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Top-10 things that make you go "hmmmm" after the PokerStars/Wynn partnership

28 Mar 2011

By Vin Narayanan
When news broke late last week that Wynn Resorts and PokerStars reached a deal that called on both companies to lobby for regulated online poker in the U.S. AND for a jointly operated online poker room to be created once online poker could be licensed and regulated in the U.S., my response was "Hmmmmm."

My ambivalence had nothing to with the importance of the news. This PokerStars-Wynn deal is a significant development in the push to license and regulate online gaming in the U.S. But it's also a story that has raised significant questions about the form in which online gaming will be regulated, and about what will happen next.

So with apologies to C+C Music Factory, here are the 10 things that should "make you go hmmm" about the PokerStars-Wynn deal.

10. The Wynn 180
Wynn Resorts Chairman Steve Wynn has historically opposed online gaming because he believed it couldn't be regulated. But something has clearly changed his mind. The question is what? Here's what Wynn had to say in the press release announcing this deal:

"After much study, we are convinced that the lack of regulation of Internet gaming within the U.S. must change. We must recognize that this activity is occurring and that law enforcement does not have the tools to stop it. As a company that has safely conducted gaming in the US for more than 40 years, we believe that the same can be done for poker on the Internet."

This sounds like Wynn is saying online poker should be regulated because U.S. law enforcement can't stop it AND because it can be regulated safely. Reading this, I get the feeling that if law enforcement could adequately stop online gaming the U.S., Wynn would not want to license and regulate it.

Is this is a pragmatic move by Wynn? Or is it principled? And should it matter? Hmmm...

9. Why now?
Why did Wynn decide to announce he wanted regulate online poker now? Why didn't he do it last year when it looked legislation was a real possibility? That would have been a big deal. Instead, he announced it this year when passing federal legislation is a longshot. And why did he come out in favor of federal legislation and team up with PokerStars when PokerStars is pushing a state solution in Nevada? Hmmm....

8. Jobs and tax dollars
Wynn has been threatening to move his company to Macau because he doesn't like President Barack Obama's policies. Now he thinks "it is time the thousands of jobs created by this business and the potentially significant tax dollars come home to the U.S." Hmmm.

7. The Reid effect
Wynn's move to support online poker legislation gives Sen. Harry Reid more ammunition to try and attach an online poker bill to must pass legislation this year. But it also significantly complicates things as well. Last year, Reid was pushing legislation that would have frozen PokerStars out of the market for 15 months. That's not a bill Wynn would stand for now. But Reid attaching a bill to must pass legislation is the most viable route for a federal solution to licensing online poker. Hmmm.

6. What's Full Tilt's strategy?
PokerStars just made its big move to become a player in the future "licensed and regulated" U.S. poker market. Caesars already has a World Series of Poker branded room ready to go when the U.S. licenses real-money play. What's Full Tilt Poker's strategy? Do they strike an alliance with Las Vegas Sands, which operates The Venetian Resort-Hotel-Casino? Do they do a deal with MGM? Or do they try and go it alone with their star power? Hmmm.

5. Nevada
PokerStars is pushing a state solution in Nevada that's gaining traction at the same time they've agreed to work for a federal solution with Wynn. Caesars has been vocal in its opposition to state-based solutions -- believing federal legislation is the best way to regulate Internet gaming. Will Wynn, who favors federal legislation, oppose the Nevada bill and work against his new partner? Or will it remain silent on the issue. Hmmm.

4. Federal vs. state solution
Nevada isn't the only state considering online gaming legislation. California, Iowa and Florida are all considering it. Hawaii might consider it. Will Wynn lobby against these efforts like Caesars does? PokerStars is pursuing a state solution in Nevada. Are they going to join the pursuit for legislation in other states? And how does this reconcile with the federal push for legislation? Hmmmm.

3. "Bad actors"
With the exception of Nevada, one of the common threads running through online gaming legislation in the U.S. is that companies that have accepted bets from the U.S., or accepted bets post UIGEA, are barred from being licensed in the U.S. for some time. These "bad actor" clauses are supported by interests within the gaming industry and interests opposed to the gaming in general. It's actually one of the few points these groups agree on, and it's tough to see how online gaming regulation would pass without a "bad actors" provision. But the PokerStars-Wynn alliance challenges this basic premise and throws negotiations over online gaming legislation into tumult. Hmmm.

2. The lobbying divide
The expansion of gambling in the U.S. only happens when all of the stakeholders are on the same page. The reason land-based casinos haven't expanded to Massachusetts is the horse racing industry and the casinos can't reach an agreement on how casino-style gaming should be implemented. Now that Wynn and PokerStars has reached a deal, the "bad actors" provision has the potential to divide the lobbying forces for online poker into different camps. Many of the land-based casinos and cardrooms, along with online rooms that don't accept U.S. play, are adamantly opposed to PokerStars and Full Tilt being allowed into a licensed U.S. market. Wynn and PokerStars obviously want the "bad actors" language out of these bills. But unless all of the stakeholders for online gaming legislation get on the same page, it will be extremely difficult for legislation to pass. Hmmm.

1. The big "What if..."
What if PokerStars is successful in its efforts to pass the Nevada legislation, but no other online poker legislation is adopted in the U.S.? Does that mean PokerStars will accept Nevada players and give up the rest of its American player base? Does PokerStars really want to punish its Nevada players by only allowing them to play against other players from Nevada?

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