New Bill Aims to Regulate And Legalize Online Poker

As the dreaded “fiscal cliff” draws near, there may be a way that the government can bring in new revenue.

According to ABC News, a bill drafted by Senators Harry Reid, D-Nev., and Jon Kyle, R-Ariz. aims to regulate and legalize online poker.

John Pappas, executive director of the Poker Players Alliance, said that the Department of Justice cracked down on Internet gaming last year by shutting down the three largest providers of online poker in the United States.

The three online poker providers catered to about two-thirds of all poker players in the United States who play online.

Since the crack down, many poker players have moved to overseas providers.

Gaming industry experts estimate that 10 million to 15 million U.S. gamblers bet $4 billion to $6 billion online, through websites whose owners are based outside the United States.

The experts say that it is impossible to estimate just how much of that total is represented by online poker; but whatever the figure, participants playing through overseas providers do not have to pay U.S. income tax on their winnings.

If online poker were to be legalized in the United States, and if all those winnings were to be taxed, Pappas said that the federal government would collect (then pass on to states) billions of dollars in new revenue over 20 years.

Pappas also said:

“This would establish a U.S. system that would create strong regulations and keep bad actors out. It would allow the market to be run by regulated companies based here in the U.S. who would be accountable to U.S. players and U.S. regulators.”


However, the alliance does not like everything about Reid’s proposed legislation. For example, the bill would not allow U.S. players to compete with poker players overseas. It would also exclude, from the U.S. market for five years, operators who previously offered online poker.

Pappas says:

“We think that’s unduly unfair and would eliminate some of the best operators globally. It’s part of the anticompetitive nature of this bill.”

Advocates say, however, that not passing the bill would invite chaos.

Without a bill like this, the 50 states would be free to promulgate 50 different sets of online-gaming rules.