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Posted by on Feb 8, 2013 in Blog, General Poker | 2 comments

Tumbling Dominoes: What New Jersey’s Decision Means to the Future of Online Poker in America

 

Falling Dominoes

 

If Nevada’s leap into the the abyss during the summer of 2011 as the first state to legalize online poker was the first domino to fall, New Jersey’s apparent decision to do the same thing yesterday should set off a tumbling progression of activity in states to follow which will eventually make American online poker a reality.

While measures to legalize online poker at the federal level remain firewalled due to continuing pockets of resistance and appalling legislative incompetency, some states are moving ahead independently without hesitation, preparing to implement their own ideas about how to deal with online poker issues.  The most progressive of these states now includes Nevada , Delaware, and New Jersey — with Iowa expected soon to follow [Footnote 1].

But the biggest prize and the ultimate lynch pin for what would be another poker explosion is undoubtedly California.

That said, let’s not get too far ahead of ourselves.

Footnote 1:  I’m intentionally omitting the District of Columbia which also legalized online poker, but remains stuck in a legal quagmire as to its future.

 

*     *     *

So, what do the latest developments in New Jersey mean, not just to poker within that state, but the rest of the nation?

It likely means that legal online poker (and much broader gambling options) are coming to New Jersey, and its nine million residents.  While Nevada was indeed the very first state to legalize online poker 18 months ago, no one is expecting web companies operating within the “Silver State” to initially to turn much of a profit.  With less than three million residents and intense competition statewide from land-based casinos, there simply aren’t enough poker players within Nevada’s borders to sustain profits, without the potential for wider expansion in the form of pacts with similar states.

Delaware faces a similar challenge for prospective online poker operators.  While “The First State” almost lived up to its motto, actually becoming the second state to legalize online poker in June 2012, at less than a million residents statewide, Delaware won’t attract a great amount of interest for what it can offer solely as an intrastate poker environment.  Nonetheless, it could be a critical player as the ideal bridesmaid most eager to sign pacts with partner online poker states, with New Jersey to the north being the perfectly obvious suitor in the tuxedo.

What makes New Jersey the critical domino is not only its considerably larger population — more than three times that of Nevada and ten times that of Delaware — but more importantly its mainstream influence upon other states.  For all the progress Nevada has made to diversity its economy and shed its image as the state of sin, most states simply will not look to Nevada as an acceptable template on much of anything.  On the other hand, New Jersey is a state much like Pennsylvania, or Connecticut, or Ohio, or Illinois, or Florida, or ad infinitum.  In other words, once similar states see online poker as a workable option in New Jersey, they’ll jump onboard the tax revenue train and accept the free ride as willing poker players gladly fuel the locomotive.

In short, the tumbling dominoes have just been set into motion.

 

*     *     *

Should poker players living in the other 49 states care what happens in New Jersey?  Absolutely.  If you want to see full-fledged online poker the way it used to be, you better care.

It’s critical that New Jersey not only establishes a workable online poker framework, it must also be done in a manner that satisfies all parties and expectations.  In short, it not only must get done, it must be done right.

The current bill includes at least one colossal threat to online poker, and that’s the legalization of other forms of gambling.  One must wonder that if New Jersey’s residents are permitted to play games like blackjack, craps, slots, and video poker online in their homes how will this impact online poker?  Well, it can’t be good.

Might the proliferation of all forms of online gaming in New Jersey (sans sports betting) cannibalize the poker tables?  When players lose or go on tilt as some inevitably will,  might they rush to other forms of gambling in a desperate attempt to win their money back?  And what happens when extreme cases of despair surface, when grandmothers gamble away their retirement checks on slots.  Will there eventually be a backlash against all online gambling activities, which unfortunately dragnets online poker?

There are also concerns that proponents of legalized online poker/gambling — however well-intentioned — may be over-promising the positives.  It’s being lauded as a possible savior for Atlantic City’s casinos.  What if that doesn’t happen and the numbers continue to decline?  Moreover, Trenton expects its cut, as well.  What happens if tax revenues fall short?

The obvious answer is — word on the street will spread that legalized online poker isn’t all it’s cracked up to be.  Other states would point to New Jersey as an experiment that failed, and will therefore be reluctant to take a similar path.  Troubles in New Jersey could spell doom for legalized online poker elsewhere.

For this reason, every poker player should be watching closely and should care what happens not only in New Jersey but other states as well.  We’re all in this together.

 

*     *     *

Don’t get your credit cards out just yet.

While yesterday’s news is encouraging and is probably the biggest leap forward in the American online poker movement over the past six years, there still remains a very long way to go.

The next major battle promises just as tough and equally as uncertain.  Look for a fierce debate ahead on the precise composition of a licensing board and the legal requirements to plant the first seeds within the “Garden State.”  Now that the major players in the New Jersey online poker game accomplished what they hoped — due in large measure to an unusual degree of cooperation between what will eventually become competitors — the next stage will be far less cordial and far more combative.  Expect the major players in New Jersey (Caesars Entertainment, Boyd Gaming, and the new kid on the Boardwalk — PokerStars) to mount a turf war.  Indeed, everyone is going to be in a race to get that first license and flip the switch which potentially has “market leader” as the payoff.

 

*     *     *

If poker players in New Jersey are holding their collective breaths, it’s going to take a very long time to exhale.

First, New Jersey needs to actually approve a final bill and sign it into law.  Next, it must set up a mechanism for licensing.  Then, it must write online poker regulations.  Then, it must announce an open period during which it will accept applications.  Then, it must decide which companies will be granted licenses.  Then, it must make sure these companies comply with regulations and operate just as a land-based casino would be expected to handle operations.  This will require a test period.  And given legitimate concerns about New Jersey’s notorious bureaucratic obstacles along the way, the race from this point forward to the finish line will not be a sprint, but rather a marathon.  Perhaps even a triathalon.

