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Top-10 things that would have happened if the UIGEA never passed

11 April 2011

By Aaron Todd

It's been more than four years since the Unlawful Internet Gambling Enforcement Act (UIGEA) was signed into law, barring U.S. financial institutions from processing online gambling transactions.

Since that time, Americans have continued to gamble online, while brick and mortar gaming companies and online gaming giants that left the U.S. in the wake of the UIGEA's passage have been salivating at the prospect of a regulated U.S. market.

There have been several attempts to set up a licensing and regulatory structure, both at the federal and state levels. Senate Majority Leader Harry Reid (D-Nev.) failed in an attempt to pass an online poker bill during the last lame duck session of Congress, while New Jersey Gov. Chris Christie vetoed intrastate online gambling legislation passed by the state's Legislature,

Several other states are mulling online poker only legislation, and Washington D.C. quietly became the first jurisdiction to pass online poker regulations last week, with a short provision in the district's budget that gives the DC Lottery and Charitable Games Control Board authority to set up an online poker room.

With all the fumbling and fits and starts surrounding the online gambling debate, it led me to wonder what would be happening right now if the UIGEA had never been slipped into the Safe Ports Act by then-Senate Majority Leader Bill Frist. Here's a top-10 list of my conjectures.

10. Federal legislation regulating online poker would have already passed
One of the big reasons that Senate Majority Leader Harry Reid (D-Nev.) was unable to push a bill that would have laid the framework to license, regulate and tax online poker through Congress late last year was the opposition of Arizona Republican Senator John Kyl. A long-time opponent of online gambling, Kyl was unwilling to "dial back" the provisions laid out by the UIGEA. In the Senate, a single member can utilize legislative rules to block legislation if he finds it offensive enough. However, if the UIGEA had not passed, Kyl would have seen Reid's efforts, which would have regulated online poker but made online casinos and sportsbooks more explicitly illegal, as more palatable than the status quo. That said, federal legislation would not have passed prior to late 2010. It's unlikely that President Bush would have signed any bills regulating the industry into law in 2007 or 2008, and President Obama's agenda was far too full to worry about online poker. It would have passed, but not until the very end of the congressional session.

9. All major online poker rooms would have partnerships with brick and mortar casinos
Reid's proposed legislation last year sought to punish the online poker rooms that currently operate in the U.S. market. Since he represents Nevada, it's in Reid's interest to line the pockets of the brick-and-mortar gaming corporations that call his state home. But if the UIGEA had not passed, most online poker rooms would still be operating in the U.S. market. That said, in a regulated market, online poker rooms would most likely be required to have a partnership with a brick and mortar casino or gaming corporation in order to operate in the United States (especially if Reid had a hand in crafting the legislation). Plus, the brick and mortar corporations would still want to utilize the expertise of the online executives, so partnerships would naturally form.

8. Party Poker/WSOP would have formed an online behemoth
It seems like a lifetime ago, but 2006 was the first year that the entire WSOP took place at the Rio All-Suite Hotel & Casino. That summer, PartyPoker.net was splayed across the felt at every table at the World Series of Poker. PartyPoker, the market leader before it left the U.S. market in the wake of the UIGEA, would have continued advertising on the WSOP felt. And if that relationship had continued, I think Harrah's/Caesars would have felt comfortable transitioning that relationship into an online partnership. Yes, Caesars does now have a relationship with 888 Poker, but it seems likely that they would have wanted to establish a relationship with the market leader if given the opportunity — something the company is unwilling to do now with PokerStars, given its position of promoting legislation that would punish "bad actors" who are currently accepting U.S. players.

7. The partnership between Steve Wynn and PokerStars still would have happened
Whether the UIGEA passed or not, Steve Wynn was going to see the writing on the wall eventually. It took him a few years to get on board, but he now understands how big online poker is and how big it could be if it were regulated by the U.S. PokerStars is a natural partnership for Wynn, and it would remain that way regardless of the status of the UIGEA.

6. UB/AP would be out of business
With no UIGEA to drive the vast majority of its competition out of the U.S. market, it seems highly unlikely that UB.com and Absolute Poker could have survived the cheating scandals that rocked the rooms on the CEREUS network. And even if the rooms did make it through 2010, I see no way that either would pass what would likely be stringent licensing requirements given their past history.

5. Full Tilt Poker would still be second fiddle thanks to a partnership with MGM
While the majority of the games on Full Tilt are played at the micro limits, the site's brand is built around its high-stakes pros. Many of the pros who have been with Full Tilt Poker since its inception play in Bobby's Room at the Bellagio (at least they did when the company opened for business, before the games "dried up."). So it would seem natural for the site to partner with MGM, which owns the Bellagio. That partnership would likely put Full Tilt ahead of PokerStars in terms of market share, but still behind PartyPoker.

4. Fewer players would be sponsored by online poker rooms
PokerStars and Full Tilt Poker's roster of "pros" is almost laughable now. I don't mean to denigrate any of the players who have earned a sponsorship – heck, I'd take one if I was offered one. But with the rooms competing for air time at major tournaments, the sites have taken to a "patch" approach to advertise because they can't advertise their .com version (and the WSOP qualifiers, $1 million guaranteed tournaments, etc.) on television in the U.S. With a regulated market, the sites would shift more of their marketing dollars more towards traditional marketing and away from patching up successful, but little-known players.

3. Rake would be higher and rakeback deals would no longer exist
If we can take anything from the example that France provides, it's that a licensing and regulatory scheme often comes at a high cost for the players. France takes seven percent of every pot played, and that's before PokerStars.fr and Everest Poker.fr even get a cut. A similar (but hopefully much less oppressive) tax would likely emerge in a regulated U.S. marketplace, leading to a higher rake on pots and an end to rakeback deals for players.

2. At least one of the online sites would be running a weekly $2.5 million guaranteed event
PokerStars has been able to sustain a $1.5 million guarantee on its Sunday Million for some time. Given a wide open U.S. market, there's no reason that tournament wouldn't grow to a $2.5 million weekly guarantee, though it would most likely be happening on PartyPoker and not PokerStars.

1. Registration for the WSOP Main Event would have eclipsed 12,000
After the UIGEA passed, online sites were no longer allowed to directly register their players for the WSOP Main Event. Instead, they began awarding "WSOP packages" to players who won satellite events, placing the $10,000 buy-in plus travel money in player accounts and leaving it up to the players to decide if they wanted to use the money to buy themselves in. Given the chance to take the money and run, many players keep the cash and forgo the WSOP, or use some of the money to buy in to smaller WSOP events and skip the Main Event. If that change hadn't occurred, the number of entries in the Main Event would have continued to grow at least 10 percent per year. Given the record-setting field of 8,773 players in 2006, 10 percent growth per year would have yielded roughly 12,850 players last year.
Top-10 things that would have happened if the UIGEA never passed is republished from Online.CasinoCity.com.
Aaron Todd

Home-game hotshot Aaron Todd has covered the gambling industry since 2006. While he is happy to play Texas Hold'em, he'd rather mix it up and play Omaha Hi/Lo, Razz, Deuce-to-Seven Triple Draw, and (his personal favorite) Badeuci.

Since graduating from St. Lawrence University, Aaron has worked as a journalist covering the gambling industry and as a communications specialist in college athletic departments.

A native of a small town in New York just south of Ottawa, Aaron lives in Needham, Mass., with his wife and three children. Write to Aaron at aarontodd@casinocity.com, and follow him on Twitter @CasinoCity_AT.