Will Florida ever get intrastate online poker?

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Much discussion is going on about the prospects of Florida being one of the first states in the country to thread the needle of the federal Unlawful Internet Gaming Enforcement Act and legalize intrastate Internet poker for its residents.

In 2009, the Florida Legislature authorized a public policy study of the various options available to the state to deal with the growing Internet poker industry. The report basically said the state could do nothing, outlaw the activity or regulate and tax it. The Florida Legislature’s reaction the past two years has been a deliberate approach to the latter option: regulation and taxation.

Led by Rep. Joe Abruzzo, a Democrat from Wellington in Palm Beach County, legislation to legalize intrastate online poker received its first hearings last year. While no votes were taken on the measure in 2010, the structure of how Florida would approach legalization came to light this year.

Teaming with Sen. Miguel Diaz de la Portilla, a Republican from Miami, Abruzzo’s 2011 bill provides for the creation of an intrastate online poker network. It allows for the creation of the network through the use of three hub operators and allows for Florida licensed poker room operators to provide portals for consumers to access the poker websites. It also requires state poker room regulators provide oversight of online poker activities and the selection of hub operators through a competitive procurement process.

This bill had early success in the Florida Senate before stalling. In the Florida House, the bill has not fared as well mainly for reasons unrelated to the bill. The chairman of the House Committee with jurisdiction over gaming issues resigned midway through the legislative session to pursue a county commission seat in Miami-Dade County. Sufficient time did not remain in Florida’s constitutionally limited 60-day legislative session to fill the vacancy and get a new chairman up to speed on the substantive issues of the committee.
As a result, the bill wound up a victim of the process. While this doesn’t bode well for the online prospects in 2011, significant progress was made, which may pay dividends in future years.

First, the measure had received hours of public discussion with private staffs working to fine-tune the proposal. Second, and more important, the legislation has interest from the incumbent poker-room operations at Florida’s parimutuel facilities. Finally, the state’s economists have evaluated the effect of the legislation on the state’s tax coffers and have projected the bill will be a multimillion-dollar positive revenue producer annually.

Looking ahead to the off-session committee meetings for 2011 and next year’s session, additional hurdles exist that must be dealt with for intrastate online poker to become a reality for Floridians. The most obvious is the conservative caucus in the Florida House of Representatives. Boasting numbers nearing 35 percent of the Lower Chamber, this group of anti-gaming legislators is a formidable opposition to any gambling measure in Florida. Online poker advocates such as Poker Voters of America have a steep climb to convince these members that such legislation is in the public good. Furthermore, late opposition from the Florida Sheriffs Association and from the Poker Players Alliance presents new hurdles for the measure to overcome.

The other more subtle challenge to the legislation comes from the Seminole Tribe of Florida as a direct result of the gaming compact it executed with the State of Florida under former Gov. Charlie Crist. Under the compact, the tribe would not be required to make the minimum guaranteed payments if the state affirmatively allows online gaming and the Tribe’s gaming revenues drop more than 5 percent for the previous 12 months.

However, the tribe would still be required to make payments based on a predetermined percentage-based revenue share amount. If the Abruzzo bill passed, the compact would allow the tribe to enter the Internet poker market as a hub competitor to the three state-licensed hubs. At some point after a bill passes, these issues will present additional variables for the state economists to wrestle with as they project the overall net impact on the state revenues and online poker matures as a revenue source in Florida.

Looking into the crystal ball moving forward, I see momentum being created each year by the efforts of Abruzzo and the advocates from the Poker Voters of America. Progressive legislation, particularly in the gaming arena, is analogous to training and running a marathon successfully. The work put in on the front end is what pays dividends on the back end.
This is a multiyear effort that’s showing progress each year. While 2012 may present a more favorable climate for the passage of the legislation, it may also be a year where more hurdles are placed in the rearview mirror and fewer are between the sponsor and the finish line. In the end, I think the bill’s ultimate success will rest on how successful the advocates are in assuaging the concerns of the conservatives in the Florida House between now and the 2012 session.

— Marc W. Dunbar is a shareholder with Tallahassee law firm Pennington, Moore, Wilkinson, Bell & Dunbar, P.A. He represents several gaming clients before the Florida Legislature and teaches gambling and parimutuel law at the Florida State University College of Law.