My 2006 UIGEA Conspiracy Theory Confirmed?

The UIGEA passed the House and Senate on September 30, 2006. It served to restrict gambling transactions for financial institutions. For players, that meant it became harder to deposit and withdraw money.

On October 2, 2006, I made a prediction that the domestic casinos would rise from the ashes:

Here was my conspiracy theory:

1. Harrah’s Entertainment was the 13th largest contributer to Frist’s 2000 Senate campaign. (Bill Frist was the senator that pushed through the UIGEA).
2. It approaches the senator with a deal that seems to be a win-win-win situation. Frist wins, the casinos win, and the U.S. wins.
3. Frist wins by displaying his morality for future presidential campaigns to the U.S. public by banning online “gambling”. After a period of “consideration” another senator that in cahoots with the casino decides to try to legalize.
4. Casinos start up their own versions of online poker. American casinos quickly gobble up the U.S. market.
5. The U.S. government gets hundreds of millions of dollars in tax revenue.

It’d be a win-win situation.

Now, it looks like my prediction is coming to pass. Harry Reid recently put a bill to license, regulate and tax the online poker industry (though I admit he’s probably not in cahoots with Bill Frist). The proposed measures would absolutely destroy foreign “rogue” operators like Full Tilt and PokerStars. F-Train does an excellent job summarizing the 75-page bill, but here’s a a quick rundown.

• All current poker rooms have to exit the U.S. market and return customer deposits.
• No licenses will be given out for the first 15 months. To be clear, that means that there will be no legal online poker in the U.S. for 15 months.
• Only companies that have owned or operated a casino for 5 years prior to the passage of the bill will be eligible to receive a license after the initial 15-month waiting period.
• That means foreign poker operators have to wait 15 + 24 months (3 years and 3 months) before they can come back to the U.S. market.

And when they do try to return to the U.S., they’ll be faced with entrenched domestic competition.

It looks like I was pretty spot on with my 2006 prediction. The only question is whether the bill will pass (it looks somewhat unlikely), and if it does, how it will be modified.

Post a comment on what you think this bill means for the poker industry.

UPDATE: It looks like the language of the bill changed to allow all foreign poker rooms to get their license within 15 months (though this is still subject to change).