State to consider legal online poker
Pari-mutuels would link to poker sites,
share revenue with State

By Nick Sortal
Copyright © 2011, South Florida Sun-Sentinel
Friday, January 28, 2011

While some Florida legislators talk of setting up Las Vegas-style casinos in a few years, others suggest there's a way to immediately raise gambling revenues with a click of a mouse.

They want to allow horse and dog tracks and jai-alai frontons to have portals to online poker rooms, with the state getting a cut of the revenues.

"It's common sense," said Florida Rep. Joseph Abruzzo, D-Wellington, who proposed the bill. "There are hundreds of thousands of players in Florida in unregulated and unprotected offshore sites.

"Why not legalize, regulate and bring in revenue from something that's already occurring?"

There's a precedent for a state offering online gambling: Both legislative branches in New Jersey approved online gambling, and the bill went to the governor on Jan. 13. It would allow Atlantic City casinos to run not only online poker rooms, but all forms of online gambling. California also has a bill working.

Opposing the Florida bill are online poker companies such as PokerStars.com and FullTiltPoker.com, which already have a large audience and simply want the state to legalize their sites instead of going through the pari-mutuels. Some players' groups also are against the bill because they want online poker approved nationally, not state by state.

Would enough play?

Internet poker is in a legal purgatory. It is not illegal to play Internet poker, but it's against federal law for a U.S. company to run an online poker room for money, as declared in the Unlawful Internet Gambling Enforcement Act of 2006. Many in the United States play on poker sites through offshore accounts, and other countries have a broad range of regulations and fees.

U.S. Rep. Barney Frank, D-Mass., tried to repeal the 2006 law last year, and U.S. Sen. Harry Reid, D-Nev., tried to attach legal online gambling in an unrelated, last-minute 2010 bill. Both attempts failed.

John Pappas, executive director of the Poker Players Alliance, wants a national bill legalizing all Internet poker sites. He estimates 8 million to 10 million Americans — about 400,000 of them Floridians — play online through offshore accounts.

"Internet poker is best for the consumer when you can have a critical mass of players from all jurisdictions and all time zones meeting on a site and playing," Pappas said.

But Abruzzo said a national bill would not be in Florida's best interests.

"If they'd pass it, we would receive hardly any revenue," Abruzzo said.

Could take effect July 1

Florida's online gambling proposal comes at a time when state leaders say they are looking to strengthen a limping budget. News surfaced earlier this month that Gov. Rick Scott met with Las Vegas interests who would pay license fees to build casinos here.

But Abruzzo and others say construction of resort casinos, if approved, is years away, whereas online poker could help the state budget as soon as a law took effect July 1.

Scott could not be reached for comment.

Under the proposal, up to three poker sites would contract with the state as hubs, with the websites of Florida's 23 pari-mutuels' card rooms each acting as a portal. To participate, players would click on a pari-mutuel site and go into a pool of other Florida players. The hubs would pull a small piece for each poker pot, called "the rake" in poker parlance, and pass it on to the card rooms. The state would get 10 percent of each card room's rake, as it does now in brick-and-mortar poker rooms.

"The state has a prime opportunity to regulate activity that is currently conducted through overseas operators, while simultaneously generating much needed revenue for the state," said John Lockwood, who represents several pari-mutuels.

A Senate Committee on Regulated Industries report presented Jan. 11 said online poker could generate $56 million for the state by 2014. The existing pari-mutuel card rooms are on pace to take in $12 million for the fiscal year that began July 1, when expanded poker laws took effect.

The Seminole Tribe, which is entitled to any game the state offers, also could set up online poker. The state's $1 billion compact with the tribe would be unaffected, unless the Seminoles' profit were to drop 5 percent from one year to another, the report said.

Nick Iarossi, a lobbyist for an online gambling company, said the pari-mutuels won't draw enough players and wants the state to include existing online poker companies. He represents Betfair, a United Kingdom online gambling site that currently blocks U.S. IP addresses to avoid even tiptoeing close to any legal line. Florida pari-mutuels would use similar software to block out-of-state IP addresses.

"This bill is really kind of a carve-out for the pari-mutuel industry," Larossi said.

For state Rep. Dennis Baxley, R-Ocala, talk of Internet poker is no different than discussing Las Vegas-style casinos and is "another attempt at broad expansion."

"I hope we look at more concrete ways to build a great future for Florida other than expanding gambling," he said. "I don't think it works."