Nevada, offshore shops both want legalized online gambling

May 8, 2011 |
LAS VEGAS -- Manny Pacquiao took on Shane Mosley Saturday in Las Vegas, but attendees of the inaugural iGaming North America conference at the Monte Carlo Hotel and Casino may have gotten a taste of another battle – this one between combatants who should by anyone’s clear reckoning should be on the same team.

The issue is regulation of online gaming, and no one in the business will tell you (at least publicly, anyway) that U.S. government controls would be harmful. The industry is practically begging state and local governments to get involved and make wagering online legal, safe and regulated.

But how to get there is the rub, and even with hundreds of casinos executives, legal beagles, software gurus and assorted other industry moguls meeting for several days, no clear consensus emerged as to how the industry can present a positive, coherent and unified message that will resonate with state legislatures and/or Congress.

Land-based casinos recognize the need for government involvement, but have different views on how to get to the finish line than offshore sites and their lobbying groups do. Indeed, after hours of panel discussions and question-and-answer sessions, a half-decent argument can be made that bricks-and-mortar casinos and Internet sites aren’t really even in the same business, both heading forward but on parallel railroad tracks that might never meet.

It’s hard to construct any scenario, for example, in which casino industry giant Caesars does a 180-turn from its long-held position that the only way to legalize online gambling in the United States is via federal legislation. Yet Joe Brennan, influential chairman of the Washington D.C.-based Interactive Media Entertainment and Gaming Association and a key player in the movement to legalize online wagering, bluntly stated at the conference that the chances of passing any kind of federal law “are slim to none, and that’s being generous.”

Many in the online community are more than a little peeved that Caesars, by all accounts, went to the mat in helping convince New Jersey governor Chris Christie to veto legislation – passed convincingly by both houses of the state legislature – that would have opened the door to online wagering for state residents. Christie’s signature might have been a momentum-changer and helped efforts in other states (Iowa, California, Florida) move along. Instead, the New Jersey legislation, perhaps a victim of friendly fire from Caesars’ big guns, has been sent back to the drawing board.

So the gambling industry, reeling from last month’s poker indictments, trying to find its way forward in an uncertain economy and needing to speak with a single voice, moves forward on shaky ground. A U.S. government that most believe has done too much (Wire Act, Professional Amateur Sports Protection Act, Unlawful Internet Gambling Enforcement Act) is now being lobbied because the industry feels that it is not doing enough. And there is not even agreement about which buttons to push.

“I would give the gambling industry a D-minus at forming a coalition,” Laurie Itkin, vice president of government and public affairs for Betfair, told Covers.com. “Government does not want to take sides,” she added in reference to the conflict between casinos and Internet sites. “[The industry] just hasn’t leveraged its influence in any coherent manner.”

Gambling revenues up over past 12 months

Are you ready for some good news?

The American Gaming Association is reporting that revenues from the U.S. casino industry were actually up in 2010, and even if that’s only because 2009 was an awful year, in this economy gift horses are cherished. Gross gambling revenue increased to $34.6 billion last year, a slight gain from 2009’s $30.74 billion. Frank Fahrenkopf, the AGA’s president, pointed out that the high price of gasoline (and, eventually, jet fuel) could mean rough days ahead for Las Vegas and other destination casinos. Pennsylvania, the new gambling hot spot, showed the biggest increase (26.4 percent) among states with more than one casino, stealing customers from Atlantic City.
 
Technology advances can keep players safe

One constant theme among the techie segment at the conference was the frustration they experience when anti-gambling elements say they oppose legalization because they fear that children will be able to access accounts and put money on their favorite teams, or play poker before they understand the game. “Think about this for a second,” said one attendee. “Is there a better chance of getting ripped off now, when there are no rules in place, or if the government steps in, creates rules and regulates it? People are unaware that the technology exists right now to make this work. If we’ve learned anything from the European model, it’s that the government involvement is a good thing.”

Itkin sees silver lining in poker indictments

Betfair’s Itkin said the poker indictments, while presenting problems for the industry, do provide an opportunity for other sites, especially those which stopped taking U.S. customers when UIGEA became law in 2006. “There are plenty of operators who played by the rules and now stand to gain,” she said. “They can now explain that they respect the laws and [when the door opens again] will operate with integrity. In that respect the indictments do, in a manner of speaking, give some operators a second bite at the apple.”

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