U.S. Internet Gambling In Focus: 2013 & 2014

8/13/2019 U.S. Internet Gambling In Focus: 2013 & 2014

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A brieng paper that highlights keylegislative, regulatory and marketdevelopments from 2013 and

developments expected in 2014.

U.S. Internet GamblingIn Focus: 2013 And 2014


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Contents

U.S. Internet Gambling: 2013 And 2014 January 2014

NO. OFSTATES THATCONSIDEREDINTERNETGAMBLINGLEGISLATION

2013 (STATE)

No. of states in whichInternet gamblingwebsites are now live2014 (State)

Amount spent ($m)lobbying Internetgambling legislation

2013-2014 (Federal)

8.24

3Notable Data

Author

About This Report And Use Of Information

In Focus: Legislative Activity

In Focus: Commercial Activity

In Focus: New Jersey

In Focus: California

In Focus: Federal

In Focus: 2014

Chris KrafcikResearch Director North [email protected]

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mailto:Chris%40gamblingcompliance.com?subject=mailto:Chris%40gamblingcompliance.com?subject=


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About This Report Use Of Information

In preparing the report, GamblingComplianceInc. relied principally on information obtainedfrom U.S. Internet Gambling RegulatoryTracker, a research solution specicallydesigned to keep your business at the leadingedge of legislative and regulatorydevelopments in the United States.

Tracker is intended as a response togrowing demand for an integrated, concisesource of information on the emerging U.S.Internet gambling market. Each report,delivered monthly in PDF format, oersa straightforward survey of how Internetgambling legislation and regulation isprogressing in applicable U.S. jurisdictions.In the event a major development occursbetween reports, an interim updatesummarizing that development will be sent

directly to your inbox.

Last year was a historic one for Internetgambling legislation. More states consideredInternet gambling measures than any otherin history. Indeed, since 2008, the number ofstates considering bills has risen from two toten. That number is expected to grow againthis year. When it does as it does willyour business have the intelligence on handto react smartly and expeditiously?

These are exciting times. The regulated U.S.Internet gambling market is just beginningto take shape. Please accept this briengpaper with our best wishes for a successfulnew year. In the meantime, if you would liketo know more about Tracker, please visit ourwebsite.

In preparing this report, GamblingComplianceInc. has made every eort to ensure theaccuracy of its contents. However, norepresentation or warranty, express orimplied, is given as to the accuracy orcompleteness of its information.

Readers, or their associated corporateentity, that rely on any information inthis report do so entirely at their ownrisk. GamblingCompliance Inc. and itsemployees do not accept or assume anyliability, responsibility or duty of care forany consequences of you or anyone elseacting, or refraining to act, in reliance on theinformation contained in this report.

This report is no substitute for local legaladvice in each jurisdiction covered. Before

acting or refraining to act on any informationyou read in this report, it is stronglyrecommended that you obtain independentlegal advice.

Copyright 2014 GamblingCompliance Inc.All rights reserved. The intended use of thisreport is for purchasers only. No part of thisreport may be: (i) copied, photocopied orduplicated in any form by any means; or (ii)redistributed or republished without the prior

written consent of GamblingCompliance Inc.Terms and conditions can be found here.


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In Focus: Legislative Activity

In 2013, eight statesconsidered legislationthat would authorize Internet gambling.Some states, including California, consideredlegislation that would authorize Internetpoker, only, while others consideredlegislation that would authorize somecombination of Internet poker, table gamesand slot games.

Also in 2013, two states, Nevada and NewJersey, enacted legislation. The Nevadalegislation authorized the governor to executeinterstate agreements and prohibited certainbusinesses from attaining supplier licensure,while the New Jersey legislation authorizedexisting casino license holders to oerInternet poker, table games and slot games.

Considered Legislation

Enacted Legislation

No Activity

Source: U.S. Internet Gambling Regulatory Tracker January 2014

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In Focus: Commercial Activity

In 2013, three statescommenced Internetgambling. Nevada went live with poker onApril 30, Delware went live with poker, table

games and video lottery games on November8, and New Jersey went live with poker, tablegames and slot games on November 26.

Commenced Internet Gambling

No Activity


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In Focus: New Jersey


The New Jersey Internetgambling marketopened on Nov. 26, 2013.Between then and Dec.31, it generated $8.3min

gross gaming revenue.Caesars InteractiveEntertainment and theBoyd Gaming-Bwin.PartyDigital Entertainment jointventure currently boast 73percentmarket share.

Boyd GamingBwin.Party45%

28%CaesarsInteractive

Source: New Jersey Division Of Gaming Enforcement January 2014

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Q4Q3Q2Q1Q4Q3Q2Q1Q4Q3Q2Q1Q4Q3Q2Q1

Year 1 Year 2 Year 3 Year 4

GamblingData forecaststhat the New JerseyInternet gambling marketwill generate $262mingross gambling yield in

Year 1, rising to $463minYear 4. Internet casino isexpected to grow steadily,with growth in Internetpoker peaking in Year 3before attening in Year 4.

