What does the DoJ's about-face mean to online bettors?

Dec 24, 2011 |

Is the Department of Justice bipolar?

Eight months and a week after raining hellfire and damnation on the online poker community with its Black Friday indictments that shuttered several of the top-grossing sites, some believe that a DoJ memo unwrapped at the start of the holiday weekend clarifying its interpretation of the 1961 Wire Act might open the door to the return of legalized online poker.

Granted, the April 15 indictments that nailed Poker Stars, Absolute Poker and Full Tilt Poker had to do more with money laundering and fraud, but Friday’s announcement by the DoJ just might be the first major step in a process that hopefully will lead to unfettered play and less government interference.

Why now?

It’s possible that the DoJ was just getting tired of being nagged. Several states had petitioned the government for an advisory opinion on whether it was legal to sell lottery tickets online to players from other states. And, in an example of bipartisanship rarely seen in D.C. these days, Senators Harry Reid (Nevada) and Jon Kyl (Arizona) had co-written a letter asking the DoJ just what it was thinking when it brought the hammer down on Black Friday.

Maybe the tone-deaf bureaucrats got the message that they had overreached back on April 15, bringing both a firestorm of criticism and a dramatic spike in Congressional activity aimed at either amending or outright overturning the 2006 Unlawful Internet Gambling Enforcement Act.

Whatever the reason, as the dust settles on the DoJ’s move, many – but not all – observers see the Christmas Eve announcement as an about-face on the issue of Internet poker, and areas that have started to make inroads (Nevada, Washington D.C.) will no doubt move more aggressively in the hope that will not be tacked down by packs of federal regulators accompanied by Dobermans.

The decision – which did not relax the prohibition against sports betting -- most certainly got the attention of legislators in states which have kicked around the issue of Internet gambling.

This past Thursday, Nevada made a move that is expected to enable it to become the first state in the country to allow Internet gambling within its border, as the Gaming Control Board voted to allow licensed online poker sites to do business. While the state has a small population, some analysts say that under the DoJ decision Nevada could legally draw players from other states which also approve play.

Proponents of online legalization in California, D.C., Massachusetts, Iowa and New Jersey will no doubt be energized by the developments.

In anticipation of the government taking off the locks and chains, six online companies have already applied for licenses to operate in Nevada – International Game Technology, Bally Technologies, Shuffle Master, Cantor, South Point Poker and 888 Holdings. Caesars and 888 Holdings already have an agreement in place.

But while some see the DoJ decision as a signal to re-emerge from their bunkers, not everyone is convinced that there will be an immediate sea change in the way the government views gambling over the Internet.

“I really can’t see what all the fuss is about,” Joe Brennan Jr, president of the Washington D.C.-based Interactive Media Entertainment and Gaming Association told Covers.com. “Nothing much has changed. The memo referred to the purchase of lottery tickets online and didn’t mention poker.”

Brennan believes that companies that leap into action without the backing of enabling legislation are leaving themselves exposed by legally and financially.

“The bigger companies have a lot to lose if they read this wrong. Smaller firms might jump in, though.”

Brennan also points out that the DoJ’s Black Friday indictments were all about money laundering and bank fraud, not Internet poker.

“When you read what the Justice Dept. actually says and not just what the headlines say,” said Brennan, “we’re pretty much where we were.”

Brennan may be right and the DoJ’s move may not be a 180-degree game changer, but it has succeeded in stirring the pot during the holiday season and, at minimum, given hope that advocates of online gambling have some momentum as 2012 gets under way.

A spokesman for Texas Rep. Joe Barton, who has sponsored legislation to legalize online poker, told Covers.com by email that Barton’s legislative staff is analyzing the DoJ memo and will have a response in the near future.

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