Industry leaders and experts share outlook for future of online gambling in US at G2E

It was held “State of the Industry: Internet Gambling at the Crossroads” keynote session at G2E, in which panelists said pending sanctions by the WTO due to US policy on Internet gambling could be the major driver for legalization.

On the heels of today’s House Judiciary Committee hearing on a bill proposing an independent study on the feasibility of legalizing and regulating online gambling, former Senator Alfonse D’Amato, chairman of Poker Players Alliance, said he expects the legalization of online poker in the United States within 18 months.

The panelists in today’s State of the Industry: Internet Gambling at the Crossroads keynote session at Global Gaming Expo (G2E) said pending sanctions by the World Trade Organization due to current US policy on Internet gambling could be the major driver for legalization because non-gaming corporations likely to be affected by the sanctions could put pressure on congress to make a change. G2E 2007 is being held this week at the Las Vegas Convention Center.

The panelists in the State of the Industry session included D’Amato; J. Terrence Lanni, chairman and CEO of MGM Mirage; Gary Loveman, chairman, CEO and president of Harrah’s Entertainment and Andre Wilsenach, CEO of the Alderney Gambling Control Commission.

The panelists said they expect online poker to be legalized prior to other online casino-style games. According to the panel, one reason poker and other games of skill are likely to be legalized before other games is the energy and interest engaged in having skill games legalized. D’Amato’s Poker Players Alliance, which he said boasts more than 800,000 members, is an example of the organized interest in legalizing online poker.

There was consensus among the panelists that it is possible to successfully regulate Internet gambling to prevent underage gambling and ensure player protection, but these types of protections don’t currently exist across the board. With the U.S. ban on Internet gambling keeping well-known, reputable companies out of the marketplace, the panelists expressed concern about player protection in an environment dominated by unregulated or poorly regulated sites. “I am afraid the U.S. customer today is very exposed – there’s no player protection,” Wilsenach said.

In fact, he highlighted a distinct difference in the mindset of US regulators and UK regulators when it comes to regulating Internet gambling. In the United States, he said, the concern is how an Internet gambling site will exclude players, but in the United Kingdom and other jurisdictions, the concern is how each site will handle player protection.

To provide an example of how an Internet gambling site can be responsibly run, Lanni described MGM MIRAGE’s experience with running a site on the Isle of Man that did not accept wagers from the United States. According to Lanni, the technology put in place for the site allowed the company to ascertain where a player lived, verify the player’s age and also provide a problem gambling component.

While the technology was viable, competing with unregulated companies that did not put the same stringent screening processes in place made the project economically infeasible, Lanni said. He emphasized, however, that the company now has experience with the technology required to keep underage gamblers from playing and is ready to “unpack” it once online gambling is legalized in the United States.

Lanni asserted the value of having established, trusted brands in the marketplace, saying that the major brands give people the comfort they want and the assurance that customers will receive the payout.

According to Loveman, Harrah’s already is exploring the possibility of expanding its World Series of Poker brand by creating Internet gambling sites in countries where it is legal to do so. Both Lanni and Loveman emphasized that they have no desire to explore jurisdictions where the laws may be unclear – any work they do in the Internet gambling sector will only be done in places where the activity is clearly permissible by law.

When asked whether Internet gambling should be regulated at the state or federal level if legalized, Lanni and Loveman both supported state-level regulation. Lanni explained that the states currently are responsible for gaming regulation, and they do it very effectively. He pointed out that the federal entities that would be charged with regulating Internet gambling under legislation currently being considered in Congress aren’t able to fulfill all of their current duties, and that adding this responsibility to their bailiwick makes no sense. D’Amato surmised that Internet gambling will probably be addressed by an amalgam of both federal- and state-level regulation.

In a question-and-answer session with attendees, the panelists were asked about the issues posed by gambling and gambling-like activities in online social applications such as Second Life. Loveman pointed out that several online applications provide users the opportunity to win a virtual asset of some kind and then turn around and sell it for real money on online auction sites.

He explained that these types of transactions that commercialize intangible objects and a variety of other legal online financial transactions start to resemble online gambling in a way that makes the current ban on online gambling appear hypocritical.