Legal poker site in Nevada may herald online gaming boom
By Mark Gruetze
Published: Friday, May 3, 2013, 8:57 p.m.
In the words of renowned comedian-composer Steve Allen, this could be the start of something big.
A subsidiary of Station Casinos in Las Vegas this week launched the country's first website where poker players legally put real money on the line.
The site, www.UltimatePoker.com, is open only to players in Nevada — at least for now — and is on a 30-day trial. However, analysts with Morgan Stanley Research predict online gambling in the United States will grow rapidly, generating about $9 billion a year in revenue by 2020. That's equal to the current gambling revenue for the Las Vegas Strip and Atlantic City combined.
New Jersey is expected to launch online gambling this year, giving residents the chance to wager on casino games such as slot machines, blackjack and roulette in addition to poker; Nevada's law allows only online poker. Delaware approved online gaming in 2012, although no betting is allowed there yet.
“More and more states are likely to legalize online gambling in the coming years, particularly once Nevada and New Jersey are successful in raising taxes,” the Morgan Stanley analysis says.
Pennsylvania, the country's sixth most populous state, is a lucrative market because of its size. According to Morgan Stanley statistics, online gambling in Pennsylvania could generate almost $500 million in revenue within five years.
An April 11 analysis by Morgan Stanley Research of Boyd Gaming, operator of casinos in nine states, explains why online gaming is so attractive to the casino industry and its investors.
The analysis says legal Internet gambling could generate revenue averaging at least $42 per adult in 2017. The midrange rate, which Morgan Stanley considers conservative, is $52 per adult, and the bullish rate is $74. Pennsylvania has about 9 million adults, according to census estimates for 2011.
New Jersey projects online gambling revenue will reach $462 million a year after four years, according to Gambling Compliance, which tracks gambling legislation around the world. It says 11 states are considering Internet gambling legislation.
States have rushed to embrace online gambling since a December 2011 opinion by the U.S. Justice Department said the federal Wire Act did not prohibit Internet gambling within the states. That reversed the department's previous position.
For now, online gambling is limited to players within a state's boundaries. Nevada has approved a law allowing agreements to share customers with other states that allow Internet games, much like the PowerBall or Mega Millions lotteries.
Ultimate Poker and other sites established in Nevada or elsewhere in the United States will use software that verifies a player's location. Users will be required to provide proof of age and can deposit money with the site through an electronic transfer from a bank or by taking cash to one of the 16 Station casinos in the Las Vegas area. Geo-location software verifies the player is in Nevada. For players outside Nevada, Ultimate Poker offers play-money games.
Rep. Tina Davis, D-Bucks County, introduced a bill last month that would allow online gambling in Pennsylvania. It was referred to committee. The bill would put the Gaming Control Board in charge of regulating the state's online gaming, including determining which games could be offered. In some states, the Lottery is vying to operate online games.
The Davis bill specifies that only firms licensed to operate land-based casinos in Pennsylvania would be allowed to offer online games.
The bill sets a $5 million one-time fee for a license to offer online gambling, with a $500,000 renewal fee every three years. The bill says 28 percent of the online gross gambling revenue would go to the state. In land-based casinos, the state gets 55 percent of gross slot revenue; state and local taxes take 14 percent or 16 percent of table-game revenue, depending on how long a casino has been open.
The bill says 55 percent of the tax revenue from online gambling would go to property tax relief for the elderly, 30 percent for transit aid for the elderly and 15 percent to the Race Horse Development Fund.
Morgan Stanley calls Pennsylvania a key state for online gambling but says the Davis bill is unlikely to win approval this year. Davis did not respond to a request for comment.
Despite the rosy projections, Morgan Stanley does not expect online gambling to eat into traditional casinos.
So, get used to the idea of playing your favorite games from the small screen. We're at the start of something big.
Mark Gruetze is administrative editor for Trib Total Media. He can be reached at 412-320-7838 or email@example.com.
Illinois weighs expansion of gambling
The Illinois Senate voted this week to add five casinos throughout the state and allow the addition of slot machines at Chicago's Midway and O'Hare airports. The bill now goes to the House.
The casinos would be in Chicago, the city's first; Lake County; a suburb south of Chicago; Rockford; and Danville. It would allow slot machines at horse tracks. A plan to permit Internet gambling within the state was removed before the vote, the Chicago Tribune reported.
Gov. Pat Quinn, who has rejected previous gambling bills, said this proposal was a step toward addressing his concerns about ethical standards, oversight and use of gaming revenue, according to news accounts.
Slot players lost $205.2 million at Pennsylvania's 11 casinos during April, a drop of 4.2 percent from April 2012, the Gaming Control Board reports.
The state gets 55 percent of that gross slot revenue, or what's left of players' wagers after jackpots are paid.
Statewide, the slot payout rate is 89.92 percent since the fiscal year started July 1, 2013. For every $100 bet, the machines return an average of $89.92. Highest payout rate: 90.61 percent at Parx in Philadelphia; lowest: 89.37 percent at Hollywood Penn National near Harrisburg.
Figures for Western Pennsylvania casinos:
Rivers; monthly slot revenue of $24.44 million, up by 0.2 percent from $24.4 million last year. Rivers was one of three casinos to post a gain from last year.
Meadows; monthly slot revenue of $20.11 million, down by 9.68 percent from $22,27 million last year.
Presque Isle in Erie; monthly slot revenue of $11.81 million, down by 15.98 percent from $14.05 million last year.
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