Smoking Ban at Harrah’s New Orleans

City Ordinance Allows for Study of Policy Impact to Gaming Market

On April 22, 2015, a city-wide smoking ban went into effect in New Orleans. Despite protest from its ownership, the ban applies to Louisiana’s only land-based casino, Harrah’s New Orleans Hotel and Casino. Harrah’s, joined by other New Orleans’ businesses, is suing to have the ordinance removed on the basis that they expect to lose significant revenues. This loss, they allege, will consequently hurt local tax revenue collections and potentially cost local jobs as well.

HarrahsGaming facilities are usually reluctant to go smoke-free. When approached by anti-smoking advocates, these facilities indicate they would lose substantial revenues if they shunned smokers. Typically these facilities offer smoking and non-smoking areas to accommodate both types of visitors.

In the Gulf South, only Florida has a state-wide ban on indoor smoking which includes its gaming establishments. However, Florida’s smoking ban does not apply to Native American gaming facilities because these facilities are on sovereign land. Alabama only has Native American casinos, therefore smoking is permitted in all gaming facilities throughout the state. There is no casino-smoking ban in Mississippi; however, one of its many casinos, the Palace Casino, voluntarily went smoke-free.

In Louisiana, there is no statewide smoking ban at gaming facilities. Harrah’s New Orleans competes in a local market which encompasses the New Orleans metro-area, with one racino and two riverboat casinos. However, the recently enacted smoking-ban only affects facilities within Orleans Parish (i.e., Harrah’s and the Churchill Downs’ Fair Grounds Racecourse and Slots). The two riverboat casinos technically operate outside of Orleans Parish, and are thus allowed to operate without prohibiting smoking.

(more…)

Project Planning/Getting the License – First and Fast, or Later and Last

Competition for gaming licenses is fierce.  The gaming industry has witnessed licensing battles in Pennsylvania, and those gearing up in Massachusetts and Florida.  With licenses in limited supply, applicants must show why their project is the best.   They have to engage the public and turn public officials into vocal advocates.  Government officials increasingly focus not just on the potential gaming revenues of a project, but on the total impacts of a development on surrounding communities and the state as a whole.

productsNew06AUrban planners and local planning departments exist to review and mitigate these impacts.   Paying early attention to the local planning process can help to head off potential opposition, prevent costly mistakes, and give license applicants a leg up on the competition.  One significant aspect of effective front-end planning is thoughtful and complete review of the zoning and land use issues involved in the project.

(more…)

An Economic Strategy for Casinos in the Land of Pachinko

As we begin the third week of the special autumn parliamentary session in Japan, the focus remains on whether or not substantial progress will be made on casino legalization. Prime Minister Shinzo Abe sees passing the casino bill as a crucial component in his “Abenomics” package of aggressive economic and fiscal policies and reforms. He views Japanese casinos as an opportunity to increase tax revenue and stimulate the flagging economy, and he hopes that foreign investment from major gaming operators and integrated resort (IR) developers will help to pull Japan out of two decades of deflation and weak growth. The timing of the current parliamentary session becomes all the more critical, given that the Japanese GDP took a 7.1% plunge during the first quarter of the 2014 fiscal year. When factoring in recent tax increases and rising energy costs, Japanese workers are now effectively earning less than they were when Abe took office in 2012.

Japanese Prime Minister Shinzo Abe

Japanese Prime Minister Shinzo Abe

Gambling Which Isn’t Gambling: Pachinko

Although gambling is technically illegal in Japan (except for some government-administered racing sports and lotteries) there is already a thriving gambling pastime which has been an integral part of the Japanese lifestyle since the first part of the 20th century, operating in the gray area of the pachinko industry. This pinball-like slot game (which originally utilized ball bearings from dismantled munitions factories after World War II) is regarded as an exception to the criminal code’s gambling prohibition. When players accumulate enough little silver balls, they can redeem them for token prizes such as pen sets, cigarettes, or perfume, then take certain special prizes to off-site shops where they are exchanged for cash.

