A Las Vegas firm this week became the first to launch legal online gaming in the United States, and it likely will have a major impact on casinos in Mississippi and nationwide.
The move Tuesday by Ultimate Gaming to offer online poker – in Nevada only, for now – is the first since the federal government said states are free to offer Internet gambling — as long as it doesn’t involve sports betting.
That impact on Mississippi depends on if the state legislature legalizes online gaming or rejects the measure as it has the last two sessions. New Jersey and Delaware have already passed legislation and hope to have a network – either nationwide or in-state – by the end of the year. Ten other states, including Mississippi have considered legislation.
“We’re not terribly behind, but we need to be one of the states that comes out of the box,” said state Rep. Bobby Moak, D-Bogue Chitto. “We need to understand it’s an opportunity to move into position to make this an asset.”
Moak has introduced two house bills that would legalize Internet gaming in Mississippi, but neither has advance.
“I’m going to reintroduce it next year,” Moak said. “I think what needs to occur, is that the membership needs to get educated one the idea. They need open up and understand what’s going on. We used to be one of the top three states in the United States in gaming, and we need to be a leader in online gaming.
“First, we need to look at this as a tax producer, and, second, we need to regulate it. Online gaming (offshore sites) is not regulated now. What you’re going to have is states that have a patchwork quilt set of laws. Congress needs to pass a national federal legislation, but we’re not going to see that happen anytime quickly.”
Moak will be a speaker at a roundtable session on online gaming at next week’s Southern Gaming Summit in Biloxi. It also will likely be a topic of discussion among industry leaders throughout the conference.
Many inside and outside the industry say the move will lead many cash-hungry state governments to turn to the Internet as a new source of tax revenue.
Efforts to pass a national law legalizing online poker have sputtered, leaving states free to pass laws as they see fit.
In 2009, former Massachusetts congressman Barney Frank introduced federal legislation. “It said that if casinos were allowed to offer every game online, the cut to Mississippi would be $160 million a year in taxes,” Moak said.
That tax on casinos, which would be at a higher rate than brick and mortar casinos, would be based on gross dollars that pass through the gaming site, said Moak.
“It’s no longer a question of if Internet gaming is coming; it’s a question of when,” said Frank Fahrenkopf, president of the American Gaming Association, the trade organization for the nation’s commercial brick-and -mortar casinos.
The brave new world for gambling brings with it a host of questions and concerns. Will letting people bet online result in fewer visits to casinos, and therefore fewer workers? Will Internet bets create a new revenue stream, or will it simply redirect money from gamblers who otherwise would have visited a casino? And will it create even more problem gamblers?
“The religious community has concerns, about the expansion of gaming,” said Moak. “But this is not an expansion, because it’s already of going on.”
Michael Frawley is chief operating officer of The Atlantic Club Casino Hotel in New Jersey, perhaps the most endangered of Atlantic City’s 12 casinos. A deal for it to be sold to the parent company of PokerStars, the world’s largest online poker website, is up in the air. The Atlantic Club’s owners said Wednesday the deal was dead, but PokerStars said the next day it still wants to salvage the purchase. It was not immediately clear whether the deal will ultimately get done.
Frawley said the Internet’s vast reach could help double business at his casino, provided the right balance is struck between the online and physical gambling experiences for customers.
“If you go to the movies, you can watch one at home, or you can watch one in the theater,” he said. “Both of them can be a great experience.”
The Borgata Hotel Casino & Spa has said it is preparing to offer online gambling later this year, and Gary Loveman, CEO of Caesars Entertainment, has also said he expects his company’s four Atlantic City casinos to grab a large share of New Jersey’s online market.
Geoffrey Stewart, general manager of Caesars Online Poker, said brick-and-mortar casinos such as Caesars Palace can use Internet play to complement their physical casinos.
“Someone comes to play with us online, we will be able to offer them seats to the real World Series of Poker, or offer them hotel rooms at Caesars Palace,” he said.
Not everyone in the industry is all-in, however.
The American Gaming Association conducted a study a few years ago on whether poker-only Internet gambling — which it supports — would cannibalize the existing brick-and-mortar casinos. The study determined that it would not. But when Internet gambling allows for casino games, such as in the bill recently adopted by New Jersey, the traditional casinos could suffer, Fahrenkopf said.
The most popular form of Internet gambling is online poker.
When the Justice Department charged executives of three online poker sites in April 2011 with conducting illegal transactions, it was a $6 billion a year industry. After the crackdown, it was largely on hiatus, because at the time, taking online bets from U.S. customers was illegal. But not long afterward, the U.S. Justice Department revised its stance, allowing states to take online bets so long as they didn’t involve sporting events.
Eric Baldwin is a professional poker player who’s eager to get back online again now that poker is once again available over the Net.
“The money’s good when things are good,” he said. On the other hand, he acknowledges, “Most people don’t go to work for 12 hours, do their best and come home down a couple thousand dollars.”
He plans to at least try out legalized Internet poker to see if the player pools are big enough to make it worthwhile.
Introducing new players to poker over the Internet makes it less scary and potentially more popular, said David Schwartz, director of the Center for Gaming Research at the University of Nevada Las Vegas.
“It was mostly old guys with cigars,” he said. “It was very intimidating to walk into a poker room and see a guy who’s a thousand years old, smoking 10 packs of cigarettes a day, giving you dirty looks because you’re taking the wrong card,” he said. “What online poker did was let people get familiar with the game, feel a little bit of confidence and then they said, ‘I want to go to Vegas and do the real thing.'”
Gambling Compliance, which tracks the online gambling industry, predicts Internet gambling in New Jersey will bring in nearly $262 million in its first year and nearly $463 million after four years. The group said that figure could go as high as $575 million after four years if online gambling takes off in New Jersey.
H2 Gambling Capital, a U.K. consultancy for the Internet gambling industry, predicts 17 states will have approved Internet gambling by 2017, led by New York, California, Florida, Illinois and New Jersey.
And Morgan Stanley predicts that by 2020, online gambling in the U.S. will produce the same amount of revenue as Las Vegas and Atlantic City markets combined bring in today: $9.3 billion.
The Associated Press contributed to this article.
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