online poker Michigan
Legal Developments

Interstate Online Poker Takes A Step Forward In Michigan

Interstate online poker was always an option in Michigan, but legislation passed last week helps pave the way for the state to join the Multi-State Internet Gaming Association (MSIGA) and pool online poker players with New Jersey, Delaware, and Nevada.

Michigan’s gambling expansion bill passed in 2019 did not expressly authorize interstate compacting (nor did it expressly prohibit it), something the new legislation remedies.

The bill, SB 991, breezed through the House of Representatives by an 85-16 margin on Thursday. On October 1, the same bill passed the Senate by a 36-1 vote. The bill’s next stop is the desk of Michigan Gov. Gretchen Whitmer, who, according to PokerFuse.com, is expected to sign it into law.

Online Gambling Imminent but Online Poker Further Down the Road

Mobile sports betting and online casino games in Michigan are expected to go live by mid-January. Unfortunately, it doesn’t look like poker will be part of the initial rollout. There are three critical reasons for online poker’s lag.

First, as a peer-to-peer game, poker is a more complex offering from a regulatory standpoint. And with their attention on casino and sports betting, regulators have likely pushed online poker testing and certification to the back of the line.

Second, for operators, poker doesn’t provide the same financial opportunities as sports betting and casino. That pushes it lower down their priority list too. Nor do operators want poker to compete with casino games for early customer spend, as poker losses tend to go to pros, while the operator takes a small percentage of each pot.

Finally, without interstate pooling, Michigan’s online poker market would be constrained to the state’s less than 10 million population. That small pool of players could be off-putting to first-time players. On the other hand, if online poker launches as an interstate offering, players will have a far better first experience with the game, with more choices and larger tournament fields and prize-pools.

Adding all these different factors together, online poker in Michigan will likely trail sports betting and online casino by several months.

What About Pennsylvania?

Another jurisdiction that could enter the MSIGA and pool its online poker players with the other legal online gambling states is Pennsylvania.

The state’s singular online poker operator, PokerStars, has put up some solid numbers during the pandemic and would greatly benefit from pooling with New Jersey and eventually Michigan.

Interstate pooling would also act as an accelerant for other operators to launch online poker in Pennsylvania. Without the added fuel of interstate player pooling, online poker operators would simply be burning money with a Pennsylvania offering.

So, what is holding Pennsylvania back? The short answer is the ongoing case over the Wire Act opinion issued by the Department of Justice in 2018. The opinion alarmed the state’s regulators enough to cause a change to server requirements for all forms of online gambling and put interstate poker plans on hold.

But there’s some good news on the horizon. The DOJ’s case has proven to be on shaky footing, and the consensus is the incoming administration will stop fighting and rescind the 2018 opinion.

Once the Wire Act case is in the rearview mirror, Pennsylvania will likely move fast and join the MSIGA.

The Potential

With New Jersey, Nevada, Delaware, Michigan, and Pennsylvania (and perhaps West Virginia at some point), the legal US online poker market would be a California-sized industry. These five states have a total population of 36 million and exist in three different time zones, extending peak traffic times.

This not only provides 10% of the US population with a competitive legal online poker option, but it also opens the door for online poker talks in other states, particularly if live poker remains a questionable activity in the COVID-19 era.

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