Inside Asian Gaming

INSIDE ASIAN GAMING | April 2012 40 In Focus to legislate and regulate Web gaming. And a number of state and federal legislators responded by introducing Internet gaming bills and proposals, most involving online poker, the most politically palatable of the Web wagering options. “I am a practical man…. the only hope of getting any legislation through this Congress that deals with online gaming is poker,” Mr Fahrenkopf said. “There will be no appetite from some of the people we have to get on board for anything beyond poker. You can’t get any more than this now.” Although poker may lead the charge, most believe the Internet components of all forms of popular wagering will eventually be allowed and regulated in the US “It is not a question of ‘if’ but ‘when’ with [expanded] Internet gaming,” said James Maida, president and CEO of GLI, at the GLI Roundtable. “Internet gaming is going to happen in the US. We don’t quite know how just yet, but we know it is coming.” Control issues Indeed, the jury is still very much out over who will have the ultimate control of the creation and regulation of Internet poker in the US, but the field has been whittled down to two primary candidates—the federal government and the states. At the very least, all sides agree that regulations for online poker should insure that the games are fair, that the sites offering poker operate with integrity and law enforcement oversight, that payment systems are secure, that underage and problemgamblers do not have access to the games, and states’ rights regarding online poker play be observed. The AGA and its brick-and-mortar casino members would prefer these regulations be administered on a federal level. Among the reasons: • Uniformity —Instead of a hodgepodge of Internet poker regulations from state and tribal governments, there would be a single uniform set of rules for the gaming industry to follow and law enforcement agencies to regulate. • Reciprocity —There is no guarantee that states and tribes will work or even communicate with each other when it comes to reciprocal issues such as licensing and law enforcement. A federal oversight will provide common ground and insure vital information is shared across borders. • Transparency —Federal oversight will insure no one type of gaming, no matter how strong its political or lobbying power, will have an advantage over another in the Internet realm. • Clout —A federal presence will make certain the rights of those states that do not want to be part of the online poker business are respected. Also, federal agencies arebetter equipped tomaintain the rule of law on the borderless Internet than most state police forces. Finally, federal regulators are much more likely to work with the government on reform andbolster theWireAct and theUnlawful Internet Gaming Enforcement Act (UIGEA), primarily to keep unregulated offshore operators from preying on US poker players. So far, the only federal bill that directly tackled Internet poker regulation is HR 2366, sponsored by Congressman Joe Baton (R-Texas), which would license and regulate online poker operators under the Secretary of Commerce. Only licensed gaming establishments (commercial and tribal casinos, racetracks, card rooms, etc.) would be considered for the Web poker licenses. The bill currently has 27 sponsors. Mr Fahrenkopf said HR 2366 “is a little bit closer to where we think it ought to be,” when compared to other Internet gaming legislation, but theAGAhas chosen to remain neutral on the measure. Mr Fahrenkopf admits the gaming industry will need to be “lucky” to have any federal online poker regulation pass this year. “I am still hopeful that before this Congress is over, a new piece of federal legislation will be introduced,” he said. “I wish I could tell you it is going to happen. I hope this Congress will come up with something that will solve the problem. But it is not easy to draft something that will do all that.” All of which means if Internet poker is to be legalised and regulated this year, it will likely happen at the state level. A number of states, primarily looking to bolster tax revenue and generate high-tech jobs, have introduced online poker or some form of Internet gaming legislation. This list of states includes California, Connecticut, Hawaii, Illinois, Iowa, Maryland, Massachusetts, Mississippi, New Jersey and New York. Of the measures focusing on Internet poker, those from California and New Jersey appear to have the best chances of actual passage. The California bill, SB 1436, calls for licensing, regulating and taxing all forms of Internet gaming, but would originally be restricted to poker. Only previously licensed California-based tribes and racetracks will be allowed to have online poker licenses. In New Jersey, S1565would permit Atlantic City casinos to offer online “approved games” to state residents. “I thinkwe shouldbe anepicenter for that business, but I want to do it right—I do not want to rush and get legislation that either doesn’t pass state constitutional muster, or creates other problems for us,” New Jersey Gov. Chris Christie told Reuters when the bill was introduced in January. If one of these bills comes to fruition, they will also have a state model of Internet poker regulation to emulate. This past December, the Nevada Gaming Commission approved and released rules companies would have to adhere to in order to receive licenses to operate Internet poker sites within state borders. According to the Las Vegas Review Journal , companies with other Nevada licenses would have the new title attached to their licenses while companies new to Nevada would be vetted with full licensing investigations, which usually take several months. Among the requirements for the license: operators have to show they can limit play to state residents of legal age; detect money laundering and other forms of fraud; and have a large enough cash reserve to cover money deposited by customers. A number of well known gaming operators and suppliers already announced they would be applying for Internet poker licenses. This list includes Caesars Entertainment, Boyd Gaming, MGM Resorts International, Bally Technologies, Spielo, Online advocate—New Jersey Gov.Chris Christie