WEEKLY FEATURE: ‘Creepy’ Showdown

Las Vegas Sands spokesman Andy Abboud (r. in photo) squared off with Caesars Interactive head Mitch Garber last week at iGaming North America in Las Vegas, moderated by World Poker Tour co-founder Steve Lipscomb. The heavily pro-iGaming crowd listened politely as Garber parried all of the Las Vegas Sands’ argument against iGaming. The iGNA conference has clearly become the most important iGaming show on the American calendar.

More than 600 people gathered in Las Vegas last week to examine the growth of the online gaming industry at the groundbreaking conference, iGaming North America. While there were sessions covering the full spectrum of iGaming—online poker, social gaming, payment processing, interstate iGaming compacts, liquidity, marketing iGaming, investing in iGaming and much more—the fireworks were reserved for the second session on Day 1, a showdown between the pro-iGaming and anti-iGaming sides of the casino industry.

Andy Abboud has been the spokesman for Las Vegas Sands Chairman Sheldon Adelson’s campaign against iGaming, the Coalition to Stop Internet Gambling (CSIG). He accepted the invitation to speak as a favor the show organizers, the Innovation Group, Bola Verde Media, eGamingBrokerage, Lewis Roca Rothgerber LLC and iGaming Business, and faced off against the crowd favorite, Mitch Garber, the CEO of Caesars Interactive. The moderator, who described himself as a “David” between two “Goliaths” was World Poker Tour co-founder Steve Lipscomb.

The event started out amicably, with Abboud outlining some rather rational objections to iGaming.

“We’re not fans of online gaming,” he said. “It’s not so much that it’s a Pollyana-ish, moralistic view. I think we’re concerned about the state of the industry overall and where it could go in such a rapid fashion.”

He also repeated LVS’s problems with the iGaming business model.

“If it (iGaming regulation) does happen, it’s a limited market,” he says. “I don’t think there’s going to be room for everybody in this market. If they think that everybody is going to be able to compete in a nationwide online marketplace, it’s not there.”

He went on to criticize the “bad actors” that continued to accept bets from the U.S. following the 2006 passage of the Unlawful Internet Gaming Enforcement Act, a stance almost the entire industry agrees with.

Garber listened intently for the opening statement, and then responded.

“Surprisingly, I like a lot of the things Andy said,” Garber stated. “Unfortunately, what Andy just said is not consistent with the position that Sheldon Adelson has put out there, which is ‘Internet gaming is bad, I don’t like it, it cannibalizes (land-based casinos), minors are at risk, and I’m prepared to spend as much money as I need to make this not happen.’ Nothing about bad actors or Mitch Garbers or anybody else.”

“The fact is, it’s people like me who, in the U.S., are licensed to run Ultimate Gaming, 888, WSOP.com, PartyPoker… The same licensing process that we go through for land-based casinos, we went through for online casinos.”

But Garber shares Abboud’s disdain for the “bad actors.”

There are illegal online sites today taking business from Nevadans,” said Garber. “I want that business. I paid a lot of money and tax for that business. I’ve invested in infrastructure for that business. I want the U.S. government to shut down every site that’s offering illegal iGaming, in Nevada and in New Jersey. Illegal gambling can be shut down and I hope law enforcement will start to do a greater job of shutting it down.”

Abboud said the CSIG is going to support a bill that would restore the online gaming restrictions to the Wire Act, which was stripped out by a Justice Department memo in late 2011. “Facebook and Zynga will clean our clock because Eric Holder overturned Wire Act,” he said.

Garber said the consequences of an online gaming ban would be worse than what existed prior to 2006, and pointed out that the proposed bills had nothing to do with the bad actors and only punished the “good actors.”

“This is going to be a battle between money and facts,” said Garber, who said his vast experience has shown him that legal, regulated iGaming is the only answer.

“We have billions of dollars and millions of hours of experience,” he says. “We do know how iGaming works.”

Abboud caused a stir in the audience when he criticized the “creepy” Twitter followers of the Poker Players Alliance, a group that had been backed by the “bad actors,” primarily PokerStars.

Later in the conference, Tom Russell, the executive director of the Coalition for Consumer and Online Protection, the pro-iGaming group, gave a update on two bills expected to be introduced in Congress next week (see Online Gaming). He called the bills a serious threat and urged attendees to take action by contacting their Congressional representatives to halt their passage.

“There is no scheduled debate at this point,” said Russell, “so it’s likely they’ll end up tacked onto key appropriations bills to get passed.”

Russell said that although there are carve-outs in the bills for horse racing and fantasy sports, they would have a devastating effect on iGaming, shutting down the legally approved industries in Delaware, Nevada and New Jersey, as well as impacting lotteries.

“At this point, the bills may even prohibit games like Powerball,” he said.

He urged that Congress at least hold hearings on the bills so that the public can learn about iGaming.

“We have the facts. They have the money,” he says.

New Jersey was front and center at iGaming North America for its launch of iGaming late last year. On the last day, Boyd Gaming Senior Vice President Bob Boughner gave a presentation on his