With the introduction of Senator Robert Menendez's new bill, the Skill Game License and Control Act, discussion of a regulatory regime for skill gaming in the United States has started anew.
As we understand, the prevailing opinion among legal experts in America is that the first regulated Internet-based games of skill -- including poker -- are likely to launch in individual states, with commerce between states to follow.
So we asked them: Is there a viable future for regulated skill gaming in the United States?
Mark N.G. Hichar: In my view, there is most likely a future for regulated skill games in the U.S. I do not believe they will -- or need -- to be regulated at the federal level -- at least not initially. (As you know, the Menendez bill makes unlawful the operation of an Internet skill game facility "in interstate or foreign commerce" without a license, but does not prohibit or require licensing of Internet skill game facility operators who operate on strictly an intrastate basis.)
I believe the more likely route for the introduction and expansion of skill games in the U.S. is one that will involve, initially, state authorization of intrastate skill games along the lines of the bill introduced in California by Assemblyman Lloyd Levine. As you know, that bill, introduced in February 2008, and just last month made inactive, would have authorized (in its initial forms) the conduct by licensed operators of intrastate poker in California consistent with the Unlawful Internet Gambling Enforcement Act of 2006. It is expected that the bill will be improved and reintroduced in 2009.
I believe that the passage by a few states of laws authorizing the operation of online skill games on an intrastate basis may lead to the subsequent agreement between and among such states to allow the pooling of prizes -- along the lines of the "Powerball" or "The Big Game" models used by certain State Lotteries. Should this occur, there may then be a greater push for federal legislation governing the operation of online skill games.
In any event, I believe that the operation of online skill games on an intrastate basis will be the first step, and I believe it may occur in the next one to three years.
Mr. Hichar, a partner with Edwards Angell Palmer & Dodge, represents gaming machine manufacturers, gaming software developers, gaming service providers and gaming Web site operators in general corporate and gaming specific matters, including mergers, acquisitions, joint ventures and outsourcing arrangements.
Chuck Humphrey: Games that are truly "games of skill" like those offered by King.com, WorldWinner.com and DuplicatePoker.com, including bridge, chess, games that involve hand-eye coordination skills and duplicated games, are already legal in the U.S. Traditional poker, unfortunately, has never been held to be a game of skill by any court in the U.S. There are some writers who insist that there are such court decisions, but they are just plain wrong.
The online poker industry is seeking cases in which to raise the issue of poker as a game of skill, but so far they have not succeeded. Take the recent appeal in the Joker Club case in North Carolina, in which the State Supreme Court refused to reconsider it prior opinions holding that poker is a game of chance.
There are a number of criminal cases (misdemeanors) pending in South Carolina in which the defense will try to raise the issue of poker as a game of skill. It remains to be seen whether the defense will get a chance to present its evidence in support of that proposition.
Attempts to "legalize" online poker games at the federal level have a huge uphill battle. First of all, the current political climate is not conducive to such attempts. It is unlikely that the atmosphere will change until after the first year of an Obama administration, 2010. The atmosphere will not, in my view, change if McCain wins.
Second, the fault with such "legalization" bills is that it is virtually impossible from a political standpoint to tell states with very anti-gambling laws -- take Utah for example --that they now have to allow their citizens to legally play online gambling games like poker. This is a fault that the original Frank bill, introduced last year to overturn the UIGEA, suffers from, too.
The only potentially successful approach is to lobby individual states to legalize online games like poker in their jurisdictions. As more and more such states pass legalization, regulation and taxation laws, it should be possible to get the federal Congress to amend the UIGEA to permit interstate compacts among those states so that a larger player audience can be offered by legally licensed online operators.
Mr. Humphrey, who was a staff attorney for the Securities and Exchange Commission in Washington, D.C. early in his legal career, is now a lawyer specializing in gambling law, business matters and structuring transactions. He is the founder of www.Gambling-Law-US.com.
Conway A. Downing Jr: The Poker Players Alliance continues to act as a break away horse, marching to its own drummer and putting too much emphasis on its being a game of skill. Non-poker players and most legislators view poker as gambling, period. Moreover, its cowboy, go-it-alone strategy is just another manifestation or symptom of our (U.S.) insular thinking, and its failure to forge a united legislative and policy front with traditional I-gaming interests (which happen to be mostly U.K./EU based) does little to promote the prospects of any significant legislative breakthroughs in the near term.
Domiciling a national, federally based licensing function in Treasury, where the Financial Crimes Enforcement Network is located, is not a good idea. One arm of Treasury is consumed with rooting out money laundering and focusing on Internet gambling
operations, while another would be focused on issuing Internet gambling licenses.
The industry still doesn't get it -- I-gaming, and the authorization, regulation and taxation of it, is the prerogative of the respective states. I think any kind of nationwide licensing
and/or regulatory scheme is a pipe dream.
The industry should focus on introducing safe-harbor legislation to further enhance and build upon what it already has in the for of the intrastate and Indian lands exemptions in UIGEA, and should further focus its legislative efforts on the judiciary committee
in the House, not finance- and commerce-related committees.
Mr. Downing is a gaming lobbyist and senior advisor for the Washington Gaming Group.
Anthony N. Cabot: Yes. The nature of the United States Congress is changing from one heavily influenced by Conservative Christians to a more secular and pragmatic majority. Members from both parties recognize that Americans should be treated as adults capable of making their own decisions without either the moralist condemnation or the paternalistic dictates of a federal government that is spiraling out of control on so many fronts. Senator Robert Menendez's legislation is well-conceived, brilliantly written and reflects the growing sentiment in Congress that regulation that recognizes state's rights as opposed to prohibition is the path forward. The only substantial impediment to future movement is if John McCain is elected and uses his veto power to play to what remains of the Republican's Conservative Christian base.
Mr. Cabot, an attorney with Lewis & Roca in Las Vegas, has practiced gaming law for over 23 years with an emphasis in traditional gaming law and Internet gaming, sweepstakes and contests.