This week in Gaming Review

Pennsylvania Gaming Control Board Director of the Office of Compulsive and Problem Gambling, Elizabeth Lanza, has received the “2016 Person of the Year Award” from the Council on Compulsive Gambling of Pennsylvania.  Director Lanza received the award last week during the organization’s “2016 CCGPA Statewide Conference East” in Trevose. This is outstanding news and well timed. This is National Problem Gaming Awareness Month. I suggest we take a moment to revisit some of the initiatives the AGA recommends regarding responsible gaming.

New Jersey is strongly exploring the concept of skill based games with regulations that will fast

track new product to the casino floor. I expect more new about this at the IGNA and the ECGC. The I Gaming North America will be held 4/5/16 thru 4/7/16. The East Coast Gaming Congress will take place 5/25/16 thru 5/26/16. I plan to follow attendees and provide commentary during both events.

New Jersey is also looking at Daily Fantasy Sports as a revenue generator. State Senator Jim Whelan proposed a bill that would regulate daily leagues only and tax them at the current casino rate of 9.5%.

More news from PokerStars this week. In a press release, PokerStars parent company Amaya stated:

“Amaya Inc. (NASDAQ: AYA; TSX: AYA) today announced that it expects to initially launch its PokerStars brand in New Jersey on Monday, March 21, 2016.  The launch quickly follows the September 2015 authorization by the New Jersey Division of Gaming Enforcement (the “DGE”) to operate the PokerStars and Full Tilt brands in the State. Amaya currently expects to conduct an interim testing period with the DGE and a beta period for a limited player base beginning in mid-March.”

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This Week in Gaming Review

The 2nd week of 2016 provided statistics that made operators in Pennsylvania and New Jersey nothing less than ecstatic.  Pennsylvania posted record numbers last year to $3.17 billion, topping the previous high of $3.16 billion set in 2012. This information was released by the PGCB on Friday.

 

The four casinos in the Philadelphia area had $1.19 billion in revenue, up 3.9 percent form $1.14 billion the year before. Slots revenue was up 2.8 percent locally, while table games revenue gained 6.6 percent. The 4 Philly casinos include Parx, SugarHouse, Harrahs and Valley Forge. These outstanding numbers are a prelude to the Philly Live project that is expected to start construction within the next 11 months.

New Jersey Online Gaming hit a new monthly revenue high in December and full-year revenue improved by more than 20 percent. The Atlantic City leaders in December were Borgata and Caesars Interactive.

Borgata

According to figures released Wednesday by the Division of Gaming Enforcement, state-licensed online operators reported revenue of $14m in December, 6% more than November reported 13.2 million and 30.8% higher than December 2014’s total. The online casino vertical rose 39% year-on-year to $12m, while poker revenue fell 3.6% to just under $2m. For the year as a whole, the state’s online revenue came to $148.8m, 21% higher than 2014. Total online casino revenue in 2015 came to $125m, up one-third from 2014, while poker revenue fell 18% to $23.8 million. This is confirms that online gaming is trending in the right direction.

 

Governor Brian Sandoval

Lastly, Gov. Brian Sandoval officially reconvened the Nevada Gaming Policy Committee to discuss skill-based games and daily fantasy sports, among other issues.

According to a statement from his office, Sandoval signed an executive order to reconvene the 12-member committee, which includes the governor, select members of the legislature, a tribal representative, members of the public and other appointees, including gaming regulators and licensees.

"The industry is constantly changing as more states and countries enter into this increasingly competitive field, and I believe the changes we are witnessing demand the attention of Nevada’s policy leaders," Sandoval says in the statement.

According to the statement, "The objective of the Committee is to gather input from various constituencies, including the public, on gaming policy issues, for possible future consideration by Nevada’s Gaming Control Board and Gaming Commission, as appropriate."

The committee meet no later than March 15 and deliver non-binding recommendations before October. I am curious to see which licensees will be on the committee. I'll report that information in a future post.  I want to note that the Associated Press was the source of the Nevada related news. It was condense to fit this post.

 

 

I was 2-2 last week during NFL wildcard weekend with the best bet losing. Texans + 8.5 in a teaser.

This week my best bet is #Seattle + 8.5 in a teaser. Enjoy the games.

 

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Online Gaming News in Pennsylvania

The past three weeks have been similar to  Fast and Furious 7 with all the activity involving online gaming. Pennsylvania has at least two additional bills that are related to internet gambling. One takes on the logistics involving registration and the exclusion of any holders of a Category 3 license. This would deny Valley Forge the opportunity to participate.

 

The new bills are also asking for a tax rate of 54%. This is  the same level that Pa. taxes slot play. This will not work in an online environment. New Jersey is making things work with a rate of 17.5%. That rate has the operators able to market the product and turn a profit. With the rate of 54%, there would not be internet gaming in New Jersey. Delaware taxes online slots at a rate of 43.6 percent and 29.4 percent for other games, including poker. The first $3.75 million per year has a 100 percent tax rate. They are not making any money.