Although the pachinko business has been on the decline since its peak in the 1990s due to a younger generation eschewing what they see as the dingy, smoky pastime of their parents’ generation, estimates of gross gaming revenue (GGR) for pachinko in 2013 are still thought to be a staggering $30 billion or higher. In order to win over Japanese youth and the untapped female market, and in preparation for competition from casinos, the pachinko business is now trying to rebrand and reinvent itself with stylish, smoke-free lounges, cafes, shopping malls, and even daycare centers for the children of parents with a little extra cash on their hands.

A Pachinko Parlor in Tokyo's Akihabara District

A Pachinko Parlor in Tokyo’s Akihabara District

A telling anecdote which illustrates the fuzziness of pachinko’s classification by Japanese society recounts a group of pro-casino legislators who requested data on annual pachinko winnings from the National Police Agency, which administers the off-site exchange shops. The mind-boggling response provided was that pachinko generates no winnings, as pachinko is not gambling. The industry’s 12,000 parlors are operated entirely by the private sector, and it is not taxed, although that would likely change if taxable casinos were legalized.

How Will Social Implications Affect Casino Legislation?

According to the Ministry of Health, Labor and Welfare, 4.8% of Japan’s adult population, and 8.7% of men over the age of 20 are pathological gamblers who are addicted to gambling. This stands in stark contrast to other developed nations where the average statistic for compulsive gamblers is closer to 1%. As a result, the Ministry supports a total ban on casino use by Japanese citizens, which is the model used at gambling facilities in Monaco. Other groups are exploring requiring special entrance fees for Japanese casino customers, which is the approach used for locals at casinos in Singapore. Either way, restricting casino access for the Japanese would cut into what the government sees as a solution to the nation’s economic woes, especially when some have projected that 80% of casino patrons will be Japanese nationals.

Gambling by Japanese Nationals to be Allowed

Recent media reports on the casino bill being drafted by a multiparty group of Japanese parliament members had stated that a clause was being introduced only allowing foreign nationals to gamble in Japan. Since many believe that the Japanese customer base is crucial to the profitability of Japanese IRs, this would have been seen as a setback discouraging investment by foreign developers. Conflicting reports have now emerged, citing an unidentified “parliamentary source”, stating that the draft law will not ban Japanese locals from casino gambling.

We are closely following all the casino-related developments as they occur in Tokyo, where parliament is in session through November 30th. Check back with TMG Insights to stay current on the latest news from Japan.

Contributed by:

Anthony Mumphrey III
Principal, TMG Consulting
anthony@tmgconsulting.net
(504) 569-9239, Ex.22

—–

Disclaimer
The views, interpretations, or strategies expressed are those of the authors, and do not necessarily reflect the position of TMG Consulting. This site is meant for educational purposes only and does not constitute professional advice. TMG Consulting makes no representation as to accuracy, completeness, or suitability of any information on this site and will not be liable for damages arising from its display or use.

Japanese Legislators Reconvene to Discuss Casino Bill

Today marks the convocation of the special autumn session of Japan’s parliament (the National Diet). During the previous session which ended last June, a bill was introduced by a cross-party coalition of lawmakers representing both the ruling LDP party as well as opposition parties. Passing this preliminary “enabling bill” is seen as the first step toward the establishment of casinos in Japan, and it would lay the legislative groundwork on a conceptual level. Once passed, a second piece of legislation would be required, outlining the specifics of casino implementation, administration, and regulation in Japan.

Toru Mihara, an Osaka professor who advises pro-casino lawmakers, has said that he sees the bill’s passage as likely occurring by November, barring the introduction of pressing legislation that would distract the Diet from the casino bill. Similarly rosy forecasts of swift action by the Diet have been made many times in the past. The clock is ticking as Tokyo commences preparation for hosting the 2020 Olympics, and many are beginning to wonder whether or not Japanese IRs will be able to open in time for this major international tourism event.

A coalition of LDP and opposition party legislators is working to legalize Japanese casino development.

How Big is the Market?

