Iowa considers legalizing online poker

BY SARAH BULMER | MARCH 09, 2011 7:20 AM

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Kyle Devaney once walked away from a game of Texas Hold ’Em $500 richer.

But the 23-year-old didn’t win the money in a casino or in a friendly game with his friends — he did it online.

Devaney, a University of Iowa senior, has been playing online poker for nearly six years. And, technically, he is breaking the law — but it’s one that’s rarely enforced.

Online gambling is illegal, untaxed, and unregulated in all 50 states, but that could change under a bill winding its way through the Iowa legislature.

Federal law allows states to legalize online gambling within their borders. On March 1, an Iowa Senate subcommittee approved a controversial bill that would legalize and regulate intrastate-only online poker. It will now need to pass the full Senate, and then the House, to become law.

If passed, Iowa would be the first state to legalize online poker, though similar legislation is being considered in Florida and California.

“My friends and I all went off to college, and it was easier to play online,” Devaney said. “I think [the regulation of online poker] would be better.”

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Under Senate Study Bill 1165, Iowa would be the first state to issue online poker licenses to qualified businesses. People wanting to participate in the legal online poker would register for an account at one of the licensed businesses, put money into an account at a local casino, and play poker on a regulated website.

The Iowa Racing and Gaming Commission would oversee the system.

Lobbyists say roughly 150,000 Iowans are illegally playing online poker; supporters contend that the move could bring in $30 million to $35 million in taxes each year. Supporters said the change could create a major source of revenue that the state is currently losing.

“The online poker industry now is not contributing monetarily to society in the United States or in Iowa,” said Ned Chiodo, a lobbyist in favor of the bill. “With the passage of this bill, the revenue that this industry will generate will be taxed.”

While it would likely bring economic benefits, the bill has drawn bipartisan concern from legislators concerning the ethics of gambling.

“This issue reaches past party lines,” said Rep. Dave Jacoby, D-Coralville. “Democrats won’t want to vote for it because gambling breaks up famil[ies] and causes social problems, and some Republicans are against it for religious reasons.”

Rep. Greg Forristall, R-Macedonia, said he has not read the bill, but said that he would need “serious convincing” to support it.

Jacoby said he supported the bill but predicted it will take at least two years before it reaches the full House.

In addition to state revenue, supporters said the bill would protect gamblers.

“[Players] can be cheated — they can be taken advantage of,” Chiodo said about the current system.

But Jacoby said not knowing who is dealing a player’s cards and taking her or his money is a concern — and one that’s drawn national controversy.

“It’s not like a casino, where you can see the person walk in the door and walk out,” Jacoby said.

Another potential downside would be loss of business for people going to local casinos. But Dan Franz, the general manager of Riverside Casino & Golf Resort, said he supported the bill.

“We are for the legalization of Internet poker … because it provides a regulated and safe place to gamble,” he said. “I don’t think the bill will change [Riverside Casino] business substantially. A great majority come in for the environment and entertainment.”

UI freshman Alex Elaty said he believes playing online is easier than regular gambling. He’s been playing online poker for a year, since he turned 18.

“There’s not much interaction, so it’s easier in terms of concealing your emotions, and you don’t have to go off of other players’ emotions,” he said. “You can just worry about the actual game.”

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