Mark Lipparelli

Mark Lipparelli, Former Chairman of the Nevada Gaming Control Board, told a California House Committee that he felt the proper tax rate would be the high single digits and that any amount higher than the low teens would hurt the growth of regulated online gaming. Promotions are the drivers of internet wagering. They are limited when the profit margin is minimal. A rate of 12 to 15% is suitable. It could start at the low end and increase over a 4 year span.

 

I am sure that the compromise phase will come when the bills reach the floors of the House and Senate. Here are my three bullets of what can make this happen successfully and by 2016.

• Remove the registration at the property stipulation. That takes the convenience factor out of it. This also limits the operator to a locals only atmosphere.
• Set up the capacity for compacting agreements with any state that has online gaming. This would increase liquidity in Poker and Slots when tournaments are held. It would also drive more revenue to the participating states.
• Limit the amount of providers to casinos that are currently operating  in this state. They are stakeholders and would maintain the integrity of the online product. Allow at least one partner that is independent of the casino to buy into the platform of shared revenue, provided that partner can pass a review by the Pennsylvania Gaming Control Board. This would increase marketing efforts. 

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Online Gaming News from Pennsylvania

The Online Gaming talks are continuing in Pennsylvania with both sides presenting bills and testimony before the PA Gaming Oversight Committee in Harrisburg. The bills before the committee

include one by the Chairman Rep  John Payne with Bill 649, and Rep Tina Davis with HB 920.

There is another bill that is Poker only. The two that are mentioned have the best chance of moving forward with bi partisan support.

The opponents of any online gaming legislation are lead by Sands Bethlehem Casino and Vice President of Government Relations, Andy Abboud, stated the position that online gaming would not protect underage children from gaming. He also cited that gaming online would not support the brick and mortar operations. Mr. Abboud was questioned by Rep Davis about mobile apps that are currently used by Sands in Nevada and how that differentiate from what would be considered in Pennsylvania. There was no definitive answer given. She also ask Mr. Abboud about a fine Sands received in Las Vegas for a substantial amount of money. Mr. Abboud was not able to recall the fine and averted the question.

The proponents of the online gaming legislation included Caesars Vice President Michael D. Cohen and Penn Gaming Vice President of I Gaming Chris Sheffield. Cohen cited the success of Caesars Interactive in Nevada and New Jersey while Chris spoke of the integrity and safety nets of the international online gaming community. Sheffield also highlighted the employment opportunities online gaming would add to the state. Cohen and Sheffield jointly agree that the perspective of their testimony would transmit to a proposed online gaming environment in Pennsylvania.

Entertainment at its best

 

The technical side of the process was provided by GLI Vice President of Government Relations, Kevin Mullaly and GeoComply Operations Manager Lindsay Slader. Each gave either a demonstration or explanation of how technology works in other jurisdictions with gaming online. The consensus was that this is something that can be done and regulated with the controls that the Commonwealth would feel are appropriate.

My take is that all businesses that are successful must have an online presence. If it is minimize, then the amount of revenue is dramatically reduced. If I have a competitor in a neighboring state that can provide a service that I can't, I am at a competitive disadvantage. Will that disadvantage be limited to geographic boundaries?  No! If I want to play in New Jersey, I can still drive there. So if the promotions of playing online entice me to do so, I would play less in my home state. If the same promotion was available where I live, I would play there. Note the staggering decline in gaming revenue in Atlantic City was parallel to the increase of money spent wagering in Pennsylvania once tables and slots were approved. There was a direct correlation.

If this online gaming initiative continues thru May and gains traction in the PA State Senate, things could get very interesting. Stay Tuned!

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Gaming News from Pennsylvania

This past week, Sands Casino in Bethlehem made a proposal to the Pennsylvania Gaming Control Board to authorize electronic gaming with live dealers. This is being done in Macau with great success. It allows the gaming operator to accommodate additional play while maintaining the human element of the game. Players can wager on up to four games at one time. The electronic game will never be slowed by buys, cheque changes  and color ups. That a win -win for the operators and the players.                                                 

                                                                     More Action!

 

Sands President Mark Juliano and Table Games  Director Jack Kennedy are showing logic with this proposal.  They are creating jobs and additional revenue for the state. The tax rate will be at the table game level which is significantly lower than slots. Sands is also using an area of the casino floor that is underperforming presently and maintaining the current mix of slots and table games. I 'll give further updates as to the status of this proposal. 

 

The Pennsylvania Gaming Control Board is also making my highlight reel with the discussion before the Gaming Oversight Committee regarding skill games. Testimony was provided by Executive Director Kevin O' Toole, Chief Counsel Doug Sherman and Chief Technology Officer Michael Cruz.

Kevin O'Toole

This is important to the operators as they look for new ways to grow the market. Borgata Casino in Atlantic City is looking at a three on three tournament as a skill based event. This is a first for a casino. Pennsylvania is looking at how skill based events could be incorporated into their regulations. Currently, with slot machines, a skill base component may be present in the bonus round of a game. This does not change the rate of the tax. That tax rate is currently 55%. I would anticipate something significantly lower if a three on three tournament was held in Philadelphia or Pittsburgh.

 

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