USA Poker SitesNevada, Delaware, and New Jersey are currently the only states to enact state regulations governing online poker. In February 2014, Nevada and Delaware formed the first interstate poker compact, an agreement that allows online poker players from Nevada to participate in online poker rooms located in Delaware, and vice versa. Players partaking in online rooms located in different states spark the question as to what regulations apply at any given time. Is it better for each individual state to promulgate its own rules, enabling it to maximize the profitability of online poker in its forum? Or is it better for the federal government to dole out a regulation that trumps all the rest? There are pros and cons to both sides.

Allowing states to legalize online poker on its own accord allows each state to set its own parameters. The benefit of having the flexibility to choose the level of control each state would be willing to assert is matched by the fact that sole control would also lead to increased state revenue from levying taxes on player earnings. With the advent of interstate compacting, smaller states that may not have the player market to support regulating online poker may still institute its own regulations while partnering with other states that have also legalized online poker for the purpose of sharing a collective unit of players.

Individual state ratification is not without its drawbacks. Allowing each state to develop its own rules could lead to a scenario in which players are subject to up to 49 sets of overlapping rules[1], not knowing which ones to comply with at any given moment. Regarding the actual sites themselves, each would have to acquire a license in every state it wishes to operate in. This could result in online poker becoming costly to operate on a national basis, potentially making it not worth the trouble for applicants to seek business in states that already view poker as a fringe market.

The advantages from developing federal regulations alleviate all the disadvantages that arise from sole state regulation. Federal regulation allows for one, ultimate set of rules. Also, online sites would only have to apply for one nationwide license that would provide cover in all states. The benefits that come with allowing states to individually regulate would also dissipate, with the federal government creating an agency to control online poker while also taking a percentage of tax revenue and all the licensing fees that would have been earned by the state.

Any federal regulation would come with a clause that permits states to opt-out. Therefore, if a state did not like the effects of the federal laws, it could choose to opt-out and create its own. This provision may be viewed as rendering federal regulation powerless because a state could simply bow out at its choosing. However, when a state chooses to enact its own rules when there already is a federal law in place, in most situations the state may only provide more benefits, using the federal law as a floor for which to base its new rules under. Consequently, it follows that a large portion of the federal regulation would remain intact.

As it stands, most states are likely waiting to see how the rules in Nevada, Delaware, and New Jersey play a role in the respective state’s economy. California has recently proposed two bills that would legalize online poker within the state. However, it seems the best route for the clean integration of online poker into America’s fabric of life would be for states to encourage federal regulation, not only for efficiency’s sake, but from a global economic viewpoint as well.

[1] Utah has already enacted legislation that explicitly outlaws online poker.