The consensus among bullish analysts has been that with one integrated resort (IR) in Tokyo and another in Osaka, plus up to ten smaller casinos in other Japanese localities, gross gaming revenue could reach $40 billion annually. This would place the Japanese gaming market far ahead of both Las Vegas and Singapore, and it would approach the size of the world’s largest gaming market, Macau, where revenue was $45.2 billion in 2013. By contrast, a Morgan Stanley report published earlier this year has suggested that Japan might not be as profitable a market as many are expecting. Their analysis has projected Japanese annual GGR to be about one half of the consensus’ estimate, amounting to $21-$22 billion.

Locations Under Consideration for a Japanese IR

More than 20 locations in Japan are vying to be chosen as locations for IRs. There are campaigns underway to attract casinos as far north as Hokkaido and Akita, further south in Tokyo’s neighboring Chiba and Kanagawa Prefectures, in Osaka to the west, as far south as Nagasaki and Miyazaki, and in the southernmost islands of Okinawa. One of the frontrunner sites for an IR is a partially man-made island in Osaka Bay known as Yumeshima. As of this month, seven developers have held meetings with the Osaka prefectural governor, who is recommending this location. Although Tokyo’s governor has been notably lukewarm to the idea of an IR in the nation’s capital, many see Tokyo’s waterfront location of Odaiba as a leading candidate for a casino resort. Another Tokyo location under consideration by developers is the current site of the Tsukiji Fish Market which will relocate nearby in 2016. Tsukiji is one of the largest contiguous parcels of land ever offered for redevelopment in Tokyo, and its prime location is ideal for an IR.

02_Odaiba

The waterfront Odaiba development in Tokyo is one of the leading sites where a Japanese IR might be located.

Contenders for Japanese Licenses

MGM Resorts International has already unveiled images of its plans for an MGM Osaka casino resort, and it has been rumored that they have also been scouting out the Tsukiji site in Tokyo. MGM has held discussions with Universal Studios Japan, and they have pledged to invest $5-$10 billion in the Japanese market, with a 51% requirement for their stake in a Japanese partnership. Las Vegas Sands is said to be eyeing a Tokyo location, and Sheldon Adelson has stated that he would spend “whatever it takes” to gain a foothold in Japan, citing numbers between $7 and $10 billion. Melco Crown is reported to have met with Osaka authorities this past July, while Wynn Resorts is thought to be exploring sites in Tokyo. Caesars Entertainment CEO Gary Loveman has stated that his company would have no problem financing an investment in Japan of at least $5 billion. Another potential foreign IR developer is Genting of Malaysia, while domestic bidders for licenses include pachinko companies Dynam and Konami, Keikyu Railways, and a joint venture of Fuji Media, Kajima Construction, and Mitsui Real Estate.

Contributed by:

Anthony Mumphrey III
Principal, TMG Consulting
anthony@tmgconsulting.net
(504) 569-9239, Ex.22

—–

Disclaimer
The views, interpretations, or strategies expressed are those of the authors, and do not necessarily reflect the position of TMG Consulting. This site is meant for educational purposes only and does not constitute professional advice. TMG Consulting makes no representation as to accuracy, completeness, or suitability of any information on this site and will not be liable for damages arising from its display or use.

Japan’s Gaming Prospects Heat Up

For years now, many have eagerly speculated that Japan will pass legislation allowing casinos to be opened within the nation. This year, more than in previous years, it looks like Japan may pass such legislation. With things heating up in the Asian gaming market, e.g., in South Korea and The Philippines, and with the 2020 Summer Olympics in Tokyo creeping up, there seems to be more than a hint of urgency to green-light casino development in Japan.

Despite having several forms of legal gaming, such as pachinko, lottery, and race betting, Vegas-style games are not currently permitted in Japan. The opposition to casinos in Japan has cited problem gambling and opportunities for increased organized crime activity as concerns. However, promises of multi-billion dollar foreign investments and the allure of a mechanism for economic recovery may outweigh those concerns this time around. Prime Minister Shinzo Abe has voiced his support for legalizing casinos as a potential means by which to revive the economy, forming part of his “Abenomics” strategy.

This summer, unless snagged by procedural issues, Parliament is expected to pass legislation  for four casino resort licenses. Diet member Takeshi Iwaya of the Liberal Democratic Party leads the push for resort gaming in Japan and has multi-party support. At least one casino is expected for Tokyo, and another in Osaka. We believe that Japan could become one of the most lucrative gaming markets in the world (behind Macau). With the passage of this legislation, Japan will likely become the stage for one of the fiercest battles for casino licenses the world has ever witnessed.


