Inside Asian Gaming

JUNE 2015 inside asian gaming 31 Online Gaming and the industry and the regulators continue to learn from each other,” said David Rebuck, director of the New Jersey Division of Gaming Enforcement in a January report on the state’s iGaming market. “From a regulatory standpoint, our system is working… However, we are far from out of the woods; we must continue to be vigilant and ready to take on new challenges as they come our way.” The poor initial results of New Jersey’s iGaming venture have prompted some to rethink the overall impact for-pay online casino gaming will have going forward. “Do I really think [online casinos] are going to be the game changer some people thought? The answer is no I don’t,” said Steve Rittvo, chairman of The Innovation Group of Companies, during a session at Global Gaming Expo (G2E) in Las Vegas. “I think… that the parade has passed for the for-money gaming model. I think social gaming and social play is really generating more revenue right now. I think it will continue to generate more revenue than for-money play.” Others, however, believe that it is still too early to pass judgment on New Jersey’s web gaming venture; that the numbers are not as bad as they first appear and steps are being taken to address issues that slowed market growth. And while Internet gaming may not reach the lofty revenue estimates first predicted for New Jersey and the US as a whole, it is still a worthwhile business to pursue and develop. “We believe in Internet gaming,” said James Murren, chairman and CEO of MGM Resorts International during a general session at G2E. “I am not intimidated by it as a bricks-and-mortar operator… I do think that it is a business opportunity for MGM, and I think we are all kidding ourselves if we think it is going to go away.” WE’VE GOT A PROBLEM So, what went wrong during the first year of Internet gaming in New Jersey? A better question may be what didn’t? “One surprise froma regulatory perspectivewas howoperationally unprepared the platforms were to implement Internet gaming in a regulated US environment,” Mr Rebuck said. “They thought they would be able to flip a switch and start up their current system here. They quickly found out that was not going to happen.” As reported in various regional newspapers and online gaming news sites, these operational issues included: Geolocation glitches —New Jersey gaming law stipulates iGaming can only take place within state boundaries. To make sure this would be the case, online gaming regulations mandated operators use geolocation technology to track the whereabouts of customers while playing at web-based wagering sites. Once the player crossed a state border, the geolocation system would alert the operator to shut the session down. On paper, this appeared to be the ideal solution. In practice, not so much, with reports claiming the geolocation technology had trouble distinguishing borders and would automatically reject customers who launched playing session at a location near state lines. Payment problems —Customers using credit cards to set up wagering accounts at New Jersey iGaming sites also ran into problems, usually in the form of a transaction denied notice—not all that surprising really, since most major credit cards still do not approve any transactions involved with online wagering, a legacy of the Unlawful Internet Gambling Enforcement Act of 2006, which had made acceptance of such monies by financial institutions a punishable act. Today, roughly 27% of Visa and 56% of Mastercard transactions with New Jersey online gaming sites are still rejected, according to information provided by the Division of Gaming Enforcement. Gross revenues for the industry’s first full year of operation in 2014 amounted to US$122 million, only 10% of the $1.2 billion initially predicted by the state, leaving officials to try and determine what went wrong. “Even one year into the process with the experience which has been gained, Internet gaming is still in its early stages of development and the industry and the regulators continue to learn from each other.” David Rebuck | director of the New Jersey Division of Gaming Enforcement