Why Brick and Mortar Poker Needs Online Poker

This week I paid a visit to my old stomping grounds, Foxwoods Resort and Casino, with the intention of playing poker for the first time in a long time. While I always check out the poker room whenever I go, my recent visits to Foxwoods (and to Mohegan Sun for that matter) had me going there for dinner or to see a show with the missus, but this time was going to be different. This trip we would be spending an evening together and then going our separate ways the following day – her to the spa and me to the poker room. If you didn’t know (and why would you), I was an avid poker player before Chris Moneymaker’s 2003 World Series of poker victory ushered in the “Poker Boom” so I’ve seen both sides of the proverbial curtain. I’ve seen Foxwoods before the Boom (in fact I’ve seen it before Internet poker was anything but Planet Poker) and I’ve seen the buildup, the apex, and of course the regression of poker following UIGEA and later Black Friday. This column is specifically about Foxwoods, but I have little doubt the same dynamics can be found in poker rooms across the US, especially in California. Tuesday night in the Foxwoods Poker Room While I wouldn’t call it dead, there were plenty of open tables, plenty of short-handed tables, and very few waiting lists. It resembled the Foxwoods I remember from 2002 and not the Foxwoods of 2005, or even the Foxwoods of 2010 – which had already started to slink back into the abyss, where I had already noticed the stakes had dwindled and the room wasn’t as vibrant. I didn’t stay long Tuesday night, but what I saw was somewhat depressing – which could also be attributed to the poker room having been moved downstairs in what is a dark, low ceiling basement like room, far away from the sounds of the casino. There is no chance for the random passerby to stumble upon the poker room, a matter made all the more troubling when you see the old poker room location upstairs taken up by empty tournament tables, it’s a literal dead man’s zone with no activity. So my first bit of advice to Foxwoods: Flip the tournament and cash game rooms! Wednesday morning in the Foxwoods Poker Room I arrived for my actual session at about 8:30 AM, and was even more shocked than the night before at the lack of games going. I literally thought I had time-travelled back to 2001, as a few big Stud Games (and the handful of usual small ones were still going) as were the low limit holdem games. If Tuesday night’s crowd was disheartening, Wednesday morning was downright scary. The room did pick up by noon time, but it was still basically all low limit games with lots of moving pieces; also known as games going from full to short-handed with open-seating and back to full again. All in all, my visit to Foxwoods did not leave me with an optimistic appraisal of poker if things continue on their current path. The most troubling aspect Setting aside the lack of activity, the level of depression in that room was astounding. People would rant and rave over losses of a few hundred dollars. My feeling has always been if you can’t lose the money in front of you with a smile on your face than you are playing for more than you should. Play poker in  online you needs to be fun, and nobody in that room was having fun. You could tell these were players who got caught up in the Poker Boom and thought it would be rainbows and puppies forever. But now they are finding that the stakes they were crushing just a few years ago during the Boom no longer run on the regular, and the small stakes games are tougher and practically unbeatable due to the increased sophistication of casual players and of course the rake. As I explained to my wife, you see dejection on the casino floor all the time, even the occasional guy mumbling to himself as he pulls out a cigarette and looks for the exit, but in the poker room the emotion is more than this; it’s an unhealthy combination of anger and entitlement. You see people tearing up cards over $400 pots, and leaving the table screaming “nice call buddy.” It’s pervasive and other players are walking on egg shells, not even capable of consoling someone who took a bad beat with a “tough loss” as the person is already tilted. This has even trickled down to the floor and the dealers in some respects. Basically, the atmosphere in the Foxwoods poker room is not good, and is not conducive to bringing new people to the tables – assuming they could find the poker room to begin with, in its tucked away location. How online poker could help What I saw on this trip was definitely a bit disheartening, and only strengthened my feeling that brick & mortar poker needs online poker to survive. The two work together and this really is no longer a debatable point. I blame the lack of players and even the atmosphere on the lack of new players and money in the game. During the Boom years there was never a shortage of people who had no idea what they were doing. Whether they heard about poker at work, saw it on TV, or participated in play money games online there was always a constant stream of new money into the poker room. This dynamic was almost completely absent from the players in the room. For the most part the games were tight (lots of chopping) and the soft seats were basically people who played a few too many hands and/or couldn’t gauge their aggression properly. So what I witnessed was regulars just passing money around while the rake ate them all up. They knew it was going on; they understand their hourly rate has been cut so deeply that grinding out a living playing poker is almost impossible. But they do it anyway, apparently thinking things will change and waiting for the second “Poker Boom” we have been promised. What could help is the return of online poker. Online poker could bring those new players, and their money, back into live card rooms, and provide these new players with the incentive to seek out the Foxwoods poker room – have I mentioned its terrible location yet? This infusion of new cash and energetic players (who are just ecstatic to be playing real live poker and not so much interested in the results) would also boost the bankrolls of the grinders, and could lead to a domino effect of sorts, where the poker room is bustling, and smiling faces can be found within the sea of humanity. If brick & mortar poker is going to be kept from regressing even further we need the return of online poker. Previous Post Next Post About Steve Ruddock Steve Ruddock is a longtime member of the online gambling industry. He covers the regulated US online casino and poker industries for variety of publications, including OnlinePokerReport.com, PlayNJ.com, USPoker.com, and USA Today.