Contributed by:

Anthony Mumphrey, III, Principal
anthony@tmg-consulting.net or 504.569.9239 x 22

and

Nicholas Farrae
Senior Analyst, Economics & Gaming
nicholasfarrae@tmg-consulting.net or 504.569.9239 x 31

—–

 Disclaimer
The views, interpretations, or strategies expressed are those of the authors, and do not necessarily reflect the position of TMG Consulting. This site is meant for educational purposes only and does not constitute professional advice. TMG Consulting makes no representation as to accuracy, completeness, or suitability of any information on this site and will not be liable for damages arising from its display or use.

iGaming Goes Live in Three States

Since our last entry on iGaming, Nevada, New Jersey, and Delaware have become the first states with (legal) live online gaming websites within their boundaries.

In 2011, the U.S. Justice Department reversed its ruling on internet gambling. Today, legal internet gaming is gradually rolling out across the U.S. How much revenue iGaming will generate and exactly how smoothly iGaming websites will operate remains unseen.[1]

Nevada

Nevada became the first state in the U.S. to operate legal iGaming.[2] Currently, only online poker is allowed in Nevada, and the Nevada Gaming Commission has no plans to expand beyond this in the foreseeable future.[3] Two websites, UltimatePoker.com and W888.com hold licenses in the state with the express purpose for online gaming, launching their websites in April 2013 and September 2013 respectively.[4] The websites are only allowed to be accessed by players physically within the state of Nevada. Participants are subjected to an extensive identity verification screening that ensures that that they are of gambling age.

But how much is Nevada making off of this new source of revenue? Nevada’s gaming commission has indicated it will only report iGaming revenues in a separate category of monthly reporting once there are three online poker sites operating in the state.[5] With just two websites up and running, there are no official reports of online poker revenue to date.[6]

Chapter 463 of Nevada Revised Statue[7], not only authorizes iGaming within the state, but positions Nevada for interstate gaming, allowing Nevada to negotiate online gaming agreements with other states.[8]

Delaware

Delaware passed legislation on June 27th, 2012 authorizing online gaming within the state. In October 2013, Delaware rolled out the first “real money stakes” internet gambling games to selected users, and in November 2013, online gambling was made widely available to Delaware residents[9]. Users physically in Delaware are able to play not only online poker, but also blackjack, roulette, and slot games.[10] While online gaming is not expected to generate much improvements in tax revenue, the expectation is that younger gamers will be drawn to Delaware’s brick-and-mortar casinos.[11] After launching online gaming, gamers in Delaware who tried to play poker experienced connectivity issues due to location-based software issues.[12]

New Jersey

New Jersey became the third state to offer iGaming on November 26, 2013, after the New Jersey Division of Gaming Enforcement green-lighted six casinos licensed to operate statewide internet gaming. The six casinos approved are the Borgata Hotel Casino & Spa, the Tropicana Casino and Resort, Trump Plaza Hotel and Casino, the Trump Taj Mahal Casino Resort, Bally’s Atlantic City, and Caesars Atlantic City.[13] Registered gamers who are physically within the state of New Jersey can play blackjack, slots, and poker online.[14]

As of early December 2013, Atlantic City’s casinos are struggling with their verification systems. The general manager at the Tropicana Atlantic City, Steve Callender, said “about 75 percent of people who have tried to play on the resort’s online gaming website — TropicanaCasino.com — have been denied because the system could not verify they were in New Jersey.” This is due primarily to three reasons: technical problems, users not physically present in New Jersey trying to access these sites, and some major banks, PayPal, and American Express having policy to not process online gaming transactions.[15] According to Moody’s, iGaming in New Jersey stands to generate $250 million to $500 million within its first year.[16] Being an early mover in iGaming, New Jersey hopes to gain an edge over casinos in nearby states, such as Pennsylvania, that have caused Atlantic City’s land-based operations to struggle in recent years.

What’s Next?

