The federal appeals court ruled in January that the 1961 Wire Rope Act only applies to sports betting, so declined to comment from the Justice Department's law office during the Trump administration that the law should apply to other types of gambling.
With regard to poker, the First Circuit's decision gave clarity to interstate poker networks and largely eliminated concerns among gaming operators that federal agencies could suspend interstate poker operations in jurisdictions where compacts exist.
Yaniv Sherman is Senior Vice President of 888, the digital games company that has partnered with Caesars Entertainment's World Series of Poker to provide the WSOP online poker rooms in New Jersey, Nevada and Delaware. So far, the WSOP / 888 network is the only interstate poker operation in the US.
This intergovernmental agreement allowed the WSOP to offer an all-online summer tournament series in 2020, as well as creating the tournament structure for the American side of the 2020 Main Event, which was held in partnership with a counterpart to the rest of the world to ultimately determine a Main Event Champion.
Sherman discussed the implications of the First Circuit Wire Act ruling and the future of online poker.
Questions and answers are processed for clarity and convenience.
Gambing.com (GDC): Over the years, various opponents of gambling had attempted legislative approaches and other measures to stifle the growth of the industry. How did the Office of Legal Counsel's 2018 statement (which itself was a reverse of a 2011 statement by the same office) fit into this narrative?
Yaniv Sherman: There have been many forces trying to suppress online legislation or regulation in general. But when the US Supreme Court struck down the law to protect professional and amateur sports, I believe they found that this ship had sailed and states had started legalizing and regulating online (domestic) sports betting, and in some cases, gambling online. … (However) the DOJ statement has been a very effective way of creating a lot of uncertainty regarding (interstate gaming).
That had some success for this lobby because it created some murky waters, especially among states contemplating poker. It didn't stop anyone making advances in sports betting because sports have always been part of the Wire Act. But what it did put iLottery, e-payments, poker and (online) casino in the same bucket and created a lot of confusion.
GDC: What impact did this Office of League Counsel's opinion had on the gambling industry ahead of the First Circuit's eventual positive decision?
YS: I had some very difficult conversations because as of May 1st 2018 we had a living and very successful … first and still only (interstate poker network). At that point we tried to understand if we would be asked to actually take it down.
In fact, it set the agenda (for the advancement of interstate poker) back a few years. Remember, we got to the point where Pennsylvania had just started regulating online gaming and sports betting, and we were ready to enter into a deal (including Pennsylvania) and they decided they wanted more legal clarity.
Demand for online poker
GDC: Then came the favorable decision – what followed?
YS: Two years later the network is still active, very successful and 2020 was a great year for poker. Given the huge demand for poker, the next few states to come on board are looking at poker with a very cheap position and I think 2020 has given us a preview of how much demand has been built in poker.
I don't know if we're going back to the good old PartyPoker days of the early 2000s, when PartyPoker alone was twice the size of the entire (online) poker world today. But this is also a result of the fragmentation of poker over the past 10 years.
Certain countries have encircled online poker – Italy, then France, then Spain – they are now consolidating again. The vision we had before us is still very much the case. After all, you have a Europe-wide network – that is already in the works. You have an interstate US, possibly North American network. … I definitely see the chance that some compromises will be made between the European and American networks.
But I think poker is a material opportunity from our perspective in the short term. It has already reached critical mass between Nevada and New Jersey and when the WSOP hosted its first online tournament we saw the huge success that led to it. As you add more states you get the exponential effect that poker will expect as you add more liquidity.
Question of "when rather than if"
GDC: What has to happen now to get past this start-up phase of Nevada, New Jersey and Delaware as linked poker markets?
YS: The other states we are currently looking at that have regulated or legalized online poker are Pennsylvania, Michigan, and West Virginia. I think the next step is for regulators in these states to determine their position on this decision (federal appeals court) and recommend their policymakers to move forward.
In Michigan and Pennsylvania they already have important elements built in – it would be up to regulators to join such a pact so they don't have to go back to legislation. Regulators are currently the key people to drive this conversation forward. Of course we will be with them along with Caesars to facilitate this conversation. Hopefully now it's more about the "when" than the "when".
Michigan actually came up with a specific poker bill. It was separate from the casino and sports bills. It was much more evident about their ability and desire to join such a network. It's proof of how important that is. Even before the Michigan First Circuit ruling took the position that poker should have this ability (to be played across state lines).
GDC: Since the repeal of PASPA, the online gaming world has been largely focused on sports betting, and only four states have online poker rooms. It's an odd twist because 10 years ago poker was the only online gambling game that took place. Does poker have a place in digital gambling today?
YS: Poker has taken a back seat to the sports and (casino) gaming craze. I've been talking very loudly about poker for the past two or three years. I still maintain that poker is an important industry and a very important tent pole in any gaming legislation that goes beyond direct revenue.
It's an entertainment experience and it's very important for the industry to be able to offer poker. I hope that more countries will come on board. It's important to see that it's not just about tax revenue. It offers players an entertainment destination and an overall better product.