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Fitch Ratings: federal approval of Internet poker won’t happen until next year

Passage of an online gaming bill at the federal level is not going to happen in 2012.

That’s the assessment of Fitch Ratings Service in a report on Online Gaming that was released Thursday. The bond ratings service said political gridlock in Washington and retirement of key proponents of online gaming could push discussion of the issue into 2013.

“The Republican Party included ‘prohibition of gambling over the Internet’ as part of its 2012 platform, making passage of online gaming bill through the Congress unlikely in the near term,” Fitch analyst Michael Paladino said.

Putting politics aside, Paladino detailed the momentum for proliferation of online gaming on the state-by-state level. He believes federal approval will eventually take place.

He cited the U.S. Department of Justice’s reversal last December of its stance on the Federal Wire Act of 1961. Justice Department attorneys said the Act applies only to sports wagering, which has allowed states to freely pursue intrastate online gaming regulations.

Last month, a federal district judge ruled that poker relies more on skill than chance.

“Because the 2006 federal ban (the Unlawful Internet Gambling Enforcement Act) applies only to ‘game[s] subject to chance,’ the ruling, while not binding, suggests that the ban does not apply to poker,” Paladino said.

On Wednesday, Fitch downgraded its view on Caesars Entertainment Corp. from stable to negative, hinting that the casino operator could look at Chapter 11 bankruptcy protection as a method to restructure its sizable debt.

However, Paladino said a notable factor in the Caesars’ credit story “is the progression and potential implementation of online gaming.”

Caesars Interactive Division, which operates the World Series of Poker, online gaming operations in the United Kingdom and social gaming website Playtika, could be spun off as a separate public company.

 

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