Calif. eyes online-poker battles in NJ, Penn.

Posted at 12:06 PM, Jan 03, 2016
and last updated 2016-01-03 15:06:47-05

December was a surprisingly busy month in the battle over legalizing online poker. While the debate in California has been tabled until early 2016, several key developments around the country could have a direct impact on whether Californians get to play poker over the internet legally any time soon.

One of the main arguments for legalization in California is that it will provide revenue to the state because the companies will be forced to pay for permits to operate and, of course, will be taxed. One of the arguments made by opponents is that the poker industry would not create nearly as much economic impact as supporters suggest.

That’s why so many people involved in the issue in California are watching what is happening in New Jersey. That is the most recent state to legalize online poker, and also the biggest. There were significant problems with the launch of poker sites in New Jersey, especially a level of interest that was much lower than projected. This led to a few of the companies that launched poker websites quickly folding and overall revenues dropping significantly since legalization.

New numbers, however, reveal that the online gaming industry in New Jersey had its best month on record in November, bringing in more than $13 million. As with all brick-and-mortar casinos, like the many tribal casinos in San Diego County, poker is only a small part of online gaming revenues. However, New Jersey’s poker sites took in almost $2 million in November, up 2.3 percent from October and up 4.3 percent since November 2014.

Poker supporters in California are watching the New Jersey market carefully, especially because the world’s biggest poker site is preparing to launch there. PokerStars expects to open its site in early 2016 and hopes to provide a big spark to interest in playing the game online.

PokerStars has been a driving and highly controversial player in the battle over poker in California. Supporters believe that its inclusion will help create the maximum amount of revenue. However, opponents say PokerStars is so big (reports indicate it controls anywhere from 70 to 95 percent of the world online poker market) that no other sites in California would be able to compete. Along with the desire of race tracks, including Del Mar, to launch a poker site, the debate over whether to allow PokerStars in California is the biggest hurdle for California to clear. That’s why lawmakers and stakeholders here are watching New Jersey so carefully.

Elsewhere, while California has been the focus of many in the poker industry, it appears Pennsylvania has now moved into position to become the next state to legalize online poker (it’s currently legal in New Jersey, Nevada and Delaware). Within the past few weeks, a legalization bill cleared several hurdles in the Pennsylvania legislature. However, there were setbacks as well, especially for those who predicted that the issue would get a final vote in 2015. Several amendments were added to the bill, which pushes the issue into 2016.

Finally, there is a new push to ban all online poker on the federal level. The effort is led by famous billionaire and casino magnate Sheldon Adelson, best known for building the Venetian in Las Vegas, and for being a mega-donor in Republican Party politics. Adelson has long fought efforts to legalize online gambling, arguing against it on moral grounds. Sources tell 10News that he is actively lobbying in California to try to prevent online gaming.

This month, a committee in the House of Representatives, led by prominent congressman Jason Chaffetz (R-Utah), held a hearing about online gaming. He argued that online gaming is dangerous and could turn every smartphone into a casino. He also made the case that computer-savvy players will find ways to bypass software that prevents players from states where online poker is illegal from playing on sites in states where it is legal. He brought up a similar argument that the software cannot guarantee underage players won’t be able to play. Similar concerns were brought up to 10News by experts at San Diego-based web security company ESET.

Online poker industry supporters rallied around the hearing, making their own case and saying that many of Chaffetz’ arguments have been debunked.

All of these factors from around the country will likely be brought up when the California State Assembly takes up online poker again. The lawmaker pushing California’s current effort to regulate gaming, Adam Gray (D-Modesto) tells 10News he expects to bring the issue up early in the new year. 10News will stay on top of all new developments.

In the meantime, check out our special series “Check or Bet”.