According to the National Conference of State Legislatures, six states are working to authorize iGaming within their borders. California, Illinois, and Pennsylvania each have iGaming resolutions pending within the state legislative bodies. Colorado, Hawaii, Iowa, and Mississippi had iGaming laws which failed to pass in 2013.[17] With three states already conducting iGaming operations, it’s only a matter of time before the first interstate online poker games make their debut.

Contributed by:

Nicholas Farrae

Senior Analyst, Economics & Gaming

nicholasfarrae@tmg-consulting.net or 504.569.9239 x 31

 

—–

 Disclaimer
The views, interpretations, or strategies expressed are those of the authors, and do not necessarily reflect the position of TMG Consulting. This site is meant for educational purposes only and does not constitute professional advice. TMG Consulting makes no representation as to accuracy, completeness, or suitability of any information on this site and will not be liable for damages arising from its display or use.

[1] “So What is New Jersey’s Online Gambling Market Really Worth?” OP Report. Web. Online Poker Report. 23 April 2013.

[2] “Know When to Fold.” The Economist. Web. The Economist Newspaper Limited. 14 Sep. 2013.

[3] “Nevada Examines iGaming Changes.” Casino Connection AC. Web. Casino Connection Atlantic City. 31 Oct. 2013.

[4] “Nevada Poker Sites.” US Poker.com. Web. USPoker.com 2013

[5] “Poker Revenues Rise in June.” Las Vegas Review-Journal. Web. Stephens Media LLC. 2 Aug. 2013.

[6] “Nevada and New Jersey Jockey for Online Gambling Revenue.” The Pew Charitable Trusts. Web. The Pew Charitable Trusts. 11 Feb. 2013.

[7] “Chapter 463—Licensing and Control of Gaming.” State of Nevada. Web. State of Nevada. 2013.

[8] “In Nevada, Online Gambling Poised to go Interstate.” Marketplace Business. Web. American Public Media. 22 Feb. 2013.

[9] “Caesars, Partner 888 to Launch Online Poker in Nevada.” Reuters. Thomsonreuters.com. 17 Sep. 2013

[10] “Delaware Ups Ante with Online Gambling.” Delaware Online. Web. Gannett. 31 Oct. 2013.

[11] “Online Gambling to be Allowed in Delaware.” NPR. Web. NPR. 4 Nov. 2013.

[12] “Delaware Internet Gambling Facing IP Issues, Lack of Poker Traffic.” Pocket Fives. Web. PocketFives.com. 10 Nov. 2013.

[13] “Atlantic City, NJ – NJ OKs Statewide Internet Gambling For 6 Casinos.” Vos Iz Neias. Web. VINNews.com. 25 Nov. 2013.

[14] “Christie Signs Bill Legalizing Online Gambling.” Philly.com. Web. Philly.com. 2 Feb. 2013.

[15] “Online Gambling Issues persist into Second Week of Web Betting on N.J.” New Jersery On-Line LLC. Web. Advance Digital. 5 Dec. 2013.

[16] “Online Gambling is Good for New Jersey’s Credit Rating.” The Washington Post. Web. The Washington Post. 2 Dec. 2013.

[17] “2012 Legislation Regarding Internet Gambling or Lotteries.” National Conference of State Legislatures. Web. National Conference of State Legislatures. 7 Feb. 2013

Impact of Sequester: Economic Impact Estimates will Become Less Reliable and More Expensive to Produce

The Bureau of Economic Analysis (BEA) is planning to make significant program cuts as a result of the Budget Control Act of 2011 and the Sequester of funding. One such program that is in danger of being cut is the Regional Input-Output Modeling System (referred to as RIMS II).

RIMS II has served as a critical tool used for economic analysis for decades. It is used to describe how changes in economic activity (spending) impact jobs, earnings and additional spending in a specific region. It is the basis for projecting changes in jobs, earnings, and tax revenues, resulting from projects such as major hotel and casino developments, airport construction efforts, chemical plants expansions, as well as the jobs and spending created by major events such as the Super Bowl or the Final Four NCAA National Basketball Championship.

Since the 1970s, BEA has collected and processed economic data in order to generate RIMS II and offer it to the public on a cost-recovery basis. RIMS II is a commonly used tool by universities, public agencies, and private business alike.

