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Top-10 storylines at GiGSE

23 May 2011

By Vin Narayanan
The one thing everyone at last week's Global iGaming Summit & Expo in San Francisco agreed upon is licensed and regulated online gambling is coming to the United States soon. Nobody could agree on when it would happen or where it would happen (federal or state). But the consensus was it would happen in the next few years.

And as land-based casino executives, online gambling executives, legal experts and legislators continued to discuss the future of online gaming in the U.S., 10 key storylines emerged.

10. New message for Republicans
With Republicans in charge of the House of Representatives, most likely gaining seats in the Senate and possibly taking the White House, the gaming industry needs to retool its message towards politicians. According to panelists at the conference, licensing and regulating online gaming to generate tax revenue isn't going to convince Republicans to vote for online gaming legislation.

"Republicans respond to different messaging," said Brett Hale, senior vice president for corporate and government Relations for Churchill Downs. "It needs to be framed as it's occurring unregulated right now and we want it to move to a regulated environment where states choose what's offered."

"The main issue in 2012 will be jobs," said Rep. John Campbell, who introduced federal legislation to license and regulate online gaming this year. "If we legalize Internet gambling, every single job will be in the U.S."

"This is a jobs bill, an economic activity bill," added the Republican legislator. "This is a growth bill for something that 30 million Americans are doing already."

"What Black Friday showed us is consumers are going to do this. Let's protect them. Let's get them protected," Campbell said.

"We can educate people," Campbell concluded. "It's about jobs, growth and consumer protection."

9. Get stakeholders on same page
Policy makers as a general rule don't like to choose winners and losers from within in the industry. They prefer that the industry sort things out for themselves before making laws about it. And that certainly hasn't happened in the online gaming debate.

"We need to work together," said Jon Porter, a former Congressman from Nevada. "We need consensus. We are our own worst enemies. For a member of congress to hear 20 different stories from 20 different members -- that's not going to work."

Laurie Itkin, Betfair's vice president for government and public affairs, also noted that people within the gambling industry can slow down progress as much as people who oppose gambling. "You need to engage all the (gambling) stakeholders long term," Itkin said. "If you don't bring everyone in under the tent, the folks outside the tent can slow down the process."

And right now, the gambling industry isn't on the same page when it comes to online gambling. The big casinos want it. The small casinos are worried about it. Some Native American tribes want it. Others don't. People in the horse racing industry and lotteries want to be part of the discussion, and for the most part, they're not.

And until all stakeholders come together, it's going to be difficult to pass any legislation.

8. Native American friendly legislation
"We have yet to see a bill that treats Indian tribes fairly," said Tom Brierton, president of Franklin Creek Consulting.

"The Reid bill gave clear advantages to Nevada based operators over everyone else," Brierton said.

"A key mistake that was made in the last Congress was a lack of an effort to engage Indian gaming across the country," Brierton added.

And given the political clout of the Native American gaming tribes, Brierton is absolutely correct. They donate a lot of money to a lot of different politicians, and are in a position to block both federal and state (depending on the state) online gaming legislation moving forward.

7. Bridge the generation gap
A constant theme during the convention was age. Younger legislators get online gaming and the Internet. Older legislators are the ones that need convincing. And older legislators really need to be educated on just how prevalent online gaming in the U.S. is, and that it needs to be regulated.

6. Online bingo is a priority
As casino executives discussed developing online gaming in the U.S., they took pains to ensure bingo was part of the discussion. They noted the Europe's success with bingo, and they thought it could be replicated in the U.S.

"Bingo has become a fairly young demographic (because of online gaming) in Europe," said Daniel Burns, commercial director for 888 Holdings. "It was historically older. But a good game is a good game."

"I also hope long term that bingo is being thought about in the same terms of poker," said Kevin Sullivan, senior vice president for business development at Boyd Gaming. "(I hope we're) thinking about those together so we can bring both genders out there."