PokerStars Gets the Last Laugh

It was October 2006. President Bush had just signed the Unlawful Internet Gambling Enforcement Act into law. Poker sites were leaving the U.S. left and right. Party Poker, iPoker, Paradise Poker, Ongame, Boss Media, Cryptologic, 888 and many more all ran for the exits and banned their U.S. players. PokerStars was one of the few online poker sites that decided to continue accepting Americans. Its competitors scoffed at PokerStars and other sites that stayed in the market. The management of these companies that decided to play conservatively went on record as saying companies that stayed in the U.S. would run into problems, including difficulty in payment processing. The processing environment immediately after the UIGEA was enacted was much different than it is now for offshore sites. Neteller, a popular ewallet for Americans at the time, as well as players throughout the world, stayed in the U.S. market. It ceased U.S. operations after its founders were indicted in January 2007. Other ewallets that processed U.S. payments after UIGEA included PrePaidATM, QuickTender, UseMyWallet, eWalletXpress, ePassporte, PicClub, MyPayLinq, and EcheckUS. These ewallets slowly met their demise one at a time. Some were forced out by U.S. law enforcement. Others simply went out of business. The loss of each payment processor made the environment more difficult for sites like PokerStars to stay in the U.S. market. Many, including Full Tilt Poker, got to the point that processing U.S. payments was nearly impossible. PokerStars still found a way and ran away as the market leader. UIGEA Propelled PokerStars to Number One Spot PokerStars was not always the number one online poker site. Party Poker beat PokerStars it in terms of cash game players up until the UIGEA became law. PokerStars was already the tournament leader at the time. Party Gaming Settled with U.S. Authorities Party Poker’s parent company Party Gaming took the safe route by leaving the U.S. market, but yet it still felt the need to settle with the United States. Anurag Dikshit, one of the company’s founders, pleaded guilty to violating the Wire Act. He agreed to forfeit $300 million. In a court statement, Dikshit said, “I came to believe there was a high probability it was in violation of U.S. laws”. Party Gaming also settled with federal authorities. It paid a $105 million fine and stated at the time, “Certain of the U.S. customer transactions intended for PartyGaming that were processed by third parties, and other gaming and payment-related activity, were contrary to certain U.S. laws.” This makes the grand total Party Gaming and a founder spent settling with the U.S. $405 million. It also put a guilty plea on record, as well as statements that allude to some level of guilt. PokerStars Shines after Black Friday PokerStars found itself in hotter water. It was indicted and blindsided by the actions. It had funds seized and the legal position the company held for more than four years was being called into question. The company did not panic. It found a way to pay players and arguably came out looking better than it ever had. The fine paid was nearly double the combined amount paid by Dikshit and Party Gaming. There were two differences. PokerStars bought Full Tilt Poker for what amounts to the difference in fines. It also got to stay in the U.S. market for 4.5 more years that its competitors that fled where it may have raked as much as $2 million a day. Fast forward to 2014. PokerStars has maintained its dominant number one position, even after booting U.S. players. The rake made off those players helped it to build its software platform, increase its marketing, and attract top online poker talent to its stable of pros and customer service departments. Much of this can be attributed to rake generated by U.S. players. Then, of course, there is the $4.9 billion the founders will be taking home should Amaya Gaming shareholders approve the sale. This is the ultimate jackpot for a company that went against the opinion of its competitors. The previous dominance of PokerStars in the U.S. market has made its brand and player database valuable assets as the online gaming industry hopes to tap the largest economy in the world. Amaya Gaming hopes that purchasing the PokerStars assets and removing the founders will make it licensable in all states. Whether that is the case is debatable at this point, but it is a bet Amaya Gaming is willing to make. Had PokerStars bailed from the U.S. in 2006, it may not be any more valuable than bwin.party, which has a market cap of about $778 million as of June 27, 2014. Staying in the U.S. market proved to be the right decision for PokerStars and Isai and Mark Scheinberg are laughing all the way to the bank. Previous Post Next Post pokerstars About John Mehaffey John has been in the online poker industry since 2001. He has played online poker professionally and has produced content for many gaming niches. He currently plays online poker in Nevada at WSOP and Ultimate Poker.

