California poker bill introduced next year, promises new PVA chief

The viability of US intrastate poker systems may hinge on preventing offshore sites such as PokerStars and Full Tilt from taking US bets, according to two leading data providers to the online poker industry.

California and Florida are currently looking at legislation to establish intrastate online poker systems and regulations as permitted by an exemp tion under the Unlawful Internet Gambling Enforcement Act (UIGEA). This explicitly declares that online intrastate wagers do not constitute “unlawful internet gambling” if expressly allowed by the laws of a state.

But according to Poker Players Research (PPR), which provides the poker industry with regular reports and analyses, with almost everyone who is playing online poker for money now doing so in online poker rooms with over a million registered money players, a US intrastate poker site or network would need to get close to this number before it could offer an equal choice of games and size of tournaments as the offshore sites.

“Any site in California [which according to PPR has around 1.5 million online money play ers, compared to New York’s one million and Florida’s 500,000] would need to get what seems to be an unrealistically high percent age of that state’s players to create a viable alternative to the established online poker rooms US players are currently using. This does not seem realistically achievable in a competitive environment,” said director Glenn Flackett.

“Unless the ability of players to play on the sites they currently choose is substantially changed, liquidity advantages of the existing rooms will outweigh any safer, more legiti mate benefits and few existing players will switch,” argued Flackett, who thinks that attracting new players will not only be difficult for intrastate sites, “they will not build liquidity levels that are high enough.”

However, Simon Holliday, director of gam bling data business H2 Gambling Capital, cites Swedish national monopoly Svenska Spel’s 2006 example of how a platform can be built on leisure-oriented players who are comfortable only playing on state-licensed sites. This was achieved in a country with a popu lation of 9.3 million, just over a quarter of California’s and half Florida’s, with nothing done regarding offshore sites.

That said, H2 has calculated its intrastate poker numbers assuming that offshore poker site activity is eradicated.

“Governments have never moved to regulate an industry without offering it some protection. Who would be willing to pay millions of dollars in licence fees and taxation while others were allowed to carry on tax-free?”, explained Holliday.

Thus H2’s baseline for the number of players needed for sustainable, regulated intrastate gambling in the US is lower than PPR’s, for example, citing the need for approximately 500,000 unique active players in Year 1 in California, rising to one million by Year 10, while for Florida, the corresponding numbers are 200,000, rising to 650,000.

But with the federal government having its own tax-raising aims for egaming, it remains to be seen just how supportive it will be in the longer term of individual states’ drive to monopolise the gaming revenues generated within their respective borders.