Congress raised the stakes on the online gaming industry over the weekend, and some of the biggest players in the Internet poker business are folding.
The Senate tacked anti-online gambling legislation onto a homeland security bill Saturday that would effectively halt much of Internet gaming, including poker, by blocking money transfers from U.S. banks to gambling Web sites and the financial middlemen that service them.
PartyGaming - a publicly held company traded on the London Stock Exchange and parent company of PartyPoker, the largest online poker site - has already said it will stop taking U.S. money customers should President Bush sign the bill, which he's expected to do before the November elections. Another poker Web site, 888.com, also said it will bar U.S. money players, while other Internet poker rooms had not disclosed their plans.
The online companies, which are all located outside the United States, still will accept cash players from other countries.
The repercussions could be huge for the poker world at large, including reducing participation in live casino tournaments, such as the World Series of Poker in Las Vegas, which rely on Internet qualifiers - although the case could be made that live card rooms will benefit because players will be shut out from online poker rooms. About 15 million people play poker online, according to researchers who have studied the business.
"TV and the Internet have helped to build the poker industry, and undoubtedly there will be negative ripples throughout the poker-playing community," said Michael Bolcerek, president of the Poker Players Alliance, a group that had been fighting such legislation.
Bolcerek argued that driving larger, well-known companies from the Internet poker market would create a more underground Web gambling environment where less-scrupulous operators will thrive.
The turn of events in Congress over the weekend surprised the poker world that had figured the anti-online gambling effort had fizzled as it had in previous years. Earlier, the House of Representatives had passed anti-Internet gambling legislation, but the Senate's move to tie such legislation to a port safety bill pushed it over the top.
The new federal prohibitions do not apply to horse racing, state lotteries and sports fantasy leagues. Should the bill be signed, there will be a nine-month period when details of the regulatory process will be ironed out.
Keith Whyte, executive director of the National Council on Problem Gambling, said his organization had neither supported nor opposed the bill but pointed out that he did not believe it significantly addressed problem gambling. Proponents of the bill contended that online gambling encouraged addiction because it was so accessible and that it attracted underage participants.
"Addiction is not about convenience; it's about addiction. ... I've never had a problem gambler tell me that it was too hard to lose all their money," Whyte said.
As far as youthful gamblers are concerned, Whyte said that government efforts would be better spent on prevention programs than enforcement.
"Kids don't seem to have a problem getting their hands on cigarettes and booze," he said.
"That [the bill] makes it harder is not entirely a bad thing," Whyte added, "but I don't see how it prevents problem gambling."
The elimination of Internet poker could adversely affect both live poker in casinos and televised poker.
Poker industry sources estimated that the top Web sites contributed about half of this year's record field, nearly 8,800 players, to the World Series of Poker Main Event held at the Rio Suites Resort & Casino.
Poker TV shows, such as ESPN's presentations of the poker world series and the Travel Channel's broadcasts of the World Poker Tour, are supported, in part, by commercials advertising the for-play-money dot-net versions of real-money Internet poker rooms.
Gary Thompson, director of communications for the World Series of Poker, said it was too soon to tell what the implications of the new law would be for the World Series, which is owned by casino giant Harrah's Entertainment.
A spokeswoman for ESPN said that no advertisers had canceled as of yesterday.
Steve Dannenmann, the Severn CPA who finished second in the 2005 poker World Series championship and won $4.25 million, said fewer online players would be a blow to poker overall.
"It's obviously going to decrease the number of people who play in the WSOP since half [qualify online]. And it's a shame because they could raise a lot of tax money through online poker - just send the person a 1099 [earnings form]," said Dannenmann, the poker everyman who always said he wouldn't give up his accounting practice because of his card-playing windfall.
"But the guys who make their living online," he added, "may have to go out now and get a real job like I do.