The ink was barely dry on the April 15, 2011 indictments that effectively shut down online poker in the United States when Nevada began sowing the seeds towards becoming the first state to host legalize and regulated online gambling inside its borders.
In May 2011, just weeks after various money laundering and illegal gaming charges resulted in the seizure of the domains of online poker’s top operators, Nevada’s Senate Judiciary Committee passed a bill allowing the Nevada Gaming Commission to establish a regulatory framework for online poker. However, before that could go into effect, one of two things needed to happen.
Waiting for the federal government
The first was a federal law legalizing online poker. The second was written confirmation from the US Department of Justice that federal law allows for online gambling. Neither would come to pass before June 2011. Yet that was when Nevada Gov. Brian Sandoval signed the bill into law. As a result, Nevada officially became the first state in line to adopt legal and regulated online poker.
Lawmakers said the goal was to make sure Nevada had its ducks in a row. It wanted to be ready to go the day after the federal government gave its approval to state run online gaming, one way or another.
The race to offer online gambling is on
If it was a race to see which state would get online gambling first, it was more of the tortoise versus tortoise variety. It would take a year before any real online gambling legislation passed in the United States.
In December 2011, the United States Department of Justice released a memo including its legal opinion on the Wire Act. The opinion concluded that anything not related to a sporting event falls outside its reach.
The memo was meant as a response to Illinois’ and New York’s inquiries regarding the sale of lottery tickets online. However, some considered it as written confirmation on online gambling’s legality. Exactly what Nevada had been looking for.
Delaware gets there first
The tiny state of Delaware, the second-smallest in the United States outside of Rhode Island, became the first to pass online gambling legislation. Delaware Gov. Jack Markell signed the state’s online gambling bill into law in June 2012. At the time, the state promised online gambling would go live in early 2013.
Nevada gaming regulators spent 2012 defining its rules and regulations regarding online poker operations. It even issued the first licenses, but failed to flip the switch and open the market up. In the meantime, it looked like longtime Nevada gaming rival New Jersey would pass its own legislation and be the first to go live with online gambling. Then New Jersey Gov. Chris Christie vetoed one online gambling bill passed by the New Jersey legislature.
Nevada lawmakers were aware that Christie expected to sign an amended online gambling bill in the coming weeks. So, in an attempt to get there first, pushed an online gambling bill through the Assembly and Senate as an emergency measure on February 21, 2013. Sandoval signed the bill that same day. As a result, Nevada officially beat New Jersey to the online gambling punch. At least from a legislative perspective.
New Jersey passed its own online gambling legislation just weeks later. The major difference between the two would ultimately be that, while Nevada was ready to roll out legalized and regulated online poker, New Jersey planned to add full-on casino gaming to the mix.
Nevada’s Ultimate Poker makes history
None of the three states to pass online gambling legislation actually got an online gambling operation up and running before 9 a.m. PST on Tuesday, April 30, 2013.
That’s when Nevada’s Ultimate Poker became the first entity to launch legal and regulated real-money online gambling, in any form, in the United States. The company was a subsidiary of Station Casinos. Moreover, it was the exclusive online gaming partner of the Ultimate Fighting Championship.
As per the state’s newly enshrined regulations, players had to be 21 years old and physically located within state lines. Finally, after a two-year absence, online poker was back in the US.
New Jersey and Delaware, who were both still preparing to launch full online casino gambling, were suddenly in a race for second place.
New Jersey surges ahead
Both states eventually launched online gambling operations. While Delaware continues to struggle with limited player liquidity, the New Jersey online gambling market has flourished. In 2016, New Jersey online gambling operators posted a record $196.7 million in online gambling revenue. The number helped turn around a decade-long downturn in the state’s casino industry.
Nevada no longer releases revenue numbers for the state’s online operators. However, a look at the player pools on the available sites indicate it isn’t anywhere near as lucrative as New Jersey’s online gambling market. When the state did reveal revenue figures, they showed the state only generated over $1 million in monthly revenue one time.
In fact, while Las Vegas’ South Point Hotel, Casino & Spa and the World Series of Poker both opened up online poker rooms soon after the market launched, Ultimate Poker has since pulled out. About 19 months after launch, in November 2014, Ultimate Poker shut its virtual doors. The company cited a challenging operating environment as the reason behind its closure.
Nevada struggles to survive
In an effort to improve things, Sandoval and Markell signed a multi-state internet gaming agreement in February 2014. That agreement allowed residents of the two states to play online poker against each other. Interstate games came online in 2015, but have had little impact on the numbers. A predictable effect, considering the entire population of Delaware is less than half of Clark County, Nevada alone.
Nevada publicly sought a similar interstate agreement with New Jersey. However, the much larger East Coast state has yet to be convinced of the benefit of signing such a compact.
In the meantime, the Nevada Gaming Policy Committee has been throwing around the idea of opening up the market to full online casino gaming. It remains to be seen if the political will exists to take on internet gambling opponent Las Vegas Sands Corporation, and move towards legal and regulated online casinos in the state.