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Gruetze: Pa. will deal online poker in 2017, financial analysis says

| Sunday, Sept. 21, 2014, 9:00 p.m.

Pennsylvania poker players could be posting blinds online in 2017, says a new analysis of Internet gambling expansion.

Saying backers made “significant progress” this year, a study released Sept. 10 by Morgan Stanley Research predicts the Legislature will approve a poker-only bill in 2016, and cards will fly across screens the following year.

The investment company analysis predicts Pennsylvania's online-poker market will be $58 million in its first year and grow to $389.5 million in the fourth year. The latter estimate assumes the Legislature approves other online games after two years of only poker.

California, New York and Illinois are the other states likely to approve some form of online gambling by 2016, Morgan Stanley says.

It pegs California as the first to act, approving a poker-only law in 2015 and launching games in 2016. The online market is expected to total $260 million. California's adult population is 29 million, about three times more than Pennsylvania's, and Californians are more likely to gamble online. The study forecasts that 19 percent of California adults will play online, compared with 11.3 percent of Pennsylvanians.

John Pappas, executive director of Poker Players Alliance, which supports legalization of online poker, says a Pennsylvania bill could pick up speed next year.

“I don't think there is any chance of a bill this year, but, yes, 2015 is a good probability,” he says. “It takes a couple legislative cycles, at a minimum, to get something done. I fully expect more bills to be introduced in 2015, along with hearings and even votes.”

The Morgan Stanley study estimates the national online-gambling market will total $1.3 billion in seven states in 2017 and reach $5.2 billion in 2020, when it will be available in 20 states, including West Virginia and Ohio.

Those totals are down from previous company estimates, based on technical problems and below-expectation performance in the first states with online betting. One problem is that some credit-card companies and banks have been reluctant to approve online casino transactions.

Only three states — Nevada, New Jersey and Delaware — currently allow Internet gambling. Federal law requires gamblers to be in the state to play. Nevada, where online gambling is limited to poker, and Delaware have agreed to allow players from each state to compete against each other. New Jersey reportedly is considering a similar pact.

New Jersey casinos, which offer slots, table games and poker online, have won $92 million from Internet gambling since the games began in November 2013.

A bill to allow online poker in Pennsylvania remains in committee, says Tom Golden, aide to Sen. Edwin Erickson, R-Chester County, the bill's sponsor. Gordon does not expect action before the November election.

A state-commissioned study released in March said Pennsylvania could reap $113 million a year from full-fledged online gambling. With the state's budget problems, a revenue source that wouldn't involve directly taxing residents could appeal to lawmakers. However, ardent online-gambling opponent Sheldon Adelson is CEO of the company that owns the Sands in Bethlehem, one of the state's most profitable casinos.

Morgan Stanley says the national online-poker market could grow quickly if PokerStars is allowed to set up operations in New Jersey. PokerStars is the world's largest online-poker site but could not get licensed in Nevada or New Jersey after being accused in 2011 of violating U.S. banking laws. Amaya Gaming Group of Canada bought PokerStars in August, and Morgan Stanley says New Jersey could approve a PokerStars site this year.

The study notes that after PokerStars became available in Italy in 2009, the country's online poker market grew by 62 percent in a year. PokerStars accounted for more than half of that.

“We remain bullish on the long-term opportunity for U.S. online gaming,” Morgan Stanley says.

Mark Gruetze is administrative editor for Trib Total Media. He can be reached at 412-320-7838 or players@tribweb.com.

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