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Bally exec doesn't expect federal online poker soon

By Chris Sieroty

13 March 2012

LAS VEGAS, Nevada -- Bally Interactive Vice President of Business Development John Connelly said he didn't expect federal legalization of online poker anytime this year, despite assurances by Senate Majority Leader Harry Reid that he'll try to get it through.

"An election year makes things a little more complicated," Connelly said.

Reid's efforts haven't produced any publicly circulated drafts of a bill or any proposals since late 2010. Caesars Entertainment Corp. and other casino companies have lobbied for federal legislation to regulate online poker and to allow states to opt out if they choose.

Connelly said the gridlock in Congress would be an "obstacle moving forward."

He said legalizing online gaming is moving forward on a state-by-state basis. Nevada was the first state to adopt rules allowing companies to apply for licenses to operate poker websites in the state.

According to the regulations, companies with Nevada licenses would have the new title attached to their licenses; companies new to Nevada would be vetted with full licensing investigations, which usually take months.

Licensed gaming companies seeking online poker license will have to prove that their technology will be able to limit play to state residents of legal age. Online poker sites are also required to establish procedures to detect money laundering, fraud or other criminal activities, and to establish a cushy reserve to complement money deposited by customers in their accounts.

"We hope to see the first licenses by June in Nevada," Connelly said.

He said California, Iowa and Mississippi were just a few of the states with legislation legalizing online poker. Connelly said a state-by-state approach raises challenges for online poker, especially in terms of liquidity.

He said intrastate gaming is available to players in one time zone, instead of three.

"Also, the cost to maintain these players is increasing," Connelly told casino executives, government regulators and others during a panel discussion about the future of online gaming at iGaming North America.

The conference addressing all aspects of Internet gaming was held March 4 to 6 at Planet Hollywood Resort & Casino. Panels assessed the economic impact of a regulated online gaming market, effective strategies for social media and an overview of the industry.

Connelly said hand-held and mobile devices are other distribution channels to generate online gaming revenue. He said 400,000 iPhones and 850,000 Android smartphones were being sold each day worldwide.

"The evolution of (Internet) gaming is with handheld and mobile devices, not personal computers," Connelly said.

Sue Schneider, principal with eGamingBrokerage.com, reminded attendees during a panel discussion titled Interactive Gaming -- The View from 30,000 feet, that there is legal Internet gambling in the United States already -- horse racing.

"It doesn't have big numbers, but it has been around for a while," Schneider said.

Mark Balestra, director of BolaVerde Media Group, said online wagering of horse races has been hampered by the restriction on moving money online for payment.

There are a number of horse racing betting sites in the United States, including TVG, Twinspires.com and Xpressbet.com.

Mike Tobin, CEO of Continent 8 Technologies, said to look at online poker as a gambling business was the wrong approach.

"These are Internet businesses or Internet commerce sites," he said.

Tobin said people with technology and marketing backgrounds created online gambling sites in Europe, not executives with gambling experience. As the regulatory environment changes, he said Nevada will find itself as the top brand for regulations.

Tobin didn't think federal legislation regulating online poker was possible.

But with the rapid growth of Internet gaming in Europe and a recent U.S. Department of Justice memo acknowledging that only sports wagering is illegal under the federal Wire Act of 1961, large commercial casino companies are lobbying for federal regulation of the industry.

Caesars Entertainment Executive Vice President and Chief Financial Officer Jonathan Halkyard said there is a growing consensus among law enforcement, consumer safety and child advocates, and the casino industry about the need for reform of federal Internet gaming laws and strict regulation of online poker.

"The status quo was unacceptable before last December's (Justice Department) opinion," Halkyard said. "It's even more unacceptable today."

Halkyard told attendees of his keynote address at the iGaming North America conference that the company's change in position on online poker has "mirrored that of the American Gaming Association."

The Washington D.C.-based trade association in March 2011 called on Congress to enact legislation that would allow states to license and regulate online poker and ensure that players aren't being cheated.

He said that "certain regulatory safeguards must be put in place" before online poker can be legal. Halkyard said the games must be fair, offer secure payment, deal with problem gambling and be restricted to adult players.

He said Caesars Entertainment had always advocated for a federal solution.

Halkyard said a regulated online poker industry would "increase overall industry revenue and profits, not cannibalize them."

Bally exec doesn't expect federal online poker soon is republished from GamingMeets.com.