Posts Tagged ‘online’

Online Gambling Bill Makes It Through Michigan House Committee

 Online Gambling Bill Makes It Through Michigan House Committee

A bill to legalize online gambling passed through a Michigan House of Representatives committee Wednesday and though it will be nearly impossible for it to advance any further during this legislative session, there is some hope for the next.

The Bill, House Bill 4926, was introduced by Rep. Brandt Iden three months ago. He told Online Poker Report (OPR) in October that he wanted to see it pass the House by Thanksgiving.

“Throughout the month of October, I’m hoping to gain a lot of headway,” Iden told OPR. “If I had my way, we’ll be able to get everyone to the table and put a bill together and through the House before the Thanksgiving holiday. We’ll see how achievable it is, but that’s my goal.”

Well, it clearly wasn’t achievable, as it only just now made it through a committee and the legislative session is about to end. The good news, though, is that in Michigan, bills can carry over to the next session, so Iden will not have to start from scratch.

The bill stipulates that prospective online gambling operators would be required to pay a $ 100,000 licensing application fee. If granted a five-year license, the fee for the first year would be $ 200,000 and then $ 100,000 each year thereafter.

In October, Iden told OPR that the biggest challenge was arguably getting all of the state’s tribes and the three commercial casinos to all agree on the legislation. Lawmakers could always go ahead and vote for bills without the blessing of all the stakeholders, but is generally a good idea to get those who may be operating the gaming sites to be onboard.

“They’re constantly looking to expand their operations with new gamers. They realize they have generations of gamers that are going to be looking at new platforms, and if they don’t get on board they will miss bus,” Iden said to OPR.

For this Michigan House Regulatory Reform Committee vote, Iden said that the committee did meet with stakeholders the day before in order to discuss the bill. The three commercial casinos – Greektown, MGM Detroit, and Motor City – all now apparently support the legislation when they did not previously (they supported legalized online gambling, just not the bill as written.

As first reported on Twitter by Gambling Compliance’s Chris Krafcik, there were two main amendments to the bill in committee. The first requires gaming servers to be located on the property of a licensed casino. Krafcik says this is important because it may put online gambling in sync with the Michigan constitution, which says that gambling must take place at a casino. Having the servers at a casino theoretically means that online gambling is occurring at the casino, in essence a new gaming offering by existing licensed operators, rather than an expansion of gambling.

The other change is an adjustment to the tax rate. The amended bill says licensees must pay a tax of 10 percent on gross gaming revenue, down from 15 percent previously.

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NJ State Sen. Ray Lesniak Introduces Bill to Expand Online Gambling Internationally

 NJ State Sen. Ray Lesniak Introduces Bill to Expand Online Gambling Internationally

One of online poker’s most fervent supporters in the political world, New Jersey State Senator Ray Lesniak, has one more trick up his sleeve before he retires. Late last week, Lesniak introduced a bill that would effectively allow New Jersey to enter into agreements with other countries in order to share player liquidity.

The bill, S3536, amends the portion of New Jersey law that legalizes online gambling. Most of the bill is what already exists, detailing the history of gambling in the state, the benefits of gambling (as well as regulation) for the state, and the legalization of internet gaming.

One of the key points of New Jersey’s online gambling law is that the gaming servers must be located in Atlantic City:

….all hardware, software, and other equipment that is involved with Internet gaming will be located in casino facilities in Atlantic City or in other facilities in Atlantic City owned or leased by a casino licensee and thereby considered to be part of a casino hotel facility that are secure, inaccessible to the public, and specifically designed to house that equipment, and where the equipment will be under the complete control of a casino licensee or its Internet gaming affiliate.

But then comes Senator Lesniak’s amendment. He starts by explaining that online gambling has been of great financial benefit to the state and that the market for internet gaming internationally is growing quickly:

In the coming years, the global online gambling market is expected to see a compound annual growth rate, and the largest share of online gambling revenue comes from Europe totaling nearly $ 15 billion a year and growing at a faster rate than the rest of the world; and

Since its inception under P.L.2013, c.27 (C.5:12-95.17 et al.), Internet gaming has resulted in economic benefits to Atlantic City and to this State, and is estimated to have produced, within the first three years of implementation, approximately $ 998 million in economic output, over 3,000 jobs, $ 219 million in employee wages, and $ 124 million in tax revenues, of which $ 84 million derive from Internet gaming revenue alone. The provisions in this act, P.L. c. (C. ) (pending before the Legislature as this bill), permitting Internet gaming equipment to be located outside of the territorial boundaries of Atlantic City if necessary to facilitate the conduct of international wagering, would increase the economic benefit of Internet gaming to Atlantic City and to this State.

