A Look at a Future U.S. Online Poker Market Part TwoOthers Trying To Get A Piece Of The Pie |
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Note: This is part two of a three-part look at a potentially licensed and regulated online poker market in the United States. You can find part one here. Be sure to check back on Wednesday for part three.
Even before Black Friday, online poker platforms were jockeying for position with brick and-mortar casinos in the United States, all in an attempt to be a participant in a licensed and regulated online poker market.
No place is more indicative of the trend than Las Vegas. In March, amidst an intrastate backed bill by soon to be indicted PokerStars, Wynn Resorts announced its entry into a “strategic relationship” with the Internet giant. The duo was planning to split profits 50-50 from a PokerStarsWynn.com. Casino boss Steve Wynn’s decision came after previously opposing legalized Internet gaming and calling it impossible to regulate, according to the New York Times.
While the business deal disintegrated, the Nevada Gaming Commission’s unanimous approval of the suitability of a relationship between Caesars Entertainment, owner of the World Series of Poker brand, with subsidiaries of Israel-based operator 888 has held to the present day. The arrangement allowed the U.S. land-based gaming company to operate a site in the U.K but not on U.S. soil.
The deal between Caesars Entertainment and 888 was the first of its kind for a Nevada licensee and was quickly followed by the Wynn-PokerStars alliance, and finally with Fertitta Interactive, an entity established and co-owned by Station Casinos’ founders, getting in bed with Full Tilt Poker. Full Tilt subsequently was unable to pay out balances to players, and is currently not operating.
In addition, rumors have surfaced that MGM and PartyGaming, parent company of the once largest U.S. facing poker site in PartyPoker. com, have formed an alliance to offer an online poker product. In April 2009 PartyGaming reached a non-prosecution agreement with the U.S. Attorney’s Office for the Southern District of New York. As part of the agreement, PartyGaming paid $105 million in fines with the assurance that the U.S. government will not prosecute the company or any of its subsidiaries “for providing internet gambling services to customers in the U.S. prior to the enactment of the Unlawful Internet Gambling Enforcement Act (UIGEA) on 13 October 2006.” While land-based casinos were acquiring new partners, some software providers were making moves in an effort to position themselves to offer online poker.
Nevada-based slot machine manufacturer International Game Technology (IGT) in early May announced its intent to purchase Swedish-based Entraction Poker Network for $115 million. Entraction, a 112-room network which includes a number of popular poker sites open to foreign players, provides IGT with a position in the online gaming realm, allowing the company to “partner with land based casinos around the world.”
In June, iPoker network owner Playtech, in a joint venture with the Scientific Gaming Corporation, signed an agreement with the California Online Poker Association, an organization backed by gaming interests such as Commerce Casino, Bicycle Club, Hollywood Park Casino and the Morongo and San Manuel bands of Indians in Southern California, to provide the state with “play for fun” poker. With its residents wagering $13 billion a year in the past on Internet poker, California is actively considering an intrastate system, despite efforts stalling for 2011’s legislative session.
The Road Ahead
There are many hurdles to overcome before any form of legislation is passed. The finer points related to licensing, taxes, and detailing the regulatory framework for the nascent industry are all still in the works. Any legislation that gains momentum must also please its detractors. As such, the bill’s language must include provisions for offering U.S. citizens a safe environment in which to play online poker.
The AGA emphasizes a few points related to ensuring game integrity. Potential online poker operators must be able to properly police their players, prevent underage gambling, and ensure the integrity of the game by restricting access to any software that could create an unfair advantage. Perhaps most importantly in the wake of Black Friday, any operator must be held accountable for player funds, guaranteeing that deposits are not being used for money laundering or any other illegal activities.
“I view online poker legislation as an anti-crime-consumer-protection bill,” said Frank J. Fahrenkopf, Jr., president and CEO of the American Gaming Association. “Now the result is also that it will generate some revenue. It will generate some revenue for the states involved, the states where the bettors are, and revenue generated to the federal government because there will now be tracking on winnings.”
The powerful lobbying group could be joining current efforts to push a piece of online poker legislation through Congress. Fahrenkopf told Card Player back in May that his organization is working toward its own version of a bill, and as of July, the organization said it was still in the processing of drafting such a measure.
Online poker is a game that millions of Americans play. If the industry is to have any sort of longevity, then a system must be created that not only benefits the government in the form of tax revenue, but also protects the consumer by employing the historically accountable aforementioned brick-and-mortar operators we examined. Despite the uncertainties in its implementation, many players, politicians, and businessmen alike all want one thing: licensed and regulated online poker in the United States.
Be sure to check back on Wednesday for part three of this look at a potentially regulated online poker market.
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