California iGaming Week in Review: Topsy Turvy iGaming Rides

Can someone please put me out of misery already? California has sent me on one of the most gut wrenching, topsy turvy iGaming rides of any state and we’re only heading into July. I’m not saying California’s path to online poker isn’t an interesting one, but California’s 2014 online poker dreams seem to now be hanging on by the thinnest of strings (so next week it will probably look likely again), and instead of sorting out and solving its problems it feels like every week more and more problems are continually being introduced. With PokerStars ownership in limbo for the foreseeable future (September 30th appears to be the target date for the closing of the sale to Amaya Gaming) California’s plans for online poker seem to be on hold, and the state’s lawmakers have started to employ the “usual suspects” of stalling language as I’ll explain below. September is also the end of the line for this session of the California legislature, so it would seem that with the Amaya / PokerStars deal set for late September we can start looking ahead to 2015 already. As the saying goes: So close, yet so far away. Who even owns PokerStars? So why do we have to wait for the PokerStars sale to be finalized? Like waiting for the sale of a house to go through, Amaya is fairly certain that PokerStars is going to be theirs, but they can’t just move in yet – or in the case of California, advance their cause. They’re in the house measuring the wall space to see if their furniture will fit and picking out colors for the walls, but technically the house belongs to someone else until the sale is final. I’m as guilty as anyone when it comes to calling Amaya the new owners of PokerStars, but when it comes to issues like licensing, PokerStars still owns PokerStars until everything is officially signed, sealed, and delivered. The “Poison Pill” was perhaps potentially put in place on purpose First off, is that enough P’s in the header title for you? The latest rumors coming out of California (they’re not really new but they are picking up steam) is that several of the tribes that have lined up against PokerStars and their allies and are pushing for a “Bad Actor / Tainted Assets” clause are not too keen on online poker in the first place and see this issue as something that can be used to kill the bill. If these rumors are true it would seem that the whole affair this year has been little more than a dog and pony show orchestrated by some (not all but some) gaming interests in an effort to not appear as the “bad guys” in this, as nobody wants to be blamed for costing California tens-of-millions in tax revenue and licensing fees. Lawmakers sense iPoker slipping away Earlier this year there were several online poker champions emerging in the California state legislature, but recently these champions seem to getting cold feet, as their rhetoric has changed from one of eternal optimism and “Ra-Ra” speeches to the cautious, looking at everything, approach. According to StandUpCA.org, the authors of the original bills are not simply going to rubber-stamp the bill proposed by the coalition of 13 tribes, “Correa and Jones-Sawyer last week told tribal leaders they will not automatically sign off on draft amendments to the bills agreed to by the politically powerful tribal coalition,” the website states. “Senator Correa intends to be very deliberate in reviewing the tribal coalition’s i-poker proposal,” said Arthur Terzakis, director of the Senate Government Organization Committee, “… he has asked for input from the state’s attorneys and regulators.” A source close to Reginald Jones-Sawyer (the author of the Assembly bill) stated, “He wants to make sure this is done right.” Even PokerStars partners are measuring their words While overtly they are saying all the right things [paraphrasing], “this only improves our partnership” and “PokerStars is proving once again why they are the best in the world” if you read between the lines you’ll start to see that there is a lot of uncertainty even among PokerStars partners (The Morongo Band of Mission Indians, the Bicycle Club, the Commerce Casino, and the Hawaiian Gardens Casino) evidenced by the remarks of Haig Kelegian, Managing Director, Bicycle Club to gigse.com: California iGaming Barometer It’s looking liked we’ve got some storm clouds on the horizon for the remainder of 2014. So unless something drastic occurs, or some miracle 11th hour deal is agreed to, California can be crossed off potential 2014 online gaming expansion nominees, joining Massachusetts, Pennsylvania, and New York. But hey, there is always 2015! Previous Post Next Post amaya|bike|commerce|hawaiian gardens|morongo|pokerstars About Steve Ruddock Steve Ruddock is a longtime member of the online gambling industry. He covers the regulated US online casino and poker industries for variety of publications, including OnlinePokerReport.com, PlayNJ.com, USPoker.com, and USA Today.