And then, right near the end of the bill, comes the kicker, “The division may permit Internet gaming equipment to be located outside of the territorial boundaries of Atlantic City if the division deems it necessary to facilitate the conduct of international wagering permitted under this section.”

Thus, if this bill passed, poker players located in New Jersey would presumably eventually have the ability to play on sites not based in New Jersey. One would assume the New Jersey regulators would have to approve of individual operators and come to agreements with regulators in other countries. When this happens and the player pools of international sites merge with those of New Jersey, player traffic would jump, hopefully attracting more and more players and, in turn, generate more tax dollars for the state.

The current New Jersey legislative session ends January 9, 2018, so Lesniak has a month if he wants to see the bill passed while he is still a Senator.

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Senators Graham, Feinstein Once Again Ask DOJ to Ban Online Poker

 Senators Graham, Feinstein Once Again Ask DOJ to Ban Online Poker

It has been a while since we heard from Senator Lindsey Graham (R – S.C.) about trying to ban online poker in the United States, so I suppose it was about time for him to try to revive his dead horse. Last week, Graham and Senator Dianne Feinstein (D – CA) sent a letter to U.S. Deputy Attorney General Rod Rosenstein, asking him to reverse the Wire Act clarification issued by the Department of Justice’s Office of Legal Counsel in 2011, a decision which would effectively make online gambling completely illegal in the U.S.

As readers may remember, the Wire Act was designed more than 55 years ago to curtail organized crime by making sports betting over phone lines illegal. For whatever reason, decades later, the Department of Justice interpreted it to include all gambling over the internet. In late 2011, the OLC clarified that the Wire Act only applied to sports betting, thus officially opening the door for states to launch their own online gambling industries.

Sen. Graham has introduced billionaire Republican donor Sheldon Adelson’s Restoration of America’s Wire Act (RAWA) multiple times, trying to get the OLC’s ruling reversed, but it largely hasn’t been taken too seriously by lawmakers. Thus, it’s time for another approach.
As one would expect, the letter is mostly bullshit. For example, one paragraph states:

The DOJ opinion had the practical effect of repealing legislation Congress carefully and thoughtfully enacted in 2006 to ban internet gambling – legislation developed over seven years and crafted based on assurances from DOJ at that time that internet gambling was barred by the Wire Act and other federal criminal laws.

I’m not going to bother parsing every word, but suffice to say that the UIGEA – the law referred to there – was not “carefully and thoughtfully enacted.” It was, instead, attached to a must-pass SAFE Port Act and snuck through in the middle of the night with virtually no debate.

The letter goes on to use the “won’t anyone think of the children” scare tactic that we have heard a million times and again cites an old FBI letter that states, “[o]nline casinos are vulnerable to a wide array of criminal schemes” like money laundering. Of course, that letter is always misrepresented, as the concerns it addresses have to do with unregulated gambling, not legal, properly regulated online gambling.

Poker Players Alliance Executive Director John Pappas skewered the letter in a statement, saying:

If they were handing out awards for Congressional letters, this one would win “most misleading” in a landslide. Aside from the statement that Pennsylvania authorized online gaming and other states are considering it, there is nary a fact contained with the letter’s five paragraphs. Congress has given express authority to states to regulate igaming, a detail that Senators Graham and Feinstein repeatedly ignore. Moreover, they continue to misrepresent and almost decade old FBI letter that does not address the realities of regulated online gaming. I suppose it’s easier to conflate reality with their own bias to continue making the same points, than actually own up to the fact that regulated igaming is responsible public policy.

The PPA posted the entire letter, which can be read here.

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Pennsylvania Online Gaming Has Passed, But Will Online Outlets Join Them?

 Pennsylvania Online Gaming Has Passed, But Will Online Outlets Join Them?

After more than a year of haggling over the details, the state of Pennsylvania passed online gaming, poker and DFS regulations for its citizens. While the passage of that bill was a watershed moment that brings to four the number of states with such legislation, the question now is when will it go live. Although state legislators are looking to move quickly on the issue, there are questions regarding the taxation that could keep suitors away from Pennsylvania’s burgeoning online gaming industry.

In a report prepared by Moody’s Investors Service, which provides financial bonds research for investors and other companies, the taxation rate for slots segment of the Keystone State’s online gaming industry could scare off some suitors. The rate of 54% is much higher than the rate that states such as New Jersey (16%) and slightly higher than that in Delaware (43.5%). Such heavy taxation could be anathema to online gaming operators, who would be looking to make more of a profit from the games than not even 50% of their “win.”

And what effect would that massive tax bill on casino gaming have on those who want to enter for online poker? While they continue to indicate that they want to be a part of the industry, companies like 888 Holdings (888Poker), The Stars Group (PokerStars) and partygaming (partypoker) might not want to invest heavily with either a poker or a casino gaming operation in a market that they won’t see a suitable return.  

