all blocked out of the US market.

  • http://CalvinAyre.com Calvin Ayre

    Slot….Sports is even less likely than poker, though it is arguably even more a game of skill than poker. That whole game of skill argument has always been a joke. I have been on the record for years saying that the pure poker companies were delusional if they think they are somehow different….this is about money guys, not morality and it will always be about money. The only way poker will be treated differently is if everyone decides they don't want to play it anymore and there is no money involved.

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  • david23331821

    you really think poker being a game of skill is a joke?

  • david23331821

    you really think poker being a game of skill is a joke?

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