PokerStars Sale Harms Cali Online Poker Now; Helps Down the Road

With the sale of PokerStars to Amaya Gaming, online poker expansion in California could be breathing its last harried gasps of 2014. The main point of contention all along has been the inclusion of PokerStars in the market, especially after it partnered with several entities, and this point of contention seems to only be growing more volatile since the announcement of the sale. There are also several other smaller, but still significant issues, from revenue sharing to the role (if any) the California horse racing industry will play. I’m not saying it’s over in California, but there are only a couple chapters left in the book and there doesn’t seem to be enough time for a new plot twist to emerge. In other words, if California online poker was a vampire it would be high noon, Dr. Van Helsing would be prying open the coffin lid with Jonathan Harker standing at the ready with a wooden stake in hand. How did we arrive at this point The most amazing part of this entire saga is that California would seem to be the perfect candidate for online poker expansion. The state is massive, with a population of 38 million, and capable of supporting a robust online poker industry on its own, without joining interstate compacts or sharing liquidity. The state is one of the most liberal when it comes to gaming, having allowed certain forms of poker to be played legally since the state was incorporated, and more recently allowing tribal resort casinos to be built. That being said, the numerous and seemingly always at odds California gaming interests have struggled to come to any type of consensus on how to adopt online gambling, despite trying for the past five years. 2014 initially seemed like the stars were finally aligned, but an announced partnership between PokerStars, the Morongo Band of Mission Indians, the Bicycle Casino, the Commerce Casino, and the Hawaiian Gardens Casino derailed any chance of a complete consensus being reached. The partnership did bring many tribes and card rooms together, but rather than several different warring factions with some disagreement and some overlap, we now have two powerhouse factions at complete odds with one another. With PokerStars being allied with certain interests the remainder of the state’s power players lined up on the other side, calling for a sweeping bad actor clause to be added to the bill, a measure that PokerStars and its consortium called a deal-breaker and vowed to fight to the bitter end, even if it meant going to the courts. PokerStars has even enlisted the help of a constitutional law professor from Harvard University to tear apart the bad actor arguments. Why the sale to Amaya makes things worse in California The sale to Amaya makes the exclusion of PokerStars far more difficult down the road, as labeling the current version of PokerStars a “Bad Actor” would also require attaching that same label to Amaya Gaming. Furthermore, it’s simply harder for PokerStars detractors to make a reasonable case for why the company should be barred. They can cite whatever reasons they want but all anyone is hearing is that they don’t want to compete against PokerStars. By purchasing PokerStars, Amaya Gaming has effectively made it impossible for the coalition of 13 tribes to back off their support for a “Bad Actor” clause (not that it seemed like they were going to anyway) since regulators would almost certainly find PokerStars suitable for a license, just as they are likely to do in New Jersey. Light at the end of the tunnel The good news is it already appeared 2014 was slipping through California’s so the sale may be the straw that broke the camel’s back but it’s far from the main reason. What the sale does do is give PokerStars a second chance in New Jersey, and once the company is licensed (found suitable) in one locale other locales will find it much harder to keep the company out, especially when their new parent company is licensed in several jurisdictions and supplies B2C games (both online and brick & mortar) to virtually every operator in the country. So what we have is the sale hurting California’s chances in the short-term, but perhaps helping California’s chances in 2015 by removing the key obstacle which is whether or not PokerStars should be licensed. Previous Post Next Post amaya|bike|commerce|hawaiian gardens|morongo|pokerstars About Steve Ruddock Steve Ruddock is a longtime member of the online gambling industry. He covers the regulated US online casino and poker industries for variety of publications, including OnlinePokerReport.com, PlayNJ.com, USPoker.com, and USA Today.

Measuring the Effects of Tribal Gaming in the United States

Thirteen of California’s most powerful tribes find themselves locked in a power struggle over the language of the state’s proposed iPoker legislation. Their influence is arguably the single biggest driving factor behind which gaming operators will be included if/when the industry goes live, who will be left out in the cold and how those lucky enough to be accepted must conduct their affairs. Hard to believe that only 27 years ago these same tribes would have had absolutely no say whatsoever. But as CalvinAyre.com recently reminded us via an infographic (found below), times have changed, and today Indian gaming is as much a part of American culture as baseball and apple pie. A brief history lesson From the mid-19th century until the 1970’s most Indian Reservations were stricken with high poverty rates, little economic opportunity and government dependency – largely due to the placement of most reservations in undesirable areas. It wouldn’t be until the 70’s that tribes in California and Florida decided to do something to facilitate the growth of their stagnating economies. The plan: open a few bingo parlors. Little did they know what would happen next. Tribes in other states soon caught wind of the happenings in CA and Florida and would soon introduce bingo parlors of their own. In fact, the industry grew so fast that commercial casino operators began complaining that the tribes were siphoning patrons, and subsequently revenues, away from their commercial casinos. In the 1980s, state governments began fighting for the right to tax Indian operated bingo parlors, also arguing that the industry needed to be regulated by government. Naturally, some tribes saw government intervention as a threat to their sovereignty. Tensions rose. By 1988, the Federal Government would feel compelled to step in, ultimately resulting in the passage of the Indian Gaming Regulatory Act (IRGA) in 1988. To summarize, the IGRA segmented gambling into three classes and authorized the establishment of the National Indian Gaming Commission. As a provision, in order to run Class III gaming operations – which included slot machines, and banked games – the tribe must negotiate a compact with the state. Furthermore, the Federal Government would recognize Indian self-sufficiency and only step in when criminal activities or unfair treatment towards players are suspected. It is also the job of government to ensure that tribal gaming revenues are used towards the betterment of the tribe. Since the IGRA’s establishment, Indian gaming has expanded at an unprecedented pace, ballooning from a $100 million niche in 1988 to a nearly $28 billion a year industry by 2012. But in the three states that have legalized Internet poker, Indian tribes are either not present or have little influence over operations. With Pennsylvania and California set to enter the mix, that’s about to change. Highlights of Calvin Ayre infographic
Indian gaming accounted for 43 percent of all gaming revenue in the United States in 2012, only 4 percent less than commercial casinos. That equates to $27.9 billion out of the $66.3 billion generated by the nation’s gambling facilities .
Tribal gaming is prevalent in 30 states, and of the 20 of where it is not, 16 of those do not inhabit federally recognized tribes. Only Utah, Missouri, Massachusetts and Rhode Island prohibit Native American gaming.
240 out of the 566 federally recognized tribes operate one or more gaming venues. There are currently 460 Native American owned and operated casinos, bingo parlors and other gambling halls in the US.
Indian casinos generate $91 billion in non-gaming related activities, or nearly 3.3 times that what they do from gaming alone.
In 2012, Indian tribes forwent $12.3 billion of their revenue to federal, state and local governments.
Tribal gaming accounted for 679,000 jobs and $30 billion in paid wages. This Infographic is brought to you by CalvinAyre.com Predicting the impact of regulated online poker on CA’s tribal gaming industry There is no denying the influence of tribal factions in California. Card rooms are limited to spreading player-banked games, effectively ruling out slot machines, craps, roulette and traditional forms of blackjack and other table games. Conversely, tribal casinos in the state can host just about any gambling game they please. But with regards to online poker, the tribes ability to feature more game variants may prove to be a detriment. To elaborate: because cardrooms like the Commerce and the Bicycle are restricted in what games they can host, they’ve based their reputation almost exclusively on the most popular non-house banked game of them all – poker. Take the Commerce for example. At 240 tables, it houses the largest poker room in the world. Not only that, poker players at the Commerce are treated like royalty. And with the construction of the Crowne Suite Hotel in 2001, the one drawback to visiting the Commerce from out-of-town has all but been eradicated. So I ask you this, should the Morongo Band of Mission Indians get its way, and PokerStars is permitted reentry into the US, who benefits from the cross-promotional opportunities afforded by a partnership more: The Commerce, which already hosts one of the most popular stops on the WPT and is the second home of a myriad of recognizable pros, or the Morongo, who’s only casino touts a generally half-filled 22 table poker room? The answer seems clear. Granted, tribes like the Pechanga boast formidable live poker arenas, but in the end, it’s the cardrooms that likely benefit the most from online poker, not the tribes. Then again, PokerStars could always just build a new branded poker room at the Morongo like they plan to do at Resorts in New Jersey, and my theory flies right out the window. In either case, the mere fact that tribal factions in California are essentially in control of the state’s iGaming fate speaks volumes to how far they’ve come since their days of impoverishment and economic hardship. Previous Post Next Post bike|commerce|morongo|pechanga|pokerstars About Robert DellaFave Robert DellaFave writes for a variety of online gaming sites and is also working on programming a poker simulation creative enough to beat the best. Follow Robert on Twitter @DivergentGames and on Google+

