Online Poker Legalized – Are you bluffing?

In recent years, there’s been an increased amount of scrutiny on online gambling and in particular, online poker. The states of Nevada, Delaware and earlier this week, New Jersey have approved and launched online gaming markets.

POLITICAL CONTEXT
There has been increased scrutiny from government players with Republican politician, Joe Barton advocating the roll out of nationwide law that will help regulate and legalize online gaming. Barton had introduced a bill in the US Congress that would help create a licensing system for online poker companies. Whilst, this was welcomed by many, it was also simultaneously opposed by many and this can be seen by the fact that the bill was introduced in July and has not made any progress in the last 4 months. Making things illegal can increase the price of the illegal activities – there have been instances in the past where the prohibition of marijuana or the prohibition of texting & driving, went on to increase the occurrence of the prohibited activity post the passage of the law. Pro-online gamers have supported a controlled and closely monitored legalized online poker world. Whilst this is easier said than done, the golden question is whether the government can help the online poker companies to take baby steps in the near future?

ECONOMIC AND ETHICAL CONTEXT
Whilst we are still recovering from an economic recession, arguments can be made to support banning online poker – gambling can easily become an addiction and cause serious mental and economic harm. Having access to online poker via the internet can provide easy access to the wrong individuals which can only exacerbate the current economic condition. But one can argue that similar addictions currently already exist in the form of the lottery, cigarettes, alcohol, drugs etc. Furthermore, the underground gambling market without access to casinos can potentially operate in an open monitored environment and hence enable the government to collect taxes on winnings while enforcing necessary regulations to protect consumers. There are ways to curb abuse of IP addresses, credit cards, age of players etc. by monitoring patterns of play among many other sophisticated security measures. However, is this enough to give parents the comfort that underage children will not have easy access to online poker?

 

COMPETITION
The best form of innovation eliminates wastage in the system and removes inefficiencies. We have seen e-commerce disrupt the traditional brick and mortar retail model benefiting consumers tremendously. E-retailers are able to pass down costs savings from zero physical store rent to consumers in the form of lower prices, better selection of products and quicker & convenient service. This very concept can be applied to online poker — the casino business is a high fixed cost business which runs continuously regardless of the occupancy rate or utilization level. By providing consumers with the ability to play poker online, consumers are able to save money on travel and hotel charges and casino companies can save on rent and other fixed/variable costs. It’s a win-win for both sides of the network. Also, legalization of online poker will be a breath of fresh air for dynamic and entrepreneurial companies such as Zynga, thereby enabling and supporting innovation in the gaming industry.


3 Comments

  1. Anonymous

    Interesting post! Thanks for sharing.

    Your post made me think about what can be done to ensure accountability and responsible playing of online poker players and it reminded me a lot of Singapore. For the longest time, Singapore imposed strict rules on gambling. Home poker games could even be illegal if this was done in a place that could be considered as public. As such, the opening of not one, but two casinos in Singapore was met with a lot of dissatisfaction. Citizens worried about the negative externalities that gambling may bring to society. This is especially so given that Singapore is regarded as one of the safest and lowest-crime rate countries in the world.

    As such, to enter the casinos in Singapore, a valid ID or a passport is required. Singaporeans need to pay $100 just to enter the premises. Family members are allowed to put loved ones on a ban list so that if the gambler has an addiction problem, family members can help stop it.

    Now, how can this be translated to an online setting? Institutional intervention is required. Upon registering on a site, gambler would need to present names and verification information of two family members. If a player wants to play online, he/she would need approval codes from family members via a code sent to family members' email/phone. With this mechanism in place, hopefully gambling addiction from online sites could be avoided.

  2. Stacy Harper

    Very interesting post – but I wonder what is the crux of your question – if you have a question? Sounds like there are many and legal ways to work around the existing system. Gambling markets are interesting because they involve money, and where there's money to be made or lost – people will have a strong (and public) point of view. So my comment has to do with the public and privatization of participating in gambling.

    There's a seduction in the idea of hidden sin.

    So the idea to publicize what is a very interesting and appealing past time (notice that you are anonymous). But it's important to understand what becomes lost by the idea that my "wicked secret" is now public and monitized by Government – taxed, child support, etc.

    Ultimately, I believe that the current system works well. My mother is addicted to the IPhone apps with games and they all have a component where you can subscribe to more applications – but she understands that that crosses a line that's ultimately not what she wants to play. So – if what you're asking (again – I'm not sure of your question) is that the online system should provide the support for gambling that may be illegal?

  3. Very interesting post – but I wonder what is the crux of your question – if you have a question? Sounds like there are many and legal ways to work around the existing system.