My best guess is — it will take at least 18 months for an online poker operator to launch and be ready to take real-money customers.  That puts the over/under in the summer of 2014.

Meanwhile, Nevada is swiftly moving ahead.  Already blessed with strong internal gaming infrastructure and state officials who understand and support gaming, Nevada enjoys immeasurable advantages over any other state in the nation when it comes to establishing a working platform for online poker.  Expect some sites to being testing in the late spring or early summer of 2013.  My projection is the first licensed online poker site Nevada will go live for real money in October of 2013.

Naturally, these are best-guess estimates and things could change very rapidly given unforeseen developments, particularly at the federal level.  But for now, it appears Nevada is going live in 2013, with New Jersey and Delaware to follow sometime in 2014.  Accordingly, look for other states to adapt the working template of these industry leaders when implementing their own laws and regulations.

Given all this, a best-case scenario for interstate gaming pacts is probably sometime in 2015.

 

*     *     *

Three more years seems so far away.  But it isn’t.  It’s a grain of sand in the hourglass of time when it comes to gaining sufficient legislative and gubernatorial support, changing the mainstream mindset towards online gaming which remains largely stigmatized, and ultimately transforming social policy in America.

Within three years, look for multiple states to sign interstate poker pacts — similar to the manner in which Powerball (the lottery) now has a whopping 45 states pooling the gross take for the sake of headline-grabbing jackpots.  While anything close to the number of states linked to Powerball is an unreasonable expectation for online poker (at least in the foreseeable future), all it really takes is half a dozen or so states to create critical mass and long-term profitability.  Once that happens, the falling dominoes become unstoppable and progress is irreversable.  And, as previously stated, once gargantuan California pulls up a seat at the table with its 38,000,000 million residents and massive financial resources, its a whole new poker game altogether.

The dominoes are now tumbling.  They won’t fall fast, but they’re now teetering — with some huge dominoes in line just waiting for the right push.

Thank you, New Jersey.  With your leadership and vision, the rest of America finally appears destined join the 21st Century.

 

Note 1:  I feel compelled to add that I’ve never many any prediction that online poker would be legalized at the federal level.  Moreover, this is the first time I foresee a reachable timetable target, which will be over the next three years.

 

Note 2:  Many hard-working people deserve our thanks for their extraordinary efforts.  Two of these dedicated professionals include John Pappas and Rich Muny, from the Poker Players Alliance (PPA).    Rich Muny kindly sent me the follwing statement which merits wider awareness:

Hi Nolan,

Thank you for the opportunity to comment. I appreciate everyone’s support. Without the community standing strong for their rights and
refusing to give up, I’d just be one guy complaining. I’m fortunate to have a great group of supporters.

There are many people who play a huge role in the poker advocacy effort. PPA Executive Director John Pappas has brought the
skills to work with legislative bodies to the fight. He has done a terrific job organizing the fight and bringing discipline to the effort.

Two Plus Two Owner and poker author Mason Malmuth has been a key supporter as well. Without the forums to serve as a focal point for discussion and strategy formation, and without Mason’s support, it would be a very different — and far less effective — fight.

Similarly, Dan Cypra over at PocketFives has provided terrific support. While the PocketFives Forum may not be as large as 2+2, Dan is very
proactive in supporting the effort, including his regular columns on the effort.

Ryan Sayer and Robin Jones at OnTilt Radio have been key as well.  They gave me a weekly webcast on their station, producing it and everything,
which has proven to be a great way to get out the message on all we’re doing. I had never done anything like a weekly live webcast prior, preferring instead to write (forum posts, articles, email updates, etc.) to get out the word. They helped me develop a new skill, which has been great for me personally as well as for the overall effort.

And, finally, I again have to thank the people who fight this in the trenches day and and day out. People like fellow PPA Board Member Patrick Fleming (who came up through the volunteer ranks as I did), Sheryl Jeffries, Gail S., Matt Allen, and all the others who refused to quit.  Without them, we’d not be celebrating today.

Thanks again!

Rich
Muny
rich@theppa.org

 

 

Note 3:  The opinions expressed are strictly my own and do not reflect the views of any of my past or present employers or associates and are not to be construed as inside information.

 

TO READ AND LEARN MORE, SEE:

 

POKERNEWS (MATTHEW KENDELL and BRETT COLLSON)  New Jersey Governor Chris Christie Conditionally Vetoes Online Gambling Bill

Key Quote:  “With these goals in mind, I have concluded that now is the time for our State to move forward, again leading the way for the nation, by becoming one of the first states to permit Internet gaming,” Christie said in the statement.

 

ESPN (ANDREW FELDMAN)Online gambling one step closer in New Jersey

Key Quote:   Once Christie signs the resubmitted bill, New Jersey will join Nevada and Delaware as the only states to have legalized online poker. 

 

POCKET FIVES (DAN KATZ)Governor Christie Conditionally Vetoes New Jersey Internet Gambling Bill

Key Quote:  Rich “The Engineer” Muny, Vice President of the Poker Players Alliance, posted on Two Plus Two, “[The Governor’s conditional veto] looks very good for us.”

 

2 Comments

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  1. Christie Conditionally Vetos Online Gambling Bill | Online Poker Report - [...] Dalla wrote a good piece that sums up some likely trajectories for a post-New Jersey-regulation online gambling industry in…
  2. Weekly Update: New Jersey Closer to Passing Internet Poker Legislation (02/13/2013) | Poker Players Alliance - [...] Christie paves the way for online gambling with conditional veto – The Record (02/07/2013) Tumbling Dominoes: What…

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