Ed. note: This post appears courtesy of Techdirt. We’ll be sharing business-related posts from Techdirt from time to time on Dealbreaker.
While it’s lost steam, you likely recall what is commonly referred to as the “poker boom” of the 2000s. Due in large part to the sudden interest in the game resulting from ESPN’s coverage of the World Series of Poker, it seemed like everyone was playing. This took the form not only of a massive uptake in friendly neighborhood games, but also in the emergence of online poker as a serious force in the internet world. That is, of course, until the United States government, conversely beholden to a largely religious lobbying effort coupled with an inability to collect taxes on the gaming, decided to shut down most of the popular poker sites. The result of the efforts by these anti-freedom groups was the crafting of the Unlawful Internet Gambling Enforcement Act, which then led to the takedowns of all kinds of poker sites. Predictably, this simply caused those sites to relocate domains and move their money processing facilities offshore, further depriving the government of both oversight and any chance at revenue. Recently, Chris Christie, Governor of New Jersey, has sought to expand legalizing online gambling in his state, and is currently working through the legislative/vetoing process to do so as he sees fit.
Which brings us to today, where a company called the Rational Group, owners of the previously popular PokerStars and Full Tilt sites, is looking into buying a distressed Atlantic City casino, giving them a legitimate home-base of operations within America, allowing them to reopen their online poker doors, and providing a massive revenue opportunity to the state of New Jersey.
Rational is taking its own gamble (sorry) in trying to develop a US base within the Atlantic Club, which lost $13.6 million during the first three quarters of last year amid declining revenue. The problem for Rational, however, is that its crown jewels are still on shaky footing with US regulators. In July, PokerStars paid $547 million to the DoJ and $184 million to foreign players in a bid to settle charges. The question now is whether or not the slate has been wiped clean.
“Both companies had issues with U.S. law when, in 2011, the Department of Justice closed down [PokerStars's and Full Tilt's] websites after they continued accepting U.S. bets,” attorney Jason Gross told Press of Atlantic City. “Here you have these two companies, both owned by Rational Group, that went farther than most companies, and it may create further issues.”
Let’s avoid mincing words here: the idea that legal complications stemming from a what was essentially a religious lobbying effort (with some help from the pro and college sports leagues) could prevent a now legitimate business from operating and generating state revenue would be a travesty. A tyranny of the minority serves nobody in this instance. The people want online gambling, the state wants online gambling. Holding Rational’s feet to a fire sparked by bad legislation is wrong, particularly when that company wants to invest into a distressed NJ business and help turn it around.
With that said, the broader point appears to be that online gaming is going to come back, whether Rational succeeds in this endeavor or not. As the article notes:
By legally forcing online gaming to have a home casino in the States, it could both reopen the online market while also capitalizing on that sweet tax revenue. Rational and its all-powerful brands might not bring online poker back, but it does look increasingly likely that online gaming is coming back.
And, in my opinion, not a moment too soon. I’m all for religious freedom and belief, but those stop where my freedom begins. The sooner the government gets out of the business of enforcing morality on the internet, the better.
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