New York Online Poker Hearing
Thursday September 10,2015 : NO FIREWORKS AT NEW YORK ONLINE POKER HEARING
A generally positive vibe, but not much interest from legislators.
Wednesday's hearing on New York internet poker, chaired by the New York state Senate’s Standing Committee on Racing, Gaming and Wagering head Sen. John Bonacic, turned out to be a mild affair with generally positive comments…but the presence of only two legislators from the 11-man committee suggested a lack of real interest in the project…and even those two lawmakers did not stay for the whole hearing.
Despite the lack of colleagues in adjacent chairs, Bonacic plugged on with the hearing, which heard evidence from seven witnesses:
Poker Players Alliance executive director John Pappas
James Featherstonhaugh, president of the New York Gaming Association
Michael Pollock of the Spectrum Gaming Group
John McManus, general counsel of MGM Resorts
Caesars Entertainment government relations VP David Satz
Borgata president Tom Ballance
Kevin Cochran, a legal analyst for the publication GamblingCompliance
Richard Schwartz, president of Rush Street Interactive
Much of the views aired at Wednesday's meeting are by now well known to industry observers, having been argued in previous hearings or in the media.
The New York Gaming Association's James Featherstonhaugh perhaps understandably urged caution and thoroughness in reaching any decisions on internet poker legalization. Without condemning the legalization of online poker, he pointed to the future arrival of three more land-based resort casinos in addition to the state's nine existing racino operations and suggested that the online decision should be held in abeyance until the impact of the new developments could be accurately assessed.
Feathstonhaugh conceded that online wagering for horse racing has been successful, and that studies have indicated that 85 percent of online poker players in New Jersey hadn't previously been to a land casino, making it likely that racino revenues could be enhanced.
There was little that is new in Pappas's testimony, which focused on the benefits in consumer protection that legalization could bring, whilst Pollock argued that the racinos' player base was thinning and that online poker offered an opportunity to access a fresh demographic. He also reiterated the key point that the online poker demographic is different, and that legalization will not cannibalise land revenues, using New Jersey as an example and suggesting that online punters could be converted to actually boost land business..
MGM's John McManus opined that in today's business environment companies – including racino enterprises – needed to keep up technologically, in particular by embracing the advantages of the Internet if they were to avoid being left behind, whilst David Satz from Caesars estimated that New York state could harvest up to $425 million in taxes from a $2.8 billion online poker sector over the next decade if online poker was legalised and a reasonable taxation rate of 15 percent was imposed.
However, both executives had reservations about a proposed $10 million licensing fee.
Satz was not in agreement with Featherstonhaugh's earlier recommendation that decisions should be put on hold for up to three years, commenting that such a delay could be catastrophic if it was exploited by the federal passage of the Restoration of America's Wire Act, a possibility which clearly concerns him.
"I think it's critical everyone understands the federal threat and effort by a certain individual to ban Internet gaming in all states is very real," Satz said. "There were hearings in March, and there's rumor of more hearings this fall. Sitting and waiting as one witness suggested I think could be a mistake. What's at stake here is the 10th amendment rights for a state to determine its fate."
Tom Ballance of the Borgata has previously and repeatedly said that in his practical experience online gambling does not cannibalise land casino business, and he reiterated that view at Wednesday's hearing. He was very positive on the contribution online gambling had made to his land operations, despite his initial doubts.
Clearly a convert, Ballance suggested that confining legalization in New York to just poker would constrain the state's potential in the sector, pointing out that online poker delivered only 18 percent of New Jersey online revenues and that a general legalization of online gambling was a better option.
He also underlined the importance of provisions for poker player-sharing compacts between like-minded states, and urged the monetisation of skill-based games, which appeal to up and coming demographics.
Importantly, Ballance opined that in his experience online gambling is more closely monitored and controlled than the land equivalent in regard to underage and criminal activity.
"There's no such thing as an anonymous bet in legal, regulated online gambling," Balance observed. "One of the key elements is when you sign up, first you have to give us your name, then your address, then your social security number. We've got three-to-four different databases to match up and guarantee everything matches up to that name, address and social security number and that you're 21 years old. Then it goes out to the IRS database to make sure that it's not a deceased person's social security number. If you're not using your ID, you have to be using someone else's perfectly and their credit card as well."
The day's final witness, Richard Schwartz from Rush Street Interactive, was definitely positive on legalization, saying that it was a great marketing opportunity for land-based operators, and using as an example the Golden Nugget in New Jersey, which reported better player-spend in the land casino following the introduction of online gambling.
Three negative reactions had been received in respect of Sen. Bonacic's legalization plans, all submitted in written form, the Senator revealed. He noting without disclosing details that these would be considered, along with other submissions which may come in before the end-September deadline.