5. Native American tribes need to get on the same page
Right now, Native American tribes are not on the same page when it comes to online gaming. In California alone, there are a series of divergent views. The Morongo want online poker. The Pechanga and the members of the California Tribal Alliance -- not so much. In fact, the only thing the Native American tribes seem to agree on is that they don't want a federal solution to online gaming.

"I don't understand why a tribe would support any of the federal legislation," said Robert Martin, chairman of the Morongo Band of Mission Indians.

But Martin does view online poker as a commercial enterprise Native Americans should be pursuing in California.

"Poker has been allowed for 100 years," Martin said. "If you don't take advantage of the Internet, you'll be behind the 8 ball. If you sit back and study this thing even further, it will move to a point where we can't catch up."

Leslie Lohse, who is the chairwoman of the California Tribal Business Alliance, thinks Native American tribes need to move much more slowly on the matter.

"We must consider (Indian casinos) allowed us the opportunity to ... rebuild our nations," Lohse said.

"We understand there is a win in there," Lohse said. "But there is a loss to us. And not just in dollars and cents. What rights are we going to give away?"

These are arguments that are being discussed by Native American tribes across the U.S. But until a consensus is reached, it's hard to see how federal legislation moves forward. Of course, if you could get just a couple of tribes to agree on something, state legislation is a definite possibility...

4. IGT, Bally and WMS want in
The presumption within the online gaming industry had always been that when online gaming was regulated and licensed in the United States, American land-based casinos would partner with European online casinos and the world would be one big, happy place. But at last week's conference, IGT, WMS and Bally Technologies said they plan on being the dominant suppliers in the U.S.

IGT has been operating overseas as an online gaming suppler. And they recently made a move to purchase the Entraction Poker Network. WMS operates its own online casino in the U.K. And Ballys is evaluating who they want to partner with/buy as it readies for online gaming coming to America. All three companies envision supplying games and software to American online casinos, much like they supply slot machines now. And they have no plans to cede the market place to European software providers.

3. Vindication, not celebration
Bwin.Party Co-CEO Jim Ryan, PKR CEO Malcom Graham and Betsson CEO Pontus Lindwall were all in attendance, and while they were not celebrating the U.S. indictments of PokerStars and Full Tilt, they were feeling a little bit better about themselves.

"It vindicated the long term strategy of not taking a U.S. bet," Graham said. "It was frustrating watching companies using their U.S. cash flows to finance their European market operations."

"You ask yourself if you got it right," Ryan said of watching PokerStars and Full Tilt grow after PartyGaming withdrew from the U.S. market. "There was no (government) action taken against them and the announcement of various U.S. casinos partnering with them and it looked like you made a bad decision. But the indictments make the decisions we made along the way, however painful, right. It feels good to be right."

2. Party Poker will be back
Ryan says Party Poker, which fell from the top poker room on the Internet to the third ranked poker room, will be back in the U.S. once it's licensed and regulated. "We'll come back as a b2b partner, and should regulations allow us to pursue a full license in time, we'll do so. Graham and Lindwall said PKR and Betsson are looking to become b2b providers as well.

1. Don't count on anything this year
Can online gaming be licensed and regulated this year? Sure. But it's a long shot. New Jersey could put the issue to a referendum on this year's referendum. But with a sports betting initiative already on the ballot, there's serious debate over whether placing the issue on the ballot is a good idea. California could do something this year, but there's not consensus among the Indian gaming interests in the states, and until there is, California is a long shot as well. And as Poker Players Alliance Executive Director John Pappas put it, the "legislative clock is running out" for action at the state level.

That leaves the federal level, which is where the PPA, Caesars and other gaming companies have been focusing their efforts. And because the most likely path for federal legislation is Senate Majority Leader Harry Reid attaching a bill to must pass legislation, the odds are against a federal bill being passed as well.

So is licensed and regulated online gaming coming to the United States? Yes. Is it coming this year? Probably not.
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