U.S. GAMBLING GROUPS GEAR UP FOR ONLINE POKER
01/08/2012 : The Department of Justice's change in policy has revitalised the prospect of legalised online gambling in the world's biggest market.
Probably spurred by the widespread mainstream media coverage generated by the recent US Department of Justice policy switch on the Wire Act and online gambling, the Reuters news agency this week surveyed the activities of major US groups showing an interest in online gambling.
It pointed to developments such as those introduced by Shufflemaster's new strategy head Louis Castle, who said that the company has anticipated that the approach to American online gambling would have to change at some point, and had been making preparations for some months by hiring and assembling a design team for a multiplayer gaming platform, and making concrete preparations to launch the company's maiden interactive division in 2012.
"Come February, you'll see a lot of activity in Nevada around legal online gaming," Castle predicted in his interview with the news agency. "Some people will jump; we'll certainly be ready. The question is which companies will want to go first. It's just got accelerated. 2012 is going to be a banner year in many ways."
Reuters observes that the DoJ policy change has opened a crack in the door for legal Internet wagering in the world's largest economy, and casino operators, suppliers and vendors are eager for a piece of the estimated $35 billion global market.
Several industry executives and experts told Reuters that the DoJ policy statement in theory allows individual states to unilaterally legalise some forms of online gambling in 2012, from lotteries and progressive slots to poker. That will accelerate efforts by the likes of MGM Resorts, Caesars Entertainment, International Game Technology and Shuffle Master to jump onboard.
Bally and other gambling equipment makers have been applying for Web gaming licenses in Nevada, UBS analyst Robin Farley said.
Analysts told the news service that the change of direction by enforcement works for major groups like MGM, Wynn and other top U.S. gaming industry operators with deep customer databases, offering those gamblers an additional venue to play.
Plans being prepared at big American groups envisage in some cases partnering with companies already operating offshore gambling sites, many based in Europe, the article explains, pointing to deals like those between MGM-Boyd and Bwin.party.digital entertainment.
The article describes the latest developments in legalization initiatives in Washington DC, New Jersey, Nevada and other states and speculates that intrastate legalization initiatives could move quickly, perhaps even making legal online poker available to many Americans before the end of 2012.
"It is [online] poker that the major corporations are eyeing," says Reuters. "Industry executives estimate the $5 billion to $6 billion U.S. poker market — virtually all of which now flows overseas — could balloon to $10 billion annually. Sterne Agee analyst David Bain said U.S. Web poker could yield an initial $1.5 billion in operating earnings annually, with the pie growing over time."
Would-be online gambling turnkey provider US Digital Gaming chairman, Richard Bronson, said: "In my opinion, 2012 is going to be known as the year the online gaming industry in America was really born. I'm sure at least two states are going to join Nevada in approving online gaming."
"The Justice Department essentially opens the frontier to new settlements. Now states can go ahead and approve online gaming with the certainty of it being legal in our country, which is a far cry from the multitude of illegal operators who have been poaching American players for years."
The major land gambling groups Caesars and MGM reiterated their support for online gambling legalization, but at a federal rather than state-by-state level.
Consulting firm H2 Gambling Capital told Reuters that Internet betting operators will win more than $35 billion globally from gamblers this year. It estimates that for online poker, just 37 percent of an estimated 2011 total of nearly $5 billion took place within regulated markets.
Two prominent opponents to legalization have already made their thoughts known (see previous InfoPowa reports).
The billionaire chief executive of Las Vegas Sands, Sheldon Adelson, said he is morally opposed to online gambling and does not believe technology has advanced enough to prevent the underage from participating.
More recently, M Resort president Anthony Marnell III voiced his opposition to internet gambling legalization during a television interview, aligning himself with Adelson.
"I agree with him 100 percent, we're pushing this way too far," Marnell said at the end of December.
He emphasised that this was his personal opinion and not necessarily that of Penn National Gaming, which took control of M Resort last June after purchasing the property's debt at a 75 percent discount.
Marnell claimed that the protection of minors was his main concern, along with the dangers of increased problem gambling.
"I just can't see a scenario where you can truly secure that from young children," Marnell said. "Once it becomes legalized, it's taking it too far. I think you start to create addictive behaviors in the home that we can't see as operators. We have problem gambling initiatives on the casino floor."
Industry consultancy Union Gaming told Reuters that the Justice Department policy switch could signal an immediate opportunity for so-called "wide-area progressive" slots. Interstate use could boost earnings for equipment makers like Shuffle Master and IGT by 1 to 2 percent, said analyst Bill Lerner.
Addressing the attraction of online gambling tax revenues for cash-strapped states, Gabe Petek, senior director of public finance for Standard & Poor's Investors Services, said the resultant revenues will likely not be large enough to address structural problems in budgets, or cover major shortfalls.
He estimated that 17 states alone need to make up for a combined $40 billion deficit this year.
"I just wouldn't think this is going to be an avenue to balance state budgets," Petek opined. "It's not going to make the difference in state fiscal situations. It's unlikely to solve the majority of any of their problems, and most states are still forecasting budget gaps for their upcoming fiscal years."
