Mixed Feelings On Nevada Intrastate iPoker Model
Some Tech Firms Think Intrastate Is Fine, Others Worry At G2E
Do the firms that will provide Nevada casinos with real-money online poker technology actually care that the model is intrastate for now? Well, it depends on who you talk to at the ongoing Global Gaming Expo (G2E) in Las Vegas, Nevada.
Louis Castle, chief strategy office at SHFL Entertainment (formerly Shuffle Master) thinks that an online poker market in Nevada is fine, as long as there aren’t too many sites.
“If there’s only a few, it could be a great business for the ones in there,” Castle said. “If it’s open to a lot of operators and breaks up the liquidity too much, it will be a very difficult market to have sustainability. But, I’m very confident in the Nevada regulators. They understand the landscape very well, and I’m sure other types of [Internet] gaming will eventually become legal.”
In other words, online gaming, if it only exists in Nevada, will be an OK enterprise since the poker-only plan won’t last very long. Nevada gaming firms have always wanted more than poker anyways, since real-life slot revenue, for example, dwarfs the poker take.
To put it another way: Poker is the gateway game.
Castle said that in the meantime he’ll be very happy to offer his casino clients an online poker “solution.” SHFL is positioned to be a dominant player in the business right away.
While Nevada regulators don’t try to limit the market to only a few competitors, according to Castle, the Silver State is notorious for being an extremely difficult place for outside companies to snag licensure. One exception would be for a service provider like Bwin.party Digital Entertainment, which should get an online poker OK since it’s partnering with MGM Resorts International, one of the most powerful brick-and-mortar casino companies in the world.
In fact, web poker rules gave well-established Nevada gaming firms the exclusive right to control the activity, and then later games such as slots, bingo and sports betting. A gambling market in the hands of a few has been the norm throughout Nevada’s history.
Another monopoly-creating factor is that obtaining a license takes a long time and it’s very expensive — up to seven-figure expensive.
Going back to SHFL. Castle added that since his firm passed on the Ongame Network, it isn’t “tied to whether or not Nevada offers a lot of poker players.”
“If we had acquired Ongame, we would be singing a very different song,” he said.
For Bally Technologies, another online gaming licensee in Nevada, interstate versus intrastate doesn’t really matter a whole lot either. Bally is about a bunch of other games. The company will tell its customers to take on software that can one day offer much more than just poker, said John Connelly, vice president of businesses development.
“As we all know, the amount of profit in the poker sector itself, in many cases, is not as high as other gaming applications and products,” he said.
The company is “passive” on legislative issues in the country, leaving that kind of work to the casinos it does business with. “We tend to stray away from those types of initiatives,” Connelly said. “We allow our operators to decide what is best for them, and then we supply the technology that maximizes the decisions they make.”
WMS is moving “cautiously,” said Robert Hays, its vice president of global commercial. According to Hays, some say Nevada’s 2.7 million people can support just one operator.
“We won’t likely deploy a [online poker] network if we don’t feel that it will be successful,” Hays said. “We don’t want the Williams brand or our poker solution to be tainted based upon a false start or poor execution due to lack of liquidity.”
The company very much wants other states to jump on board with Nevada, but it won’t be active in any legislative pushes. Just like SHFL and Bally, WMS is known for games other than poker, and not surprisingly wants to offer them in the future.
International Game Technology, a fourth company licensed in Nevada for online poker, has already experienced a liquidity issue with its online poker product in Europe. As a result, it has decided to shut down its poker network. It’s unclear how poker will work for IGT in Nevada.
While technology firms are a mixed bag when it comes to their feelings on an intrastate model, Nevada casinos, with many locations scattered throughout the nation, find a federal bill, or at the very least a state-by-state patchwork, super attractive.
The American Gaming Association, the industry’s top lobbying group, has been actively preaching a message of legalization on Capitol Hill. Nevada Sen. Harry Reid has also been working on behalf of his casinos by pushing his idea of a federal web poker framework.
South Point Casino, which will run poker in-house and not rely on a relationship with a service provider, told Card Player late last year that it wants California to come on board with the Silver State. Whether or not California would want to is another story.
Follow Brian Pempus on Twitter — @brianpempus
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