Wynn, PokerStars form U.S. joint venture

The focus of the online gaming industry was on Nevada last week for several good reasons. It’s becoming increasingly evident that the major casino companies want to become major players if the wagers are legalized in the Unites States.

If online gaming is legalized anytime soon in the U.S., Wynn Resorts is ready to go. Last week, the company announced a joint venture with PokerStars, the market leader for online poker. PokerStarsWynn.com will be the U.S.-based company operated by PokerStars should online gaming be OK’d.

“After much study, we are convinced that the lack of regulation of internet gaming within the U.S. must change,” Wynn Resorts Chairman and CEO Steve Wynn said in a statement. “We must recognize that this activity is occurring and that law enforcement does not have the tools to stop it. As a company that has safely conducted gaming in the U.S. for more than 40 years, we believe that the same can be done for poker on the internet.”

Mark Scheinberg, chairman and founder of PokerStars, says he believes the U.S. should emulate the European approach to the activity.

“We have long supported the enactment of local regulatory regimes that protect consumers and provide valuable tax revenues and jobs,” said Scheinberg. “PokerStars is closely regulated in many European countries and it has been endorsing the adoption of the same approach in the United States for years, with this alliance representing a critical step in that direction. We are excited about the opportunities that partnering with Wynn, a pioneering leader and innovator in gaming, will present for PokerStars in the United States. These opportunities include the rapid ramp-up in hiring of a large number of professionals in this growing global technology and services sector that will benefit from U.S. talent to keep up with global demand.”

How Nevada regulators will view the transaction is questionable, however. PokerStars has continued to accept bets from U.S. players following the passage of the Unlawful Internet Gambling Enforcement Act in 2007, putting the company in violation of U.S. laws. Other companies such as PartyGaming stopped taking U.S. bets at that time and have mended fences with the U.S. Department of Justice. PokerStars is still an outlaw company in the department’s eyes.

The agreement is a bit of a turnabout for Wynn. For years, he has been firmly in the “anti-online gaming” camp. When Wynn Resorts was a member of the American Gaming Association, he headed the group that was opposed to the betting system, causing the AGA to hold a neutral online gaming stance for all that time.

Several years ago, after leaving the AGA due to non-related disagreements, Wynn began examining online gaming by hiring experts to learn how it could benefit his company. The result was last week’s announcement.

Since the partnership only activates when a law is passed that will legalize online gaming in the U.S. either at the federal or a state level, it’s unclear whether the Nevada regulatory authorities will review the arrangement until that time.

Ironically, the Nevada Gaming Commission gave final approval to a partnership between Caesars Entertainment and 888.com, an online gaming supplier and casino operator. The companies will work together on internet gambling sites, including a Caesars-branded casino in Europe. But the difference is that, like PartyGaming, 888 stopped taking U.S. bets after the passage of UIGEA and made amends with Justice.

The Israel-owned, Gibraltar-based internet gaming company 888 Holdings, offers online casino games, poker, bingo, sports wagering and social gaming applications in the United Kingdom, France and Italy.

Mitch Garber, CEO of Caesars Interactive Entertainment, told regulators the company would use its World Series of Poker and Caesars brands in overseas markets through its relationship with 888. He added that it would be a giant step forward in the push for legal internet gaming in the United States.

“It confirms that internet gaming is a reality,” Garber said. “It should allow us to look more and more at a federally regulated environment in the United States.”

Meanwhile, PokerStars was in the middle of another Nevada battle, a proposition from a Nevada legislator to legalize online poker in the state. PokerStars parent company, Rational Enterprises Entertainment Ltd., is funding the effort to get the bill passed. But major gaming companies are not in favor.

Caesars Entertainment and MGM Resorts are united in their opposition to state-by-state legalization of online gaming. According to the Las Vegas Sun, the companies believe state oversight is no substitute for uniform federal regulation.

Last week, both casino giants came out against a bill from Las Vegas Assemblyman William Horne that would enable the state to regulate internet poker.

Horne’s bill would allow licensed internet poker sites “to locate in and operate from Nevada.” Legal online gaming, says Horne, would “benefit the economy of this state, and assist in protecting consumers from criminal and corruptive influences that may be present in unlicensed and unregulated internet poker sites.”

In response to the proposal, Jan Jones, senior vice president of communications for Caesars said, “Our focus is not intrastate, our focus is interstate. It’s federal, it’s putting together an American, appropriate regulation and licensing regime, and taking the jobs and revenues going to foreign companies and bringing it back to America.”

Alan Feldman of MGM Resorts agrees. He told the Associated Press, “I think everyone’s objective should be to get the proper bill passed, and to do so federally.”

For a time, New Jersey seemed to be first in line to legalize internet gaming, but Governor Chris Christie vetoed the legislation this month. New Jersey state Senator Ray Lesniak, author of that bill, has said he will revise it and re-introduce it in the legislature.

Horne’s bill does have its fans. One of them is former Nevada gaming regulator Randall Sayre, now a consultant for PokerStars, which controls about half of the global online poker market.

“If we don’t approach this in a rational fashion in this legislative session, by the time we meet again in two years, we will be left on the sidelines,” said Sayre. By adopting regulations in Nevada, every casino in the state would have a head start if the federal government allows internet gambling nationally.

South Point owner Michael Gaughan broke ranks with other casino operators to support passage of the Horne bill.

“There is no doubt in my mind that online poker and other games are coming,” Gaughan said in a statement. “AB 258 would make us a pioneer in the nationwide movement and the leader for the rest of the country to emulate.” He also said online poker could infuse more than $500 million into the state budget and ease unemployment.

Richard Perkins, a former state assembly speaker, also supports the bill, saying, “We can show the feds that this is a product that can work in the U.S. It’s not the big taboo, mysterious, ‘Wizard of Oz’ approach to gaming that the feds have made it out to be. If done properly, this bill would put Nevada in its rightful place as the leader in online poker and make Nevada the gold standard for regulation.”

At hearings held last week in Carson City, witnesses estimated the economic impact would be $1.8 billion to the state, as well as $50 million to $60 million in direct gaming tax revenue.

By Staff