THE FIGHT: NJ, DE Move the Ball Forward

Happy 4th of July, but more importantly Happy WSOP Main Event! The Main Event starts today in Las Vegas, spiking the number of WSOP-related Google searches in a huge way. But while everyone wonders how it will all play out in Vegas, those of us with our fingers on the pulse of THE FIGHT to legalize online poker can report some promising developments in New Jersey and Delaware.

handshakeLet’s tackle New Jersey first, where 10 of the 12 casinos have announced technology partners for the Garden State’s launch of online gaming, currently anticipated for roughly Thanksgiving. The most interesting name in the group of technology partners is one you might have heard of: PokerStars. The company announced it will team up with Resorts, a casino owned by DMGB LLC by currently managed by Mohegan Sun.

It’s no secret that AC casinos are struggling – only three of the 12 posted an operating profit for Q1 2013 – but Resorts seems particularly distraught. Resorts reported a $7.6 million operating loss for Q1 2013, a startling 65% year-on-year decrease over Q1 2012. Only Revel posted a larger operating loss.

On paper, this looks like a promising fit for both parties. PokerStars already had a working relationship with Mohegan Sun during the short-lived days of the North American Poker Tour (rumored to be returning in 2014), and Resorts needs an online gaming home run in the worst way. Resorts is obviously hoping that PokerStars’ strong brand will give it a leg-up in the competition to acquire New Jersey online gaming customers, even though PokerStars has never launched its own non-poker software. That last point is surely a cause for concern for Resorts, but when you’re not negotiating from a position of strength you take what you can get.

Ultimate Gaming also threw its hat into the New Jersey ring by partnering with Trump Taj Mahal. In the absence of any player-pooling agreement between New Jersey and Nevada, the Taj won’t get much out of Ultimate’s presence as the first (and currently only) licensed operators in Nevada. In fact, the Taj will be at a disadvantage in the early stages of the game, as Ultimate’s software is years behind the software of the other New Jersey technology providers, all of whom are based outside of the country. Expect Taj and Ultimate to pour significant lobbying dollars into having the two states sign a player-pooling agreement as soon as possible.

The other technology partners in New Jersey are: 888 for the four Caesars properties; Betfair / GameAccount for Trump Plaza; Gamesys for the Tropicana; Bally for the Golden Nugget; and bwin.party for the Borgata. Atlantic Club and Revel are yet to announce their partners, which makes one wonder whether the Atlantic Club ownership’s decision to terminate the casino’s purchase agreement with PokerStars was ill-advised.

Things are moving forward down in Delaware as well. This week the Delaware Lottery released proposed regulations for internet gaming in the state. The public has until July 31 to comment on the regulations.

There’s nothing earth-shattering in the proposal. The regulation sure to get the most attention is the one that creates an automatic bar only for license applicants that have been convicted of a felony or a crime involving gambling at any time up to 10 years prior to the application.

For the moment, that regulation is somewhat irrelevant. The state has indicated that it intends to use a joint partnership between Williams / Scientific Games and 888 to administer the central computer systems the will control internet gaming. The websites of the state’s three casinos – Delaware Park, Dover Downs and Harrington Raceway – will serve as portals for players, effectively shutting all other operators out of the market.

Still, it wouldn’t surprise me at all to see public comments submitted that suggest that the application restriction be modified to include any operator which took bets in the U.S. after 2006. The brick-and-mortar gaming industry has done everything it can to elbow sites like PokerStars out of the market. They’re not likely to stop now.

The state is scheduled to launch its initial online gambling games on September 30. If it makes that target, it will become the second state in the nation to have some form of legalize, operational online gaming. THE FIGHT for the other 48 states will continue from there.

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Kevin McGrady

Legislative and Politics Beat Writer: Kevin McGrady practiced corporate law in New York City for eight years before moving to Las Vegas in 2008 to join the gaming industry. Kevin is a graduate of New York University and Columbia University School of Law.
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