Pennsylvania Gaming Control Board to Senate: “We Can Regulate Online Gambling”

On Wednesday the Pennsylvania Senate Community, Economic, and Recreational Development Committee hosted a hearing that discussed, among other things, the legislature’s current efforts to expand into online gambling. The hearing featured a number of witnesses from the Pennsylvania Gaming Control Board (PGCB), who hit on topics ranging from regulations and safeguards, to problem gambling and the health of the state’s horse racing industry. Wednesday’s hearing occurred just a week after the state’s casino stakeholders appeared in front of the Pennsylvania Senate CERD Committee to talk online gaming expansion and gaming reforms. Both hearings provided positive momentum for online gaming expansion in the Keystone State, but there are still quite a few wrinkles that will need to be ironed out if iGaming is going to become a component of the state’s budget. That budget that is due in just 14 days, although there seems to be wiggle room for an extension. Regulators unafraid of online gambling The key takeaway from Wednesday’s hearing? The Pennsylvania Gaming Control Board is ready, willing, and able to tackle online gambling. PGCB Executive Director Kevin O’Toole was the first witness to tout the PGCB’s capabilities and willingness to take on this oversight role. “The Board is confident [Internet gambling] can be regulated,” O’Toole stated. The PGCB has “experienced and capable regulators,” O’Toole told the committee, adding that the board would be ready to regulate Internet gaming in an efficient and controlled manner if and when it’s legalized. According to O’Toole, the PGCB could have regulations drafted, licenses handed out, and the sites online within nine to twelve months of the legislature passing an online gambling bill. O’Toole qualified this aggressive timeline by saying it was dependent on the speed of the license application process. Another witness, Michael Cruz, the Chief Technology Officer of the PGCB, said the state would draw heavily on New Jersey’s experiences. “I’m not interested in reinventing the wheel,” Cruz told the committee. Cruz added that Pennsylvania regulators would look towards the New Jersey model in drafting Pennsylvania’s regulations. What are the remaining issues? Unlike California, the policy differences among Pennsylvania’s potential iGaming stakeholders don’t seem as hard-line. In-person registrations and whether Category 3 casinos should be allowed to apply for an online gambling license appear solvable. The pricklier issues seem to be differences between the state’s casinos and the legislature when it comes to an acceptable tax rate. The casinos and most iGaming advocates would like to see the tax rate set around 14% (the rate in Representative John Payne’s HB 649) while the recently introduced Senate gaming bill sponsored by Senator Kim Ward, SB 900, calls for a 54% tax rate on online gambling. However, these are merely the iGaming issues the state is wrestling with. The senate is trying to pass a comprehensive gaming reform bill, not a standalone online gambling bill. It’s the policies in the other sections of SB 900 that seem far more contentious. Liquor, Category 3 restrictions, and OTB’s are the REAL issues The issues that could sideline the bill (including online gambling) appear to be the following proposed brick-and-mortar gambling reforms:
Loosening restrictions on Category 3 license holders – specifically, the requirement that casino players must be guests or “members” of the casino.
Increasing the number of off-track betting locations (and slot machines at these locations) in Pennsylvania.
Making liquor available 24/7 at casinos. Category 3 Under SB 900, for a one-time $5 million fee, the state’s two Category 3 casinos would be able to do away with their “membership” requirements. Category 3 casinos are in favor of this proposal, while virtually every other casino is opposed to it. The strength of opposition seems contingent on the proximity to the Category 3 casino. This provision would not allow Category 3 license holders to add more slots or table games. Currently Category 1 and 2 casinos are permitted 5,000 slot machines and 250 table games, while Category 3 casinos are permitted 600 slot machines and 50 table games. OTB locations Another provision in SB 900 would allow casinos (this appears only to apply to racinos) to open multiple OTB parlors and place slot machines at them. Each OTB (there could be as many as 32) would cost $5 million with the slot revenue taxed at 54%. Category 1 racinos are all for this expansion effort, while Category 2 casinos (most notably SugarHouse Casino) are opposed to this type of expansion. Liquor around the clock The final sticking point is a provision that would allow casinos to serve liquor around the clock, which once again calls for a $5 million permit fee. Every casino is in favor of increasing the number of hours they are allowed to serve liquor, so this issue will pit legislator against legislator, as many are opposed to increasing the number of hours casinos can serve liquor. Upshot For the bill to move forward, these three non-Internet gaming issues (which seem far more contentious and far more difficult to solve) need to be addressed or scrapped. Alternatively, iGaming could be separated from the other parts of SB 900 and added to the budget. Pennsylvania’s iGaming future may very well hinge on his happening. Photo by Bestbudbrian used under license CC BY-SA 3.0.

