New hand dealt: Justice Department opens the door

A new Justice Department opinion -- dated in September but released Dec. 23 -- creates considerable urgency for those who hope to establish a single, national regulatory framework for online gaming.

While online poker alone was generating an estimated $6 billion annual handle through last April, that came to a crashing halt when online sites PokerStars, Full Tilt Poker and Absolute Poker were accused last spring of violating a 2006 law that forbids banks from processing illegal gambling funds.

In the meantime, though, New York and Illinois officials had asked the DOJ whether the 1961 Wire Act or the 2006 law prevented them from selling lottery tickets online within their states. They got their answer just before Christmas.

While it doesn't discuss gambling across state lines, the opinion by the Justice Department's Office of Legal Counsel reverses a decade of precedent, stating gambling taking place within a state can no longer be considered "illegal," since the Wire Act only applies to sports betting.

States including California and Iowa are now expected to quickly move bills authorizing online gambling. In New Jersey, state Sen. Raymond Lesniak said he'll try to get a bill to Gov. Chris Christie's desk by next week. While Mark Hichar, an outside lawyer for the company that runs the Texas lottery, said the memo will prompt lotteries to begin running as many different games as are allowable under state laws.

While this may sound like good news to players who just want to get back online, Frank Fahrenkopf of the American Gaming Association, the industry's top lobbying group in Washington, plans to continue working for uniform federal laws. Otherwise, "You're going to end up with a patchwork quilt of laws that are going to be very hard to decipher," warns Alan Feldman, a spokesman for MGM Resorts International, in an interview with the JD Journal.

Indeed. And once states go ahead individually, "Their natural inclination is to give it to the locals," points out gaming law expert I. Nelson Rose.

Nevada regulators showed some prescience by adopting new online poker regulations the day before the DOJ opinion, but the issue has now become even more urgent.

Nevada has impressive representation in Congress. While there are many areas where states must be allowed to do it their own way, neither players nor operators will benefit from a rat's nest of 50 overlapping regulatory jurisdictions.

Yes, Congress today faces many problems -- most of their own making. Nonetheless, Sen. Harry Reid and the rest of the Nevada delegation need to step up their efforts to create a national regulatory jurisdiction for online gaming, with a role for Nevada firms that can bring a wealth of experience to the task.