$USm

Internet Casino

Internet Poker

Source: GamblingData New Jersey Data Forecasting Report April 2013

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In Focus: California


Games Allowed

PokerTable Games

Slots

Regulation

IntrastateInterstate

Operator Licensing

OpenLand-Based IncumbentsMonopoly

Supplier Licensing

RestrictedNon-Restricted

Regulator

Gaming Control CommissionDepartment of JusticeTribal Gaming Regulators

Tax Rate

5% of GGR10% of GGR

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In 2013, California Native Americangaming tribes came closerthan ever before to reachinga compromise on how best tolegalize Internet poker. Twocoalitions drove the debate. Therst, led by the San Manuel Band

of Mission Indians, threw itsweight behind Senate Bill 678, andthe second, led by the PechangaBand of Luiseno Indians, circulateddraft legislation that was inbroad alignment with Senate Bill678. Tribal leaders from the twocoalitions met on Jan. 10, 2014,and again on Jan. 23 in an eort toiron out the remaining dierences.After the Jan. 23 meeting,Pechanga Chairman Mark Macarrotold GamblingCompliance: Webelieve we made progress on acouple of critical issues, but clearlymore discussions are needed.We anticipate more discussionsover the coming weeks. Withthe second year of a two-yearlegislative session now underway,lobbying around Internet pokeris expected to intensify. By andlarge, observers expect legislative

movement before the Aug. 31 bill-passage deadline.


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In Focus: Federal

U.S. Internet Gambling: The Year In Review January 2014

2.0

2.5

3.0

3.5

4.0

Q313Q213Q113Q412Q312Q212Q112Q411Q311Q211Q111

112th Cong. 113th Cong.

$USm

There was no legislativemovement in 2013, whichwas the rst year of atwo-year legislativesession. Internet gambling

lobbying spend during2013 remained well oof spend during the 112thCongress, which reecteddiminished expectationsfor legislative movement.

Source: GamblingCompliance Research Services January 2014

$USm

Caesars UC Group PPA PokerStars

Source: GamblingCompliance Research Services January 2014

Top proponents, includingCaesars Entertainment,UC Group and PokerStars,all increased spend on aquarterly sequential basisin 2013, which, despitediminished expectationsfor legislative movement,ensures that Internetgambling will remain onthe congressional radar in2014.

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Q313Q213Q113Q412Q312Q212Q112Q411Q311Q211Q111

112th Cong. 113th Cong.

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In Focus: 2014

Federal

GamblingCompliance expects that, on CapitolHill, consideration of Internet gamblingissues will be limited. It is an election year,which means that virtually all politicallycontroversial subjects, including Internet

gambling, will be seen through the risk-averselens of re-election.

Still, behind the scenes, proponents andopponents will continue to jockey for positionas Senate leadership continues to weigh upa blanket Internet gambling prohibition amidcontinued online expansion at the state level.On one hand, there is Caesars, which uppedits third-quarter lobbying expendituresby 63 percent. The company, as in priorquarters, spent more on Internet gamblingissues than any other proponent and bysome distance. On the other, there is Las

Vegas Sands, which more than doubled itsexpenditures. Sands kicked o a campaignto prohibit Internet gambling in June 2013,when chairman Sheldon Adelsons ery op-ed, Online Gambling Is Fools Gold, waspublished on Forbes.com.With the second year of a two-year

congressional session now underway,GamblingCompliance expects 2014 to beconstrained by election-year politics but alsoto feature a concerted push perhaps themost concerted since 2006 to clamp downon Internet gambling. At the center of thescrum will be Caesars, which is lobbying moreaggressively than any other interest group tolegalize Internet gambling, and Sands, whichis lobbying more aggressively than any otherto stamp it out.

State

GamblingCompliance expects California,Colorado, Hawaii, Illinois, Iowa, Louisiana,Massachusetts, Mississippi, New Jersey andPennsylvania to consider legislation thatwould authorize or expand Internet gambling.

As of this writing, such legislation hascarried over or been introduced in California,Hawaii, Iowa, Massachusetts, New Jersey andPennsylvania.

Broadly, and in line with historical trends,most states are expected to consider Internetgambling legislation that would limit operatorlicensure to land-based incumbents, suchas commercial casino license holders, andlimit supplier licensure to entities that didnot accept or facilitate U.S. Internet wagersafter December 2006. Most states are alsoexpected to consider legislation that wouldinitially limit Internet gambling to within statelines but that would grant regulators powerto execute cross-border Internet gamblingagreements with other states and foreignnations.

In Delaware, Nevada and New Jersey,where Internet gambling is live, regulatorsare expected to continue ne-tuning and

expanding their nascent regimes. TinyDelaware is expected to continue cross-border agreement discussions with Nevadaand other states. Nevada, at the behest ofcommercial casino license holders there, mayconsider expanding its poker-only regimeto include table and slot games. And New

Jersey, for its part, will consider legislationthat would create a new class of licensurefor so-called interstate and foreign Internetwagering.

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U.S. Internet Gambling In Focus: 2013 & 2014