For now, the big question is when the clock starts ticking on just getting the licenses handed out. Although Governor Tom Wolf signed the bill into law at the end of October, the Pennsylvania Gaming Control Board hasn’t yet started the clock on accepting applications for online gaming licenses. Currently the PGCB is putting the final changes on the regulations themselves, pushing back further the opening of the Pennsylvania online gaming industry.

Once the PGCB opens the licensing process, those casinos inside the state will get first crack at the three levels of licensing. Those three licenses – for slots, table gaming and poker – will be available for a $ 4 million price tag for individual license. If an entity were looking to get all three, then the “hometown discount” would be $ 10 million for all three. The time frame for those companies already located in Pennsylvania will be 90 days from the date the PGCB opens for business.

After that 90-day period, outside operators would then be allowed to apply. They wouldn’t receive the discount price for all three licenses, instead they would be charged at the $ 4 million per license price. That process would run for 120 days, making for a grand total of 210 days – seven months – before just the licensing procedures would be complete. Looking at the calendar today, that would mean that just the licensing process would take until the beginning of July 2018.

Once the licensing process is complete, then the actual testing process for the different gaming software would have to be completed. If the PGCB was expedient in its review process, it is conceivable that it could take 30 days before online gaming would be opened in the state. Playing on the conservative side, let’s say it takes 90 days for them to complete their testing. That now makes it October 2018 before the first bets can be taken in the state of Pennsylvania.

Although online gaming and poker are now the law in the home of the Steelers and the Eagles, it isn’t going to be anytime soon that the games start. Hopefully within that time, state regulators will consider joining with the other three states that have online poker regulations – Nevada, New Jersey, and Delaware – and join that compact to fully maximize the abilities of the online poker segment of the industry. With 2018 around the corner – and several states examining the online gaming and poker question – a fully functioning and profitable Pennsylvania market would encourage others to join the party.

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PokerStars Expects to Compete in Pennsylvania Online Poker Market

 PokerStars Expects to Compete in Pennsylvania Online Poker Market

At the end of October, Pennsylvania Governor Tom Wolf signed a bill to legalize and regulate online gambling – including poker – in the Commonwealth. Pennsylvania is now the fourth state – behind Nevada, Delaware, and New Jersey – to legalize online poker, so now the discussions in the poker community revolve around when, exactly, might Pennsylvania’s online gambling industry get up and running. We won’t get into that here (though if I were to speculate, it would be mid-2018 at the earliest), but it has been interesting to see that PokerStars already expects to get in on the action.

In a recent earnings call, Rafi Ashkenazi, the CEO of PokerStars parent company, The Stars Group, said, “We are poised to take advantage of the positive momentum in the growth of online gaming globally and the continued march towards regulation, including in the United States where we aim to be among the first operators to launch in Pennsylvania when that state opens its door to online poker and casino.”

Well, he certainly didn’t mince words there.

What remains to be seen is how PokerStars will become one of those operators. According to the new law, there will be twelve licenses available for online poker (as well as twelve more for online table games and twelve for online slots), corresponding to the number of brick-and-mortar casinos in the state. It looks like a thirteenth license will be added, as well, as the bill opened the door for the Live! Hotel and Casino Philadelphia to begin construction. Adding a thirteenth land-based casino will add a thirteenth licensing slot.

The current casinos in Pennsylvania get first dibs at the available licenses. They aren’t cheap, either. Each of the three license types – poker, table games, and slots – cost $ 4 million each just for the application. Should any of the casinos apply for all three within 90 days, they can apply for $ 10 million combined. If there are still available licenses after 120 days, outside “qualified” operators can apply, but they don’t get the discount.

Where PokerStars would probably enter would be as a partner with one of the casinos (applications in this case are less expensive). A casino would apply for the main license and PokerStars would apply for a secondary license to be the gambling platform provider for the casino. This is what PokerStars did in New Jersey, joining up with Resorts AC.

One can only speculate as to which casino PokerStars would team up with in Pennsylvania, but Mohegan Sun Pocono isn’t a bad guess. Mohegan Sun manages Resorts AC, so it already has experience working with PokerStars. If Mohegan Sun wants to get in on the online gambling business in Pennsylvania, it seems only natural that it would continue to work with PokerStars. Then again, who knows if the company wants to and who knows if PokerStars wants to, either?

One analyst did ask about how PokerStars is going to go about obtaining a Pennsylvania license. Chief Legal Office Marlon Goldstein had a fairly vague answer, responding, “We’re still evaluating our options in terms of who we may want to partner with and the landscape in Pennsylvania generally. But again, we are really excited to be competing in that market sequentially as soon as possible.”

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