Online Gaming Is A Win / Win For Pennsylvanians, Say Payne And Kotik

Online gambling in Pennsylvania is starting to look like the real deal. In an op-ed that appeared in PennLive.com on Wednesday, Representative John Payne and Representative Nick Kotik made a strong case for legalizing online gambling in Pennsylvania. The two are the sponsors of HB 649, a bill that would legalize and regulate online poker and online casino games in Pennsylvania. Payne and Kotik are the Chairman and Democratic Chair of the House Gaming Oversight Committee, respectively. Making the case for PA online gambling The op-ed begins with Payne and Kotik making the following arguments for legalization:
Pennsylvanians are already gambling online and instead of Pennsylvania receiving millions of dollars in tax revenue, the money is going overseas.
These overseas sites are often loosely regulated or unregulated, posing a safety concern for players. “It makes no sense to leave online gaming unregulated, and sit idly while the state loses out on this income and players are unprotected,” Payne and Kotik noted. “Enacting this legislation would regulate an industry that is operating without any type of protections right now. It will provide funding for the state and make Pennsylvania casinos more competitive.” As if these statements weren’t powerful enough, the op-ed concludes with the simple yet poignant sentence, “Simply put, regulating online gaming is a win/win for Pennsylvanians and the state.” Public support for legalization Citing a recent poll commissioned by Caesars Entertainment in which 58% of respondents believed online gambling should be strictly regulated, Payne and Kotik remarked, “Pennsylvanians support what we’re trying to accomplish with our bill.” The duo went on to detail some of the other positive results of the poll, including:
65% of respondents felt online gaming revenue should be taxed and the proceeds used for vital state programs.
80% of respondents believed the state should make online sites use new technologies to assure that minors do not have access to online gaming.
52% of respondents said online gaming operators should be required to use technology that limits losses, deposits and the amount of time an individual can play. These results were a direct contradiction to the results of a widely-criticized Coalition to Stop Internet Gambling poll just weeks prior. HB 649 would deal with these issues Payne and Kotik also explain how their bill would bring about the consumer protections Pennsylvanians supported in the poll results. “Our bill offers the types of strict regulations needed to make online gaming work as it should in our state,” Payne and Kotik state. The safeguards that would be created by HB 649 are many and include:
Setting deposit and loss limits.
Employing geolocation technology capable of prohibiting out of state players from participating.
Utilizing player verification checks in order to prohibit minors from gaining access.
Enacting new criminal penalties to curtail illegal, unlicensed sites. The economic implications are also persuasive The op-ed finishes by detailing some of the revenue projections that have been submitted. According to Payne and Kotik, the industry could bring in as much as $120 million in its first year (this figure is likely a combination of tax revenue and licensing fees), and as much as $113 million annually. A more cautious estimate was proffered by Robert DellaFave at OnlinePokerReport.com. Upshot Payne and Kotik’s sustained and vocal support for online gambling is a positive sign for iGaming expansion in Pennsylvania, and hearkens back to Senator Raymond Lesniak’s vociferous crusade to bring online gambling to New Jersey. This is something that, as Chris Grove has noted, has been absent in California, and a key reason Pennsylvania has jumped ahead of California as the most likely state to pass an online gaming bill in the opinion of many industry experts.

