WASHINGTON — Powerful interests are waging a complicated, high-stakes fight over the world’s largest poker pot.
The $3 billion online poker market exists in a murky legal area. Well-funded groups are splashing cash and peddling influence to shape its future, and Congress holds a hearing Wednesday on the issue.
More than 60 million Americans play poker. But online poker is legal in only three states. Outside of Delaware, Nevada and New Jersey, gamblers playing with real money can do so only through unregulated offshore sites.
Rep. Joe Barton, R-Arlington, has pushed legislation for several years aiming to facilitate online play. He plays poker at Oklahoma casinos at least once every three months and says he’s played online for fun only.
“It’s being done in some states. It’s being done overseas. This is not a cross-your-fingers-hope-it-works kind of deal,” Barton said. “Once it was up and running, people would say, ‘What was all the hullabaloo about?’”
Barton is backed by a collection of poker enthusiasts, advocacy groups and some casinos that want to legalize and expand online poker. Caesars Entertainment Group and MGM Resorts International both support regulated online poker. Caesars has invested heavily in developing its online gambling capabilities.
But a powerful group led by billionaire casino magnate Sheldon Adelson is trying to shut down online gambling entirely. Adelson and fellow casino owner Steve Wynn cite moral concerns. But they’re also worried about the future of the casinos that built their fortunes.
Adelson, one of the most prolific Republican campaign donors, has pledged to “spend whatever it takes” to kill Internet gambling. His Las Vegas Sands Corp. has spent nearly $1.3 million since 2013 to lobby against Internet gambling. Aides did not respond to requests to comment.
Utah Republican Jason Chaffetz, who chairs the House oversight committee, wants to shut down most forms of online gambling. He’s glad to have Adelson’s support but played down the impact of the billionaire’s cash.
On the other side, Caesars and allies such as the Poker Players Alliance have spent nearly $2.5 million since 2013 to promote online poker. The alliance receives funding from its members and from the Interactive Gaming Council, a Vancouver-based group that lobbies for expanded online gambling. It is unclear how much the council gives the alliance.
Estimates of how many people play poker online in the U.S. vary widely. The Poker Players Alliance says there are 15 million online players, while gambling scholars Ingo Fiedler and Kahlil Philander put the figure closer to 1.4 million in 2010.
Barton’s bill would open up that market by establishing a regulatory framework and consumer protections. Each state could decide whether to let its residents play online. He’s hoping the effort gains more traction this year, now that online poker is under review by lawmakers in Pennsylvania, California, New York and other states. Pro-poker interests have donated more than $20,000 to Barton since 2013. Chaffetz has not received any donations from groups related to gambling.
Online poker boomed in the early 2000s, but it existed in a murky legal area after 2006, when Congress banned U.S. banks from processing online gambling payments.
The three largest U.S. companies in the industry — PokerStars, Full Tilt Poker and Cereus Poker Network — claimed the law didn’t apply to poker and continued to operate. But on April 15, 2011 — known as “Black Friday” in poker circles — the companies’ executives were indicted on charges of bank fraud, money laundering and violating the 2006 law. Before Black Friday, Texas players spent over $62 million on online poker in 2010, according to data from Fiedler and Philander. The end to legal, regulated online poker lasted only eight months. In late 2011, the Justice Department ruled that a 1961 law, the Interstate Wire Act — enacted to ban betting over the phone — applied only to sporting events. That opened the door for states to decide whether to allow online poker, a move that has irked lawmakers in both parties ever since.
“It’s just fundamentally wrong for somebody in the bowels of the [Justice Department] to overturn a law,” Chaffetz said.
Texas officials agree. As governor and attorney general, Rick Perry and Greg Abbott (who succeeded Perry as governor) asked the Justice Department to restore the previous interpretation of the 1961 law. The Poker Players Alliance has sought to pressure Congress in a number of ways. Executive director John Pappas helped organize an effort to send over 5,000 tweets to key lawmakers, urging them to oppose Chaffetz’s bill. Pappas argues the bill would drive players to unregulated, offshore sites, where players have no guarantee of collecting their winnings, and regulations are lax.
“Anyone … can log on to a site based overseas, deposit money, and they can start playing poker,” Pappas said. “They just can’t do so on a site that’s licensed and regulated by the state.”
Online poker opponents cite concerns for children and addicts and the challenges presented for law enforcement.