The Fallout of the Failure of the Harry Reid Bill

It looks like the biggest fallout of the failure on the part of Harry Reid to duct tape the land based casino’s his gambling regulation bill to anything will be that poker journalists will now be without anything to speculate about. Predictably every site that was excitedly writing about every twist and turn in the Harry Reid bill saga is now publishing there “What Happens Now?” speculations. Well, let me give the definitive answer on this subject: Nothing has changed!!!!!

All the trends that have been happening and that get some cursory attention by the poker media are still going to continue. Most of them are things I’ve been writing about for years now and which the poker media seems to be shaken into recognition of.

For instance, let’s look at Wicked Chops’ analysis:

Heavy crackdown on payment processors – This has been going on for years. Right now the payment processing industry consists of chuckleheads willing to risk a decade or two in prison in order to facilitate online gambling transactions. Every month there’s another thread about this or that payment processor going down or this or that online poker site having their checks bounce. This is hardly anything new.

The Fed will be forced to act – If anything, this will happen exactly the opposite of how Wicked Chops thinks it will. If the Fed steps in it will be to further crack down on online gambling not to save the industry by being forced to regulate it. If California and New Jersey get legalized online gambling the most likely reaction from a Republican House of Representatives will be to pass laws making it illegal or extremely difficult for states to offer online gambling. I’m not necessarily predicting that that will happen but if the federal government steps in it is far more likely that they step in in a preventative way rather than a facilitative way.

Someone fills the communication void – What void? The author fails to even define what the void is that is going to be filled. Basically, this point is that they want everyone to stop saying “legalize online poker” and start saying “regulate online poker.” Big whoop. People are already lined up on one side or the other on this issue. The lines aren’t even Republican or Democrat. They’re people who believe in people’s rights to do what they want and those who feel that people need to be regulated into doing what’s best for them. Many prominent Democrats are against legalized online gambling. That list includes Nancy Pelosi. She’s not going to do a 180 on this based on some change in wording in the argument. People like that only change when it becomes blatantly obvious that their constituents disagree with them and will vote them out of office over the issue or someone promises them something they want (e.g. a huge government contract for their state, support on a bill that is crucial to them, etc).

WSOP participation drops; NAPT pulls out – This is plausible but it’s not a given. It’s likely that payment processing will continue to be an issue but at the same time there’s nothing to indicate that this has changed dramatically pre and post Harry Reid bill. Why is this issue being mentioned now and not 2 or 3 or 4 months ago? Nothing about the payment processing environment has changed.

Sponsorship Status Quo – I disagree on this one. I think as we see more and more consolidation in the industry we’ll see less and less marginal players being given sponsorship deals. It takes a totally different level of achievement or celebrity to be on Team PokerStars or Team Full Tilt than it does to be a sponsored player on some site making $1 million a month. As competitive pressures make it less economically feasible for smaller sites to sponsor “star” players the more difficult it will be to land a sponsorship deal.

Of course, names like Phil Ivey will have no problem securing any sort of sponsorship deal but nothing ever impacts the top first. It will be the smaller “pros” who feel it. It will be the C and D level sponsorship deals that will be the first to be chopped. Of course, the poker media probably won’t write about it because C and D level players usually aren’t worth writing about in the first place. That’s why they’ll be easy to cut from the poker room’s marketing expenses.

Media shrinks and consolidates – Ahhhhhhhh, now we get to the heart of the matter and why you haven’t seen the poker media writing about these trends in the past. This isn’t anything new. Everyone shared their thoughts when Change100 was let go at PokerNews in October. She wrote about the consolidation and the industry economics way back then. It’s been an ongoing trend for a looooooong time now. But people don’t like to discuss unpleasant things so you don’t see people writing about this topic much.

A new bill will be more favorable – This is mostly wishful thinking. The Reid bill did not fail because it was too in favor of Harrah’s and the other Las Vegas casinos. It failed for the same reasons all of Barney Frank’s efforts have failed. There simply isn’t widespread support of legalizing online gambling. Until politicians start to feel like if they don’t legalize online poker they’ll be looking for a new job many will just play it safe and not get on board.

But we’re still years away – This is the one thing I agree with 100% though for completely different reasons. Chops still holds out that a bill might be so favorable that it automagically gets passed. I doubt that. As I stated previously, I don’t think the favorability of the bill had anything to do with it not passing. What will get it passed is either a major shift in public perceptions of online gambling or someone willing to ram it down Congress’ throat like Harry Reid was trying to do. That’s not likely to happen with Spencer Bachus running the show in a Republican controlled House of Representatives so we’re looking at at least 2 years for another shot.

And don’t get me wrong, I love Wicked Chops. Probably one of the best sites covering poker. But that’s the same reason I get disappointed when I think they’re totally off the mark. And I see other poker journalists also writing as if any of this is new news. It’s not! Nothing is changing that wasn’t already set in motion a long time ago. Positioning it as something new means that either they were previously unaware of these trends or that they’re finally coming to terms with them. Either way, I guess it’s a positive that people finally realize and are willing to talk about some of these issues.