Pennsylvania Is The New California And California Is The New Mississippi

If the recently concluded C5 Online Gaming Conference in New York City is any indication, the next state to pass online gaming legislation will be Pennsylvania. Speakers at gaming conferences tend to paint the industry in a positive light and offer cheerful outlooks for gaming going forward. C5 was no exception to this rule. However, this positive spin is often generalized and spoken about in abstract terms, as few of the industry’s analysts and consultants are willing to make steadfast declarations on the ever-changing gaming landscape. And the other group of conference attendees – politicians and regulators – are masters at deflecting questions and leaving the door open for all possibilities. There was one exception at C5, and that was Pennsylvania’s chances of passing an online gaming bill in 2015. an issue several panelists seemed willing to discuss and bullish about. No need to parse these comments One panelist, former New Jersey Division of Gaming Enforcement and New Jersey Casino Control Commission member and current Amaya Gaming Chairman of Compliance, Thomas Auriemma, went so far as to say it is “likely” Pennsylvania will pass a bill in 2015, and that the Pennsylvania bill “will move” this year. Auriemma’s comments should be given a lot of credence, as his previous positions in New Jersey have given him intimate knowledge of the dynamics in Pennsylvania, as well as the principles involved. An online gaming bill would likely be part of the state’s budget, which is due to be passed in June. This leaves precious little time to get the ball rolling in the legislature. However, as Auriemma noted, budgets don’t have to pass on time (nor do they). So we shouldn’t consider June a hard deadline for an online gaming bill in Pennsylvania, although he also indicated that it could be passed by June. Another panelist suggested that with the continued turmoil in California, all eyes should be turned to the Keystone State. Throughout the day, whenever Pennsylvania’s progress was broached by a panel there were many nods of agreement from other panelists and audience members. These sentiments were also espoused in private conversations. Steady online gambling regulation progress in PA Unlike California, where online gaming expansion has been on the table for at least five years with little progress made, Pennsylvania is currently on a trajectory similar to New Jersey in 2012 and 2013. What I refer to as the three year plan:
Year 1: The issue becomes a topic of discussion and a bill may or may not be introduced.
Year 2: Legislation is introduced and hearings are held but the bill dies in the legislature.
Year 3: Legislation is reintroduced, more hearings are held and the measure is passed. Pennsylvania is currently in year three. Momentum is clearly on PA’s side Not only is Pennsylvania in year three of online gaming talks, but several factors have accelerated the online gaming expansion process in Pennsylvania. A new GO Committee Chairman John Payne, a pro-online gambling legislator, took over control of the all-important House Gaming Oversight Committee. His predecessor, Mauree Gingrich, was extremely leery of online gaming expansion, telling local press in 2013 that online gambling was not a priority, nor was it on the legislature’s radar. When Payne was given the Chairmanship of the GO Committee, he outlined his goals thusly: “I view this new responsibility as a chance not only to ensure integrity in the industry, but explore opportunities for expansion and reform that could generate additional revenue for our economy.” Earlier this year I spoke with Chairman Payne and he reiterated his commitment to keep Pennsylvania gaming healthy and competitive, saying, “My mission statement is to keep gaming in general healthy, but in particular to make sure our casinos stay healthy and competitive against our surrounding states.” “The thing I don’t want to see happen is four casinos in Pennsylvania close like happened in Atlantic City. […] “For me, I’d rather have Internet gambling, fantasy sports betting, fix the small games of chance bill [bar machines], than vote to raise income or sales taxes,” Payne said. Bipartisan support Payne also has a willing partner on the opposite side of the aisle, as Democrat Nick Kotik (the Democratic Chair of the GO Committee) has cosponsored Payne’s online gaming bill, HB 649. Hearings, and hearings, and more hearings With Payne at the helm, Pennsylvania has hosted half a dozen (and counting) hearings on online gaming expansion. Aside from Las Vegas Sands representatives, there appears to be a strong appetite among Pennsylvania’s gaming interests and lawmakers, who not only are hosting hearings, but dressed-down Las Vegas Sands rep Andy Abboud and his demagoguery of online gaming. They also passed HR 140, a resolution urging Congress not to pass RAWA. May I have this dance? Finally, several of Pennsylvania’s brick and mortar casinos have entered into partnerships with online operators. This is a particularly strong indicator that positive steps are being made, as the same situation occurred in New Jersey prior to the bill being passed, here and here.

