p. 42 igames:Layout 1 11/14/13 9:45 PM Page 42
The First State is First For Full iGaming
T
he tiny state of Delaware is known as “The First State” because its delegates were the first to ratify the U.S. Constitution in 1787. In 2013, Delaware is again the first state—in this case, the first to offer full-blown internet gaming. In October, Delaware executed a “soft launch” of its internet gaming program, opening up a full slate of real-money casino games online to around 75 people who had registered through the websites of the state’s three casinos. According to Ed Sutor, CEO of the Dover Downs racino, the restricted live test of the internet casinos lasted “about a week,” after which players were able to register to and play casino games for real money online, as long as they are within the borders of the Delaware. While Nevada was the first overall to offer iGaming, that state’s program is limited to internet poker. In Delaware, players will be able to access and wager on a full slate of casino games, including slots, roulette, blackjack and video poker in addition to the standard Texas hold ‘em variety of poker. On November 26 (after press time), New Jersey followed Delaware with its own full slate of casino games online. New Jersey staged a similar test period of one week to assure the system works smoothly. Sutor says players have been able to warm up to online play by registering at the websites of Dover Downs, Delaware Park or Harrington Raceway and answering a few basic questions, but the security questions will be much more extensive to register for online play. He says Delaware has a system in place to verify a player’s age by matching address records with state driver’s license records. Geolocation technology relies not only on a computer’s IP address, but also on a required mobile phone or tablet. Once registered to play, a text message is sent to the player’s mobile device, which requires a response. The system then “pings” the player’s mobile device to make sure he or she is within the state borders of Delaware. The games on the real-money sites will be the same as those that continue to be available for free42
play now. Dover Downs’ site links to IGT’s DoubleDown Casino on Facebook, which includes a variety of slot games, video poker, roulette, blackjack, bingo and competitive poker. Sutor said the target market for Delaware iGaming is young adults, ages 28 to 35, who do not go to casinos currently. He said that while the overall revenue expected—around $5 million this fiscal year—is not large, the hope is that the gaming sites will create new gamblers, and thus new business for casinos that have been struggling as new competition has come on line in Maryland and Pennsylvania. For now, though, the launch of internet gaming “is another chapter in Delaware’s history of staying competitive in the gaming industry,” Finance Secretary Tim Cook told the News Journal. “It is something that has to grow but we’re in a fiercely competitive environment here. This is just one more opportunity for entertainment.” Cook, like Sutor, said the goal is to create new gaming customers, rather than having current players at brick-and-mortar casinos go and play online. He said migrating those increasingly valuable brickand-mortar customers to the internet would be “a step back” that would take business away from the racinos. Sutor, in comments to the newspaper, noted that internet gaming is “going to happen no matter what. The internet is part of everyday life. Some people do all their banking and stock transactions online. You are either going to get on the train or be left behind. We are going to get on the train.” He added that iGaming will be “just another source of income to an industry that has been knocked on its heels by the competition by neighboring states and the sour economy. We want to protect our brick and mortar and our investment and jobs.”
bwin.party Gets NJ Waiver; PokerStars May Be Rejected
T
he New Jersey Division of Gaming Enforcement was on record as stating that after preliminary investigations, online gaming operating partners of the Atlantic City casinos would be granted transactional waivers in order to operate casinos upon the launch of legal online gaming in the state on November 26. A full investigation would later be completed before the compa-
Global Gaming Business DECEMBER 2013
nies were granted full online gaming licenses in the state. In October, Borgata’s online partner, bwin.party Digital Entertainment, was granted such a waiver. But the waiver was only granted after two of the founders of bwin.party struck a deal with the DGE to sell their stakes rather than apply for individual licenses. Two original founders of Party Gaming, Ruth Parasol and her husband Russ DeLeon, have struck a deal with the DGE to sell their shares in bwin.party as the company seeks an online gaming license in the state. The two are divesting for “personal privacy” reasons, according to a bwin.party press release. “As part of the application process, certain substantial shareholders of bwin.party are required to submit individual license applications to the DGE,” bwin.party said in a press release. The biggest online gaming question in New Jersey since it was legalized was how state regulatory authorities would treat PokerStars, the rogue online gaming operator that continued to operate in the U.S. after the passage of the Unlawful Internet Gaming Enforcement Act in 2006. PokerStars paid over $700 million to settle the charges with the Justice Department, and is barred by legislation, along with other companies that failed to withdraw from the U.S. gaming market, from participation in Nevada and Delaware. New Jersey, however, had no such “bad actor” clause in its legislation, preferring instead to allow regulators to make the determination. While bwin.party did withdraw from the U.S., PokerStars made billions by refusing to do so. The settlement with the U.S. Justice Department forced company Chairman Isai Scheinberg to step down, and he remains a fugitive to this day. His son Mark Scheinberg took over as chairman. Last month, sources told GGB that the DGE had given PokerStars an ultimatum that Mark Scheinberg and two other company officials must step down in order to obtain the same transactional waiver that bwin.party was given. The company has yet to respond. Even in New Jersey, PokerStars has a colorful history. Last year, the company agreed to buy the Atlantic Club casino for $50 million, which would have immediately qualified it to hold an online gaming license, pending investigation. But when PokerStars failed to meet deadlines outlined in the agreement, the Atlantic Club canceled the deal, keeping the $11 million down payment. Earlier this year, PokerStars reached an agreement with Resorts Casino Hotel to become its online gaming partner. As part of the deal, the company agreed to build a $10 million poker room at Resorts, pending licensing, a deal endangered by this possible rejection.