The BEA has announced that effective immediately, the RIMS product will no longer be updated. Furthermore, effective September 30, 2013, all current versions and historical RIMS products will no longer be available for purchase.

On June 19th, the BEA released the following statement about the production RIMS II:

“BEA will eliminate its RIMS II product, which currently generates products on demand as events warrant. The RIMS II program will continue to accept and process orders, which are fulfilled on a cost-recovery basis, through the end of the fiscal year. BEA will not build and develop the data needed to update the data set and fulfill orders in future years.”

The BEA intends to discontinue RIMS II by September 30 of this year and estimates that cutting the program will save $1.4 million. This represents only 0.00016% of the Department of Commerce’s total budget of $9 billion in FY13, yet it will gravely impact the ability of  public agencies and private businesses to demonstrate how projects and initiatives can benefit the general public.

RIMS as a Share of Commerce Department Budget

RIMS II will not be easily replaced by a private sector solution, since most of these alternatives have historically relied upon the BEA and RIMS II in their own development. Without the collection and reporting of the data from BEA, these private sector alternatives will no longer be based on the independent and verifiable information. These potential private sector alternatives are also substantially more expensive than RIMS II, which was produced on a cost-recovery basis by the federal government.

TMG Consulting has reached out to our federally elected leadership and have urged them to support any efforts that would allow the reinstatement of the RIMS II program within the BEA budget. TMG would also ask that any other parties that rely upon the RIMS II program do the same.

Contributed by: Eric Melancon & Bonnie Garrigan

Eric Melancon is an Associate for TMG Consulting who specializes in evaluating economic impacts of major developments and events. Bonnie Garrigan is the Manager of Economic Analysis for TMG Consulting. 

ericmelancon@tmg-consulting.net 

bonniegarrigan@tmg-consulting.net

—–

 Disclaimer
The views, interpretations, or strategies expressed are those of the authors, and do not necessarily reflect the position of TMG Consulting. This site is meant for educational purposes only and does not constitute professional advice. TMG Consulting makes no representation as to accuracy, completeness, or suitability of any information on this site and will not be liable for damages arising from its display or use.

Status of Internet Gaming in the United States

Since our last entry on Internet gaming (https://tmgconsulting.wordpress.com/2012/03/13/igaming-more-joint-ventures-strategic-alliances-and-mergers-acquisitions-than-you-can-shake-a-stick-at/), much has changed.  National-level legislation did not move as quickly as some had hoped, while individual states are considering legalization of online gaming on their own.  In service to our clients, TMG continually monitors the progress of Internet gaming in the United States.  This blog entry is a brief summary of some of the more relevant developments of late.

In 2009, New York and Illinois’ lotteries petitioned the Department of Justice (DOJ) for a legal opinion on their plans to sell lottery tickets online. In response, the Department of Justice (DOJ) issued a Memorandum Opinion[1] on December 23, 2011 which stated that Internet gaming transactions are legal between states were gambling is legal, effectively reversing its previous interpretation under the Federal Wire Act that implied it was illegal. The ramifications of the DOJ’s opinion are still developing throughout the country, with several states passing or attempting to pass new legislation to allow iGaming within their borders and reap the economic benefits.

As of June 2013, there were five states with some form of legalized iGaming and at least 18 other states that were exploring their options or working to pass enabling legislation. Only two states, Utah and Texas, have specifically prohibited iGaming, while the remainder of states in the U.S. have yet to publically take a stance.[2]  The types of games that are offered (or will be offered) in states with enabling legislation vary from online lottery tickets, online poker, online Vegas-style table games (e.g., blackjack), and online slots games.

Factions within the U.S. Congress have also introduced legislation on the federal level this year. Senate Majority Leader Harry Reid submitted a bill that would set federal standards for online poker throughout the nation, while banning casino-style online games (e.g., blackjack, slot-style games, etc.). In a separate effort, Rep. Peter King introduced a bill that would also seek to set federal standards for online gaming, but would not ban casino-style online games. At least one other bill related to online poker is also expected to be introduced this summer.  Without more uniform agreement on whether or not casino-style games should be allowed online, it seems unlikely Congress will pass an online gaming bill in 2013.