Pennsylvania Online Gambling Faces Uncertain Future After Failed Votes

The Pennsylvania House of Representatives considered legislation to legalize and regulate online gambling on Tuesday, but after a series of votes, iGaming’s future is still uncertain. What happened in PA on iGaming The effort to move online gambling regulation forward in the state cropped up suddenly this week after reports that it would be considered in June. The old vehicle — HB 649 — was left behind. Lawmakers made an attempt to add the massive omnibus gambling expansion — iGaming included — to HB 1925. At first, an amendment was offered that included a contentious provision that would allow private establishments — outside of casinos — to offer video gaming terminals. That amendment was defeated, 122-66. Next, another amendment — this time with no VGTs — was brought forward by Rep. John Payne. (Payne chairs the House gaming committee and also is the architect of the gambling expansion effort.) After a lengthy debate, that amendment was also defeated, 107-81. That left observers wondering if online gambling had drawn its last breath, at least temporarily. Wait, not so fast on iGaming’s obituary Online gambling isn’t dead yet, however. The House approved motions to reconsider both gaming amendments right after they were defeated. The best guess for what’s happening? It’s a bit of a gamesmanship between lawmakers who want to authorize VGTs and those that do not. The VGT provision has long been thought to be a poison pill for the gambling expansion if it reaches the Senate. What’s next for PA online gambling? The amendments could be considered and voted on again, as soon as Wednesday. Online gaming proponents would like to see the non-VGT amendment get through. The gambling expansion and online gambling are seen as a way to deal with a deficit in the state’s pension system. Previously, online gaming had been a part of budget talks in the state because it could generate tens of millions of dollars in revenue annually. Pennsylvania has long seemed like the front-runner for the next state to authorize online gambling. While it’s difficult to handicap the effort’s chances right now, it’s still not dead.

Getting It Wrong On PA Online Gambling Again: Some Newspapers Just Don’t Get it

I wrote about the oft-cited misconception that online gambling legalization is an expansion of gambling after two overly skeptical editorials appeared deriding the legislature’s efforts to pass an online gambling bill. This week a third paper made the same mischaracterization, and it’s common for the state’s newspapers to blast the idea of online gambling. It even went a step further, invoking fears of the long-debunked myth of cannibalization. What this newspaper says about online gambling The new editorial makes the same mistake as its predecessors, as the Delaware County Daily Times echoes the thoughts of the Philadelphia Daily News and the Lehigh Valley Express Times. The editorial board falsely believing the legalization of online gambling in Pennsylvania would authorize something that doesn’t currently exist, and somehow increase access to a form of gambling everyone in the state already has access to. The editorial board for the DelCo Times states: Getting it wrong on iGaming again As I noted in my rebuttal from last week, this line of thought just doesn’t pass the smell test. A person living in Pennsylvania can gamble online from the privacy of his or her own home today, with or without the state passing a bill to legalize online gambling. Wherever you currently live in Pennsylvania, you can go online and start gambling. All legalization would do is:
Institute much needed consumer protections;
Place the industry in the capable hands of the state’s land-based casinos;
Allow the state to benefit from taxing the industry;
Bring the industry under the regulatory sway of the state’s gaming control board. But wait, there’s ‘cannibalization’ too But the DelCo Times also goes a step further, insisting that online gambling will not only increase access to gambling, but that it will cannibalize the state’s existing casinos: No one ever seems to mention what might happen next, and what kind of effect – and decreased revenue – such a move would have on existing casinos if people no longer have to get off their own sofa to visit a room poker in dewapoker. Many, in particular Harrah’s right here in Chester, are struggling now. We would imagine the thought of online gaming might not exactly be music to their ears. Someone should tell the editorial board that this theory has been debunked, and the notion Caesars would be against PA online gambling legalization is absurd. Despite the baseless speculation of the DelCo Times editorial board, the owner of Harrah’s Chester, Caesars Entertainment, is not concerned about cannibalization. It has stated many times at Pennsylvania hearings how beneficial online gambling has been to their properties in New Jersey. In April of 2015, Michael Cohen, the senior vice president and general counsel of Caesars Interactive, testified in front of the Pennsylvania House Gaming Oversight Committee that the “practical effects that we have seen is it has not cannibalized our business. If anything, it has enhanced our bricks-and-mortar business.” He repeated the company’s line in a Senate hearing. Old and tired arguments about online gambling Maybe if these editorial boards attended some of these hearings (or at least read some transcripts), they would have a better understanding of the impact of online gambling. Instead, they just trot out old arguments that have long since been discredited. And maybe they’d be able to avoid the embarrassment of making s statement such as: “Many, in particular Harrah’s right here in Chester, are struggling now. We would imagine the thought of online gaming might not exactly be music to their ears.” That same property’s parent company is pushing for online gambling legalization because it has helped bolster their business in New Jersey. Message to DelCo Times editorial board: It is music to their ears! Harrah’s Chester wants online gambling. And while Harrah’s may be down, most Pennsylvania casinos doing just fine, with eight straight record months. One does not have to look very hard to see how Caesars feels about online gambling legalization, but why bother looking, or reaching out and asking, when you can just guess? How does the saying go? Better to remain silent and be thought a fool than to speak and remove all doubt.