States Hustle to Legalize Online Poker Despite Federal Roadblocks

LAS VEGAS -- First it was medicinal marijuana use. Then immigration reform. And now at least six states, most notably Nevada and California, are on the brink of taking action where they believe the federal government has failed -- legalizing Internet poker.

Bills are percolating in legislatures across the country that would formally permit residents to play poker online within state boundaries, an effort to circumvent a 2006 federal law that crippled the fast-growing Web gambling industry.

The bill most likely to be adopted first appears to be the one sponsored by Nevada Assemblyman William Horne, D-Las Vegas. He believes that setting up a way for both residents and tourists in the Silver State to play on licensed and regulated poker websites would create thousands of high-paying tech jobs and add an estimated $60 million to the state's desperately depleted coffers.

"I just don't think Nevada has to sit back and wait for the federal government to get it done,"
Horne told AOL News, saying he's rebuffed requests by Senate Majority Leader Harry Reid, D-Nev., to not pursue the matter until Congress changes the law.

"I've got 13.6 percent unemployment. I don't have the luxury of waiting to see if the feds are going to get it done. We've seen how contentious things are in D.C.," Horne said.

Other cash-strapped states also see mounds of chips in the pot:

Two bills are pending in the California Senate, where proponents argue that legalization would create 1,100 jobs and bring in $81 million in tax revenue.
Florida State Sen. Miguel Diaz de la Portilla, R-Miami, estimated that a similar effort he's sponsoring could result in as much as $40 million in new revenue for the Sunshine State.
New Jersey Gov. Chris Christie, a Republican, vetoed a bill to legalize gambling on the Web, mainly because he believes any expansion of gambling must be approved by a voter referendum. So lawmakers are crafting a new version they hope to put on the ballot this November.

Bills also are pending in Iowa, Hawaii and the District of Columbia.

"There's been a slow drip for a while in Florida, California and New Jersey for the last two years, and now just a number of other states are realizing the opportunity," said John Pappas, executive director of the Poker Players Alliance, a Washington-based lobbying group. "They realize their citizens are playing, and they want to capitalize from the consumer protection perspective and revenue perspective. I imagine other states will come out of the woodwork as well."

It's unclear whether playing poker on the Internet is unlawful, given that thousands of Americans do so on offshore sites every day and no one has ever been prosecuted. But the Unlawful Internet Gambling Enforcement Act, which Congress passed in 2006 as part of a port security bill, barred banks and other financial institutions from transferring money from American accounts into Web poker accounts.

That, combined with the Interstate Wire Act prohibiting most gambling across state lines, has left the once-flourishing online poker business in disarray in the U.S., even as several poker sites rake in billions overseas.

Congress failed in December to advance a bill sponsored by Reid that would fully legalize and regulate online poker. Prospects for any movement on the issue have dimmed since the Republican takeover of the House, with Speaker John Boehner's website touting passage of the 2006 law as an accomplishment and several new committee chairs either actively opposed to or decidedly uninterested in pursuing the matter.

Pappas said his members favor the Nevada legislation, which would allow players in the state to wager in games against players either within Nevada or in countries where it is legal. It would also allow the state to make compacts with other states that also legalize online poker.

"Nevada matters because if Nevada regulators, which have the longest history of regulating gaming in the U.S., say it's something that can and should be regulated, it undercuts a lot of the arguments that Internet gaming can't be regulated," Pappas said.

Still, Horne's bill faces a significant foe, the powerful Nevada Resort Association, which represents the state's casino industry. Richard Perkins, a lobbyist for PokerStars.com who persuaded Horne to write the bill, insisted to AOL News that negotiations were under way and that a compromise could be struck in which out-of-state poker websites would have to partner with existing Nevada casino licensees to operate in the state.

Yet Virginia Valentine, the resort association's president, said her group won't support any state legalization until Congress does so first.

"We still believe that it's illegal, and we don't support getting in front of the federal government," she said. "If it was already legal, the federal government wouldn't be considering legalizing it. Apparently there are people in the federal government who think it's illegal."

The resort association was the only entity opposing the bill when Horne held a committee hearing on it last week, but in other states' groups have sprung up to fight online poker legalization.

"One of the very high-risk elements to gambling addiction is availability and accessibility, and there would be nothing more available or accessible than Internet gambling," said the Rev. James B. Butler, executive director of the California Coalition Against Gambling Expansion.