States that have Taken Action

  • Delaware: Legislation has been passed allowing poker, slots, and table games to be played online within the state’s borders. The Delaware Lottery will oversee a centralized iGaming system which will be operated by the current land-based racetrack casino operators in the state. Delaware expects it will bring its iGaming online by September 30, 2013.[3]
  • Georgia: New legislation now allows an online lottery in the state. The Georgia Lottery controls this operation and offers lottery ticket sales on its website.[4]
  • Illinois: New legislation now allows an online lottery in the state. The Illinois Lottery controls this operation, which has already commenced.[5] Online poker was proposed in a recent gaming expansion bill that was vetoed by Governor Quinn.[6],[7]
  • Nevada: In February 2013, Nevada passed iGaming Legislation which allows online poker to be operated by companies that are already licensed to operate land-based casinos in the state. Existing operators must successfully apply for an iGaming permit with the Nevada Gaming Control Board. The first company in the US (Ultimate Poker) was awarded an online gaming license in April 2013 and is now active.[8] Additionally, in February 2013, Nevada’s Governor signed a bill authorizing the state to enter into interstate compacts allowing online poker.[9]
  • New Jersey: New legislation now allows online versions of all games currently offered at land-based casinos. The law has yet to be executed and awaits activation from the New Jersey Division of Gaming Enforcement. Industry executives estimate online gaming may not be live in NJ until after mid-2013, possibly not until 2014.[10]

States Considering Online Gaming

  • California: Interested parties are pushing for online poker to be operated by the existing land-based casinos.[11]  Two bills are currently (June 2013) under consideration in the Senate.[12]
  • Connecticut: Facing pressure from Foxwoods casino to authorize Internet gaming. As of June 2013, it is unclear what route Connecticut will ultimately take with iGaming.[13]
  • Florida: As of June 2013 there are two bills, one in the House and one in the Senate, proposing online lottery ticket sales.[14]
  • Hawaii: Legislation was proposed in 2013 session, but failed to pass through the Legislature.[15]
  • Iowa: Proposed legislation for online gaming was rejected by the Iowa House of Representatives in 2013, for the second year in a row.[16]
  • Kentucky: The Kentucky Lottery Corporation approved the sale of online lottery tickets, which is expected to boost annual lottery proceeds to the state by $80 million per year. Online ticket sales are expected to begin in 2015.[17]
  • Louisiana: A resolution was passed by the State Legislation in June 2013 that authorizes a study for the impact of Internet gaming in Louisiana and to report its findings by March 2014.[18]
  • Maryland: Various bills were proposed in 2013.
  • Massachusetts: Various online gaming bills have been proposed.[19]
  • Michigan: Two forms of legislation prohibiting online lottery ticket sales in the state were proposed in April 2013.[20]
  • Mississippi: For the second year in a row, Mississippi failed to pass its intrastate online gambling bill.[21]
  • New York: The New York Senate has declared it supports authorizing online poker. A bill has yet to be introduced.[22]
  • Ohio:  Legislators are exploring the issue which may require a state constitutional amendment to allow online games.[23]
  • Oklahoma:  A bill was proposed in the State Senate to make playing of lottery games on VLTs and on the Internet illegal without first purchasing a paper lottery ticket at a lottery retail location.[24]
  • Pennsylvania: Legislators have indicated that there is pressure to enable online gaming in the state in order to keep up with Nevada and its neighbor New Jersey.[25]
  • Texas:  Multiple constitutional amendments were proposed in 2013 seeking to allow online poker.
  • Washington: Online poker bill failed in early 2013. Another attempt next year seems likely.[26]
  • Washington D.C.: A forerunner in last year’s race to enable iGaming, Washington D.C. came up short. Current legislative plans regarding online gaming are unknown.[27]

Revenue Potential

Of course, the question on everyone’s minds: how much $$$?  Some recent forecasts are shown below:

