DOJ statement not a green light for Internet gaming

3 January 2012
By Howard Stutz

LAS VEGAS, Nevada -- Based on the reaction of Internet poker supporters, you would have thought Santa Claus had arrived early.

Two days before Christmas, the U.S. Department of Justice announced it reversed a long-standing opinion on the federal Wire Act of 1961. What remains unclear is whether Santa brought the new Lexus they had been dreaming about or a stocking full of coal.

Anyone reading the online poker community's blogosphere over the holiday weekend viewed the announcement as a celebration.

The Justice Department said the Wire Act, which made all forms of Internet gambling illegal, now applies only to sports wagering. The move seemingly clears a path for the legalization of Internet poker.

"We are about to see this explosion of Internet gambling sweep across the nation," gaming commentator and Whittier Law School professor I. Nelson Rose told ABC News.

I don't want to be the wet blanket dropped on the party, but we need to analyze the situation. As my 17-year-old daughter likes to say when someone gets a little too worked up, "breathe."

The legal opinion is just that, an opinion rendered by attorneys in the Obama administration's Justice Department. A new presidential administration could toss the opinion aside with yesterday's junk mail. A federal judge might render the opinion moot.

"You need to take a step back and look at this in context," said attorney Greg Gemignani of Lionel Sawyer & Collins, an expert on Internet gaming law. "This is not a green light to fire up the online poker servers by any means."

However, Gemignani said the Department of Justice has clarified what individual states can and can't do in regards to Internet poker. Gambling Compliance predicts at least a half-dozen U.S. states are considering legalizing some form of Internet wagering in 2012.

This is exactly what the commercial casino industry and Nevada gaming authorities don't want.

The American Gaming Association, Caesars Entertainment Corp., MGM Resorts International and others are pushing Congress to adopt federal laws legalizing Internet poker. The move could make Nevada, which adopted Internet poker regulations last month, the regulatory hub for the nation's online poker industry, providing the state with a new revenue source and high-tech jobs.

Republicans and Democrats in Congress, however, can't agree on what to order for lunch, let alone decide on a major piece of legislation. The upcoming presidential campaign and congressional elections that could tip the balance of power in the House and Senate make it even more unlikely an Internet poker bill lands on the president's desk this year.

That means a state-by-state solution is in the offing; and Nevada could be in the mix.

Based on the regulations the Nevada Gaming Commission adopted Dec. 22, a licensed casino operator could propose an Internet poker website geared toward Nevada residents and gamblers wagering on computers within the Silver State.

The casino operator needs approval from Nevada gaming regulators. Authorities would have to sign off on the system, technical standards and the technology provider. The process could take 12 months.

It remains to be seen whether Nevada has enough potential gamblers to justify a multimillion-dollar investment. Gemignani said small states looking at Internet poker, such as Iowa, are asking the same question.

"Are there enough players to make it interesting?" Gemignani said.

California has the population for Internet poker, but not the political climate. Indian tribes and card room operators disagree on whether the state should legalize an Internet poker system for residents.

The New York and Illinois lotteries asked for the opinion on the Wire Act in order to sell tickets for their drawings through the Internet. The lottery industry opposes a federal solution to Internet poker. But the Justice Department's opinion could allow some states to have Internet poker operated by lottery officials.

What the opinion doesn't do is vindicate PokerStars, Full Tilt Poker and Absolute Poker. The online poker companies and their chief officers were charged in a nine-count indictment last April with bank fraud, money laundering and operating illegal gambling businesses, not for violating the Wire Act.

Clearly, Internet poker -- one of the biggest stories of 2011 -- will continue to be at the forefront of gaming news in the coming 12 months.

For now, however, everyone just needs to "breathe."

DOJ statement not a green light for Internet gaming is republished from