May 3, 2013

Casinos brace for impact of Internet gambling

Wayne Parry / The Associated Press

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A sample poker game is played on the Ultimate Gaming website. The social gaming company launched the first legal, real-money poker site in the U.S. Tuesday morning. The Ultimate Gaming site will be available only to in players in Nevada, but likely represents the shape of things to come for gamblers across the country.

AP

"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. "Like any other business, you're always looking for what is the next distribution channel."

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.

Lawrence Vaughan, chief operating officer of South Point Poker, one of the first Nevada online licensees, said legalizing Internet poker removes the stigma some people had associated with it.

"You had to move money in shady ways around the world to even play online," he said. "Now it's the sort of thing your mom could sign up for."

Ultimate Gaming CEO Tobin Prior, whose firm started taking poker bets Tuesday in Nevada, added, "Players won't have to worry if their money is safe. They are going to be able to play with people they can trust and know the highest regulatory standards have been applied."

PokerStars, one of the parties charged in the 2011 crackdown that came to be known in the industry as "Black Friday," later bought Full Tilt Poker, another defendant, and reached a settlement with the federal government, paying $547 million to the Justice Department and $184 million to poker players overseas to settle a case alleging money laundering, bank fraud and illegal gambling. It admitted no wrongdoing and says it is in good standing with governments around the world.

Its parent company, The Rational Group, based on the Isle of Man in the U.K., would not say whether it plans to try to buy another casino or partner with one to gain entry into the U.S. online gambling market.

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.'"

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