  • “The American Gaming Association says that roughly 85 countries have legalized online gambling and there is around $35 billion bet online each year. The Association believes that the US market will be worth $10 billion each year by 2017 and has the potential to grow far larger than that.”[24]
  • “…should online gaming be legalized, the U.S. market for online casinos and poker could be worth as much as US$12 billion, according to Goldman Sachs.”[25]
  • “…revenue from the United States earned from online gambling in 2012 was estimated at $17 to $19 billion.”[26]

Contributed by:

Nicholas Farrae

Senior Analyst, Economics & Gaming

nicholasfarrae@tmg-consulting.net or 504.569.9239 x 31

—–
 
Disclaimer
The views, interpretations, or strategies expressed are those of the authors, and do not necessarily reflect the position of TMG Consulting. This site is meant for educational purposes only and does not constitute professional advice. TMG Consulting makes no representation as to accuracy, completeness, or suitability of any information on this site and will not be liable for damages arising from its display or use.

[1] Department of Justice. “Whether proposals by Illinois and New York to use the Internet and out-of-state transaction processors to sell lottery tickets to in-state adults violate the Wire Act, Opinions of the Office of Legal Counsel in Volume 35.” December 2011.

[2] iGaming Business North America. “State of the Union.” iGaming Business North America. Issue 05, February/March 2013.

[3] Stradbrooke, Steven. “PokerStars among bidders for Delaware Lottery contracts.” CalvinAyre.com March 2013.

<http://calvinayre.com/2013/03/20/business/pokerstars-among-delaware-lottery-bidders-optimal-payments-plots-us-return/&gt;

[5] iGaming Business North America. “State of the Union.” iGaming Business North America. Issue 05, February/March 2013.

[6] Vinicky, Amanda. “Quinn: Online Gambling Proposal ‘Problematic.’” NPR via WUISNews.org  March 2013.

<http://wuisnews.wordpress.com/2013/03/26/quinn-online-gambling-proposal-problematic/&gt;

[9] Collson, Brett. “Nevada Gov. Brian Sandoval Signs Interstate Online Poker Bill.”  Poker News Global. February 2013. <http://www.pokernews.com/news/2013/02/interstate-online-poker-bill-moves-forward-in-nevada-14377.htm&gt;

[10] The Associated Press. “Opposition to Internet Gambling Lessening in N.J.” DailyFinance.com March 2013. < http://www.dailyfinance.com/2013/03/20/Internet-gambling-opposition-lessening-nj-christie/&gt;

[11] iGaming Business North America. “State of the Union.” iGaming Business North America. Issue 05, February/March 2013.

[13] iGaming Business North America. “State of the Union.” iGaming Business North America. Issue 05, February/March 2013.

[25] iGaming Business North America. “State of the Union.” iGaming Business North America. Issue 05, February/March 2013.

[27] iGaming Business North America. “State of the Union.” iGaming Business North America. Issue 05, February/March 2013.

iGaming: More Joint Ventures, Strategic Alliances, and Mergers & Acquisitions Than You Can Shake a Stick At

We last blogged about the explosive developments that have followed the DOJ’s Wire Act Opinion.  States throughout the U.S. have been scrambling to install iGaming legislation and programs.  Just as the states have been doing, but far in advance to the DOJ’s Opinion, a broad range of companies in the gaming industry have been scrambling to be in the best possible shape for the hopeful explosion of iGaming opportunities in the near future.

It’s not just companies involved with existing iGaming markets in other parts of the world, but also major brick-and-mortar suppliers such as IGT and even brick-and-mortar operators such as Caesars Entertainment, preparing for iGaming in the United States.  iGaming is new and exciting here, and even companies rooted in the social media industry, such as Zynga, have taken steps to take full advantage of legal online poker in the U.S.  Briefly we’ll review some of the recent and notable corporate alliances, mergers & acquisitions, and joint ventures in the iGaming industry. (more…)

The Future of Internet Gaming in the U.S.: Notes from iGaming North America Conference

The bricks-and-mortar gaming industry wants in, the States want in, Native American Tribes want in, service providers want in . . . the list goes on.  But, what is actually on the horizon for Internet Gaming?  In the search for answers, I recently attended and participated in iGaming North America.  This is the first post in a series where I will discuss the future of Internet Gaming. (more…)