On Wednesday, the Department of Justice (DOJ) confirmed it will not appeal a recent ruling that the Wire Act cannot be used to shut down interstate online poker. The Biden Administration has taken a different path regarding internet gambling enforcement than did the Trump Administration. One early outcome is dropping all attempts to prevent online poker revenue and payouts from entering interstate commerce through the banking system. Essentially, by choosing not to appeal, a new national online poker market may be created.
Regulatory Clarity for Multi-State Poker Agreements
In January, the First Circuit Court of Appeals issued a ruling siding with the New Hampshire Lottery Commission that the Wire Act does not apply to online poker. The Wire Act of 1961 specifically refers to bets or wagers on “any sporting event or contest” when first laying out what communications it bans. All subsequent references in the statute to bets or wagers omit the sporting event language.
More online poker players will have access to bigger games.
At issue in New Hampshire Lottery Commission v. Barr was whether the language about sporting events therefore applied to the entire statute, limiting the Wire Act’s applicability to only sports betting. Under this reading, online poker (or other gambling) was not subject to the Wire Act’s restrictions because it was not a communication about sports.
The First Circuit agreed that the Wire Act only applies to sports, dealing a blow to the Trump Administration’s theory for restricting multi-state poker. Now, with the DOJ’s lack of appeal, every state knows it can legally allow its residents to join multi-state poker pools.
Some states with regulated online poker, such as Michigan and Pennsylvania, were waiting for regulatory clarity before joining the Multi-State Internet Gaming Agreement (MSIGA). Now, the legality is settled.
Why Are Multi-State Agreements Important?
More so than internet casinos and, especially, sports betting, poker heavily benefits from the availability of an interstate market. Online poker operators attempt to draw casual players by promoting large tournaments with guaranteed prize pools. In states like Delaware or West Virginia, where regulated online poker is available, the population is too small to support regular tournaments.
If West Virginians were limited to only sitting at online tables with other Mountaineers, there would not be much action happening. In fact, despite allowing regulated online poker, no operator has yet tried its hand in the market. Profitability remains difficult to achieve with so few potential customers.
Real money online poker tables may soon be a more common sight throughout the United States.
However, now that multi-state agreements are in the clear, West Virginia can pool its online poker market with that of larger states. By allowing West Virginia players to compete against those in New Jersey and Nevada, operators can create more consistent games with larger payouts.
States Looking to Expand Online Poker
Currently, Nevada, New Jersey, and Delaware are parties to the MSIGA and have been allowing pooled play (and money) while waiting for legal certainty. Now, look for other states to join the party. Not only will West Virginia be a new market, but so will the much more lucrative states of Michigan and Pennsylvania. With the clarity provided by the DOJ’s choice not to appeal, both states could throw their weight behind a larger poker pool.
States prefer joining multi-state agreements for poker because the larger amounts bet translate to increased tax revenue. As other locations, like Illinois and Connecticut, move closer to regulating online poker, momentum will continue to grow. Larger player pools beget larger tournaments and winnings which leads to higher deposits into state coffers.
Because of this snowball effect, other states that have remained on the fence about regulating online poker may choose to act. Now that the federal government has stepped aside, a nearly nationwide online poker ecosystem is on the horizon for the first time since Black Friday.
