Washington ban belies national efforts to license online poker

Local poker players have hope for the first time in a dozen years, as legal rumblings at the national level are putting pressure on Washington state lawmakers to reconsider the stiffest online poker ban in the United States.

Rich Muny, who leads the Poker Players Alliance, an advocacy group with more than 1 million members, is encouraged by recent events.

“There’s still a lot of work that has to be done,” Muny said, “but they aren’t as entrenched as you think they are.”

One key block was removed on May 14 when, in a 6-3 decision, the Supreme Court struck down the Professional and Amateur Sports Protection Act, a 1992 law that limited state-authorized sports betting to Nevada.

Woodinville, Washington, resident Ralph “Rep” Porter, a three-time World Series of Poker bracelet winner with more than $3 million in career tournament earnings, thinks the SCOTUS decision in favor of sports betting will lead to a push for licensed poker at the national level.

“They are just too closely related to say one is OK and not the other,” Porter said.

Roll Call’s Alan K. Ota reported on June 22 that Texas Rep. Joe Barton is considering an amendment to a bipartisan bill to nationalize licensing for horse racing medication. The amendment would nationalize licensing for online poker and sports betting.

Beginnings

Online poker, barely 20 years old, became a national obsession shortly after the turn of the century.

The first real-money online poker hand was spread at Planet Poker on Jan. 1, 1998. In the early years, online poker had more of a small-town feel.

“It was like a fraternity,” online player John “Fuel55” Veltheer said. “You knew everybody.”

Online poker sites soon began offering satellite tournaments, at which the prize for winning would be entry into a more expensive tournament.

“I used to satellite everything,” Veltheer said. “I’d get through in two or three tries and win 20 times my entry fee.”

With satellites, a player with a limited bankroll could work his way up the ladder – making the cut three or four times in a row – and find himself playing in a cash tournament with a prize pool in the millions of dollars. PokerStars held the first online WSOP satellite tournaments in 2003, offering 37 entries into the $10,000 Main Event. Among the winners was a Tennessee accountant with a surname almost too good to be true.

The boom

Chris Moneymaker’s 2003 Main Event upset, featuring an epic, David-vs.-Goliath bluff against cash game legend Sammy Farha, thrust poker into the mainstream.

“It was on ESPN every day for months,” Veltheer said. “Now people say, ‘I’m all in,’ and they don’t even play poker.”

Moneymaker turned a $40 online satellite entry into $2.5 million, inspiring a poker boom that rivaled the California Gold Rush.

“All of a sudden everybody was a poker player,” Veltheer said. “Every poker site was jammed, with everything from freeroll satellites to high-stakes ring games. You could jump into a game with thousands of other players just about any time of day, for any amount of money. If you got knocked out, you could just jump into a new one.”

The Moneymaker effect turned every poker site into a Wild West saloon.

“All they were missing were swinging doors and dancing girls,” Veltheer said.

Newsweek reported that online poker revenues jumped from $82.7 million in 2001 to $2.4 billion in 2004.

The bust

Resistance exploded onto the scene almost as quickly as the scene itself, goading President George W. Bush into signing the Unlawful Internet Gambling Enforcement Act in October 2006, prohibiting banks from processing funds to and from unlicensed gambling websites.

Online poker has been illegal in Washington since Gov. Christine Gregoire signed amendment RCW 9.46.240, classifying online poker as a Class C felony, in June 2006.

Legal challenges kept the poker sites up and running, but Washington’s felony designation was an effective scarecrow. For the high-profile Porter, flouting the law was never a consideration.

“I had a wife and two kids,” he said. “I didn’t want to be the guy they decided to make an example out of.”

The industry hit rock bottom on April 15, 2011 – “Black Friday” in the poker world – when the U.S. Southern District of New York seized the domain names of the three largest sites – PokerStars, Full Tilt Poker and Absolute Poker – effectively freezing the assets of millions of U.S. poker players.

The poker world was devastated.

“The poker community, as a whole, got absolutely crushed,” Porter said. “Players had huge percentages of their net worth locked up, so they couldn’t even transition to playing live, because they didn’t have the bankroll to do it.”

Rebuilding

A 2011 legal decision separated poker from other forms of gambling subject to the Federal Wire Act. Although 37 states allow skill-based gambling, at the time Nevada was the only state where it was licensed. New Jersey, Delaware and Pennsylvania have since joined Nevada, with Michigan set to become the fifth.

Muny said the quickest solution in Washington would be to convince tribal interests to join the push.

“There’s always concern in a state with tribal compacts,” Muny said. “The tribes have to be on board, or it’s hard to get things moving.

“But if they wanted to be a provider, or license a provider, they’d have a ton of leverage to get it done.”

Muny sees the felony statute as more of a target than a deterrent.

“Stakeholders might be more wary of Washington state than they need to be,” he said. “But lots of people have spent a lot of time making sure lawmakers hear how ridiculous it is that it’s a felony.”

Jeremey Lochridge watches over the Lilac Lanes poker lounge.

“There used to be like three or four live games constantly, maybe seven, eight years ago,” he said. “Now it’s one or two.”

Lochridge, who was too young for the poker boom, is excited at the prospect of legal, licensed online poker.

“I know a bunch of people who want to play,” he said. “I think it needs to happen.”