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Nevada Internet Poker Q & A: UNLV's David Schwartz

Director of Center for Gaming Research Talks Intrastate vs. Interstate

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David SchwartzNevada gaming regulators are currently in the process of adopting regulations for an intrastate online poker industry.

Regulations must be in place by Feb. 1, 2012, which would put licensing on the horizon for companies looking to enter the business.

Card Player caught up with Dr. David Schwartz, Director of the Center for Gaming Research at the University of Nevada Las Vegas, to talk about a wide-range of topics related to an upcoming Silver State online poker market.

Brian Pempus: With play being restricted to residents and those visiting Nevada, do you think there will be enough of a player pool to have a healthy system?

David Schwartz: I think Nevada is one state where you might. The poker rooms around the city tend to be crowded, and there’s people in them 24/7. You’ve got to figure that some subset of those people who would be going to those poker rooms would be staying at home. I’m not totally sure how many games you would need running to have a go of it, but I’m sure you would have something there. I don’t think you could have a hundred different poker rooms catering to Nevada, but maybe five or six might work.

BP: Do you envision Las Vegas using online poker as a tourist draw?

DS: I think they will probably slow play it — to use a pun. I don’t think if you’re working in a casino, even if you’re running the poker room — you aren’t going to get far in executive committee, with the hotel folks and especially the [food and beverage] folks, saying, ‘Hey, we are going to pitch people coming to Vegas to stay in the hotel room the whole time.’ I don’t know how far they would go in pitching it, but I think they would make it known that you could [play online poker].

Federal Internet poker legislation is currently at a standstill in CongressBP: Do you think this push for intrastate online poker in Nevada is more about having everything in place for offering the game nationwide once authorized, as opposed to rushing out and taking in the available revenue right now?

DS: Absolutely. If you look at poker in general in Nevada, it generates about one percent of the state’s total gaming revenues. So, when you are looking at online play it would be a subsection of that. I think you are right, it’s not that this is going to be a gold mine for revenue, but it will say ‘Hey look, here’s a concept, we can do it, and it’s working.’

BP: What do you make of Sheldon Adelson opposing Internet poker, and do you think that could be a future problem for Nevada companies trying to get a federal bill passed?

DS: He’s one owner, and there’s a lot of different voices there. I don’t think his opinion invalidates the opinions of other folks — Wynn, Caesars, MGM — who are in favor of it. Obviously if you have an opponent it’s not going to make it easier, but I don’t think it’s insurmountable. If it forces the proponents to take a closer look at the age verification and explain what they are doing, and make a stronger case, in the end I think this is a good thing. I think that ultimately someone will be able to demonstrate age verification to Mr. Adelson’s satisfaction, and he may support it after that.

BP: Do you think branding will be huge factor in this upcoming industry?

DS: I think it’s going to be surprising. The casinos believe they are going to dominate — so I think that Caesars believes that once they roll out worldseriesofpoker.com that’s going to dominate. But a lot of it is going to come down to how well the operations run, and poker players aren’t going to be brand obsessed, and are going to be focused instead on their experience of the play. The brand is part of it, but giving them an online space that they want to play in is way more important than the brand, because these are players who have their own money at stake.

Poker is not a negative expectation game like the casino games. If you are playing to earn money you are going to be really sensitive to things like how quickly you can get your money out. Where other people are playing is also going to be important. The importance of the brand is overstated. If you look at what happened in the online space before, you had brands spring up out of nowhere. For awhile, personalities were more important, but in the wake of the Full Tilt debacle, that will probably be less so. I know that the big boys are thinking brand is going to trump everything else, but I don’t think it’s going to be that easy.

BP: So you don’t see a major flood of casino-sponsored players similar to what we saw in the past with the offshore online poker sites?

DS: There might be, but I don’t know what kind of good it would do. We just saw some of the most revered names in the game — one guy’s nickname was ‘Jesus’ — and that basically turned out to be a pyramid scheme. I think [sponsored players] might happen, but I don’t think people are going to be buying that as much.

BP: Do you think competition would be more in line with what the rake is, what promotions are being offered, comps and things like that?

DS: Yeah, and I think there is going to be a feeling out period, and it’s going to be figuring out which one is the most trustworthy, as far as the moderation of the games and how they are run. There have been scandals elsewhere, so I don’t know how you wouldn’t have that in the back of your mind when playing. The scandals are one of the reasons why the American Gaming Association is saying it should be legalized in the U.S.

BP: What do you make of the AGA not endorsing a state-by-state patchwork, in favor of a federal bill, even though Nevada is pushing an intrastate system, and that a lot of companies that are members of the lobbying group reside here in Nevada?

DS: A lot of that is politics and I can’t really speak to it because I’m not in those corridors of power. But, gambling is fundamentally a state’s issue. As long as it’s not crossing state lines, a state can do whatever it wants with it. That is just the way the constitution is written. Gambling is not something explicitly under the power of the federal government, so regulation of gambling goes back to the states. So, pretty much, the federal government can’t tell you that you can’t accept sports bets on a mobile device, which we are already doing in Nevada — as long as it’s not crossing state lines.

I have to think that once they have [online poker] up and running intrastate, they will just say, ‘Look this is going well, but it could be better if other states could get on it as well.’ Let’s do a simple amendment to the [Unlawful Internet Gaming Enforcement Act], that says if it’s going from one state where it’s legal to another state where it is as well, then it’s fine — like horse racing. The Interstate Horse Racing Act said you can send horse racing bets across borders, but this is how you do it. You don’t need a huge federal presence, because state’s will take care of it. That’s always been my view of how it should go, that it should be opt-in by the states and obviously in foreign countries as well, but that might make too much sense and be too sensible to work.

BP: Last question: Do you see online poker being a gateway for Nevada casinos to get involved in other forms of Internet gaming in the future?

DS: Possibly. The gaming manufactures — the slot machine makers — their big thing is cross-platform. You could be playing a game at a slot machine and then upload it to your phone, and keep on playing when you leave. Then take your phone to another slot machine and keep on playing there. I think eventually that’s the way things are going — that’s the way things are in the U.K. However, I don’t think the casinos in Nevada are in any hurry to get there just yet.

BP: Because of a reputation concern and that poker has a large skill component to it?

DS: Yeah, I think for whatever reason they have decided to go with poker instead of sports betting, even though both make about the same amount of money for the casino. But they have decided poker is where it’s at, possibly because Caesars is heavily lobbying this and has one of the biggest names in poker.

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