The District of Columbia is becoming the first U.S. jurisdiction to allow Internet gambling, trying to raise millions of dollars from the habits of online poker buffs and acting ahead of traditional gambling meccas like New Jersey and Nevada.
Permitting the online games was part of the 2011 budget and a 30-day period for Congress to object expired last week, said D.C. Council member Michael A. Brown, who authored the provision. The gaming would be operated by Intralot, a Greece-based company, and would be available only to gamblers within the borders of the district.
Officials were not sure when the gaming would be up and running, though DC lottery officials said they were in talks with their vendor and expect to know more within weeks. Though other states have contemplated legalizing online poker, experts said the district would be the first jurisdiction in the country to do it.
The move to legalize the games comes despite a 2006 federal law that effectively banned Internet gambling. The law basically prohibited banks and credit card companies from processing payments from gambling companies to individuals. But the law is murky, and gambling experts say it created enough grey areas to open the door for a deeper expansion into the multibillion dollar industry.
"There was really no clear law that said we could not do this," Brown said Wednesday.
D.C. hopes to tap those millions to help offset budget cuts and help social services programs, Brown said. Conservative estimates from D.C.'s chief financial officer indicate the district could bring in around $13 million to $14 million through fiscal year 2014, according to Brown's office.
The gambling green light is no doubt good news to poker players, but D.C. would be authorized to offer other games of both skill and chance. It would be up to lottery officials to come up with regulations and decide which games to permit.
"Anytime you're cutting budgets and you want to save some programs, you're looking for different pieces from different pots and you hope that you get to the number that restores those budget shortfalls and that's what we're trying to do with this," Brown said.
Jeff Ifrah, a lawyer whose firm represents online gaming companies, said he was dubious about any revenue estimates since they naturally assume that online poker players will migrate from their favorite site to a new one endorsed by a state.
"Players are really loyal in this industry," Ifrah said. "You really have to ask yourself what is the incentive a player is going to have to leave a trusted site with global competition to play in a site that's untested and kind of unknown and doesn't offer you the same level of play."
Online poker games generally allow computer users to deposit money into an account and place wagers against other players similar to real gambling.
Efforts to legalize Internet gambling have stalled elsewhere this year, including in New Jersey, where Gov. Chris Christie vetoed a measure partly out of concern that bars, nightclubs and amusement parks would add online gaming to attract more customers.
A bill in Hawaii died in the Legislature and another one in Iowa is unlikely to move forward in its current form. In Nevada on Tuesday, a legislative panel amended and approved a bill that directs the state Gaming Commission to begin drafting rules to regulate online poker. But the bill also stipulates that Internet gambling would not be implemented until sanctioned by Congress or the Justice Department.
David Schwartz, director of the UNLV Center for Gaming Research, said he thought states were waiting for clearer federal guidance before proceeding with Internet gambling proposals.
"There's a lot of ambiguity at the federal level," he said. "A lot of people are waiting for some sort of federal legislation that would create a regulatory structure."
A spokeswoman for the U.S. Justice Department, which has traditionally viewed Internet gambling as illegal, declined to comment Tuesday.
D.C. Mayor Vincent Gray said Tuesday he didn't know how far along the process was but added, "Assuming it's implemented it would become a part of our lottery program and could generate additional resources for the District of Columbia as we continue to support ourselves."