I. Nelson Rose

On March 25, 2010, Governor Steve Beshear of Kentucky launched his latest attack against online gaming companies. He previously tried to seize Internet domain names using ancient anti-slot-machine laws. Now he is suing Pocket Kings, operator of Full Tilt Poker, for all the money lost by Kentucky online poker players, times three.

Indian casinos may soon overtake commercial casinos. Total gaming revenues for tribes appear to be more than $26 billion a year, while the American Gaming Association reported the 12 commercial casino states generate less than $31 billion in 2009.

But Indian gaming is getting a boost from changes in the law, or, more particularly, from those who make the laws.

"If we read Ohio law as controlling the contract in question, the parties probably are guilty of a crime under Ohio law, the contract is void, and both parties could be extradited and prosecuted together in an Ohio criminal court." -Gilbert Stroud Merritt, Jr., Concurring, in Wong v. PartyGaming

A year ago, I wrote, "Party Poker won a nice victory in federal court in Ohio, because its Terms and Conditions say that all disputes will be heard in the courts of Gibraltar."

Hidden in the compact recently signed by Governor Charlie Crist and the Seminole Tribe is a provision giving Florida's licensed cardrooms the right to spread no-limit poker.

Crist felt he had to give these operators something, because he had just agreed to let the tribe have a virtual monopoly on casino gambling for 20 years.

Sometimes the most important part of a legal document are the words that are not there.

The new compact, for example, expressly allows the Tribe to have slot machines and banking card games, like blackjack.

Internet gaming bills are pending in the U.S. House of Representatives, mainly introduced by Barney Frank (D-MA). And the Senate has its own online gaming bill too, the "i-Poker Act," authored by Sen. Robert Menendez (D-NJ).

Both sets of bills appear to set up a federal licensing and regulatory system in the Department of the Treasury. But both allow state and tribal gaming authorities to be approved by Treasury to certify applicants and even take over all regulation.

The movement to legalize Internet gaming has come mainly from the U.S. House of Representatives, most notably from Barney Frank (D-MA). Frank has so much seniority and the Democrats have such a large majority, that he can get any bill he wants through the House. But to become law, it must also pass the Senate, and be signed by the President. Barack Obama will not veto a bill from the Democratically controlled Congress.

Which means everything depends upon having someone shepherd a bill through the Senate.

What do insurance, commodities trading, and state lotteries all have in common? They were all originally outlawed as forms of gambling. The major fight today over whether poker should be legalized usually revolves around the question of whether it is predominantly skill or chance.

But this unnecessarily gives up part of the political as well as legal battleground. Many activities that are indisputably gambling are now operated under state licenses, or by the state itself. And other activities, such as insurance and commodities, are today generally not even thought of as gambling.

The U.S. Department of Justice recently made an astonishingly bad $34 million bet.

The size of the cash isn't the issue-$34 million is peanuts for the federal government.

The DoJ is betting that it can scare Americans out of playing poker online.

But prosecutors don't seem to realize that they will probably lose this bet. And when they do, the decision will be read that Internet poker is legal.

Most casino regulatory systems are either too new or too old.

When a system is new, regulators and lawmakers have freedom to play at being social engineers. New regulators are often inflexible about allowing rules to change to match real-world experience. This is how you end up with docked riverboats throwing all their patrons off the ships at the end of phantom cruises.

But if a system is too old, regulators become captives of the casinos they are supposed to police.

Kirk Kerkorian, who controls MGM Mirage, the second largest casino company in the world (Harrahs is first), is one of Nevada's best poker players.

Actually, I don't know if he ever plays poker with cards today. But when it comes to trading multi-hundred million dollar casino properties, Kerkorian usually comes out a winner.

He started in 1962 by buying 80 empty acres on the Las Vegas Strip for $960,000. It's now Caesars Palace. In 1969, he bought the movie studio, MGM, and turned it into a casino company.