14/05/2010Strong and diverse attendance at GIGSE
Mitch Garber, CEO at Harrah's Interactive Entertainment, called for an end to the ambiguity that surrounds the current regulatory trends around the world and hoped that the future of igaming would become “as clear as it is for offline” gaming. His “lofty goal” is to emulate Apple and marry a strong existing offline brand with an innovative and attractive online product.
Meanwhile the unofficial theme for the conference was whether federal or state by state legislation will win out, and not if but when. The strong lobby on all sides of the debate spoke of the benefits of each process while remaining concerned for their share of the pie. Garber dismissed many of the preventionist and protectionist arguments by highlighting online gaming has added value to existing offline operators around the world - and cannibalisation fears are misguided. Throughout the conference speakers repeated the mantra that offline companies who are not currently exploiting the lobbying effort and already building online brands will suffer in the long term.
Federal regulation becomes less likely post-Novembers elections when the Republicans are expected to strengthen but legislative panelists expect a domino effect if a State legitimises online poker or any other igaming product. Most pro-gambling stakeholders obviously don't mind how the regulation arises, and are just pushing for regulation somewhere and somehow.
However there are many hurdles still to get across. For example California is one of the most touted States to hit regulation first but there are 68 existing compacts between California and tribes which complicates any regulatory effort there since any igaming statute will have to comply with these. “This could take 2-3 years” was one legal opinion on California.
California's $21bn budget deficit may speed this process along and politicians are definitely eyeing gaming as a opportunity to reduce it. As a result Poker Voters of America claim something will get passed in California this year. Progressive legislators were hinting at license auctions, dynamic licensing costs, any many other attempts to make sure both the authorities and the operators “can make money”.
New Jersey representatives told a similar budget story and, without the tribal issues, hopes to be the first state to regulate. They aim to let their existing offline gaming companies put their products online “before the end of the year”. This is especially critical in the wake of a faltering Atlantic City. They were also critical of Harrah's attempt to wait for Federal legislation and think the states can lead the way without any Federal statute changes.
This potential gold mine can only happen however if the online regulatory solution pacifies parties with existing bricks and mortar interests but panelists reminded the audience that online gambling does exist in the US today. For example some State Lotteries currently offer online gambling via online lottery subscriptions any various states hope to expand their online offerings to include online Video Lottery Terminals (VLTs). The customer awareness of the difference between VLTs and casino slots is minimal so casino-like services could appear online soon.
There also exists a special exception for Horse Racing betting online or ‘Advance deposit wagering’. Betfair's acquisition of TVG was an interesting move into the US exploiting this exception and is an interesting attempt to merge the pools operator into their global exchange.
Whichever way the USA turns there is a global repercussion for these decisions. Canadian Lotterys are trying to exploit their small window of opportunity to build online brands and any positive change south of the border will hinder the impact of these introductions. Lotteries, poker rooms, private and tribal casinos, are all obvious stakeholders in any igaming decision but smaller jurisdictions may also see an impact. Malta was interestingly flagged up as a vulnerable jurisdiction - claimed at having 350 igaming brands - that will suffer from a regulated US environment as many of these brands will cease to be globably competitive against the wave of new US focused companies.
And of course there are the existing US-facing offshore operators. The general feeling was that any regulation will not block existing brand operators when one of the main drivers is tax revenue. No-one really believed either the Federal or State models would prevent non-US companies participating.
So the balance of power and the sources of the gold mine are yet to be revealed. The GIGSE audience will all be watching Florida, California, and New Jersey with baited breath ...