Wall Street Hedge Fund Manager Bets Against Online Poker Legislation in 2012

Written by:
Aaron Goldstein
Published on:
Wall Street

Managing member at KIF Capital Management, Ken Frankel, laughed off the idea that so many in the Internet poker community believed Senate Majority Leader Harry Reid would come through as a white knight last week. 

From Business Insider:

Proponents of internet poker seem unable to grasp Politics 101.  It is amazing that there was even speculation about attaching poker legalization to a bill to extend payroll tax cuts and unemployment benefits. The Democrats were happy the Republicans were willing to pass it without asking for spending offsets. There was no way they would jeopardize passage by placing anything controversial into the bill. It does not matter that Senate Majority Leader supports the concept or that the leading Senate opponent of internet gambling for years Senator John Kyl of Arizona is now amenable to it. It still needs to get past the Republican controlled House of Representatives that is more socially conservative than any House majority in history.

Frankel makes some interesting points.  But he also asks the multi-billion dollar question:  Does federal legislation of Internet poker really matter?

After all, it now appears that individual states are moving forward with plans to legalize the activity on their own turf while considering multi-state platforms that essentially provide a much more viable player pool (i.e. Iowa would be more than happy to act as a hub for other Midwestern states). 

How important is Nevada legalizing online poker? Not as important as some will have you believe. Most of the population of the State lives in Clark County (Las Vegas) and Reno, which both have plenty of live poker games minutes from people’s homes. Without the ability to play people in other states and countries,   it is doubtful there will be a sufficient number of “fish” (less than optimal players) to keep the games going. The only market will be online pros playing each other and that won’t last.  I have heard theories of many online poker players moving to Nevada if online is legalized, but to play whom? If they live in Vancouver, they can play people all over the world, they are going to move to Las Vegas so they can play 10 people in Elko?

On top of all of this both Indian tribes with casinos and state lotteries oppose federal legalization efforts. The Indians have more political influence than the commercial casino operators like Caesars and MGM.

Aaron Goldstein, Gambling911.com

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