By Randall Kasper
For those who read my article in last month’s issue (Help Poker Emerge From Wild West,) you may be thinking my statements that poker was so close the being legislated on a national level were inconsistent with what occurred on Black Friday. I submit it’s precisely because we were on the verge of national legislation the actions taken on that fateful day occurred when and how they did.
So, what just happened to online poker in the land of the free? Weren’t we on the path to legislation? To understand the answers we must understand where we stood before to the criminal indictment and civil complaint filed on April 15.
Before that online poker was on a beeline toward being legislated. Notice I do NOT use the word “legalized” as NOTHING about online poker was illegal for players. Not only had Nevada just introduced legislation that showed floundering states such as Florida, Iowa, New Jersey, California and others how to create a real system that would work, but the District of Columbia had just PASSED legislation regulating online poker. Had Black Friday occurred a few months later there may well have been people sitting on the Capitol steps playing online poker as the Department of Justice acted). At the federal level, things were happening to reinvigorate last year’s near passage of national legislation. So what happened?
As the online poker industry chugged along, the DOJ was putting the squeeze on the payment-processing end of the equation. It’s like they threw a smoke bomb into a house and tried to flush out their targets. It worked. Running out of options, the sites acted badly, resulting in the allegations of conspiracy to commit bank fraud and money laundering.
Without those charges (leaving only UIGEA violations) this whole thing gets pleaded out, the sites pay a fine and the online poker industry in the U.S. remains largely unchanged to the untrained eye. The effect of those two charges not only likely kills those sites in the U.S., but causes a civil suit and the entire ripple effect. The language in the civil suit, inaccurate as it is, classifies poker as “online gambling” and therefore an illegal activity (for the house and anyone aiding and abetting them; not playing per se).
Why did this happen? I contend something big was about to occur at the federal level and the “wrong” companies were about to reap the benefits. Maybe Zynga’s recent PokerCon in Vegas had something to do with it. Sure, the brick-and-mortar casinos will benefit greatly from all of this, but only because their plans coincide with Zynga. It all comes down to money, and the original intention of the UIGEA was to clear the path for the land-based casinos to dominate. At that time, the online poker industry had “x” value where “x” value was enough for land-based casinos to make enough money for it to be a legitimate part of their business.
It was not big enough to attract the next level up in the World Order Pyramid. What the land-based casinos did not count on was, when the UIGEA ousted Party Poker from America, that Full Tilt, PokerStars and others would fill the void. Here, they will come along for the ride. Zynga could make money in amounts never contemplated by one industry.
Zynga has more than 30 million customers for its free poker game on Facebook. People often analyze Zynga in the myopic view of our industry. How many players can they convert to cash? That is not their endgame. Sure, they can easily convert 1 percent of customers to “real money” poker thereby dwarfing PokerStars. Yes, they would make a couple of billion a year from “real money” poker. It’s the other 29,700,000 customers they will truly monetize.
Under a legislated and regulated system they will have the largest captive audience of consumers in history, and they will be one “free” click away to purchase any mainstream product you can think of, making the “real money” poker aspect the popcorn machine in the corner earning supplemental income. U.S. brick-and-mortar casinos will make a paltry few billion along the way.
The largest obstacle to a company such as Zynga is lack of legislation. It needs that to remove the dark cloud hanging over our industry and give cover to the mainstream companies to open their marketing budgets to them (think banner ads streaming across Zynga’s platform from Apple, Nike, etc.). Also, companies such as Full Tilt and PokerStars pose a threat, not because of their business models, but because they control the poker celebrities to draw players in on a repeat basis.
It just so happens Preet Bharara, U.S. attorney for the Southern District of New York, had built a case against those companies (and UB) that he could never have brought when the rapidly forthcoming national legislation regulating poker was passed. So, Black Friday had to happen when it did, and it provided the perfect opportunity for an attorney to advance his career, for old scores against FTP, PokerStars and UB to be settled, and paved the way to eventual legislation that will allow mainstream brands to enter the market.
I am pretty sure we’ll still see that legislation in the not too distant future. Hopefully our freedoms won’t suffer too much in the interim.
— Randall S. Kasper, Esq. is co-founder of Poker Players International, the world’s largest poker agency (ppipoker.com). You can email him at randy@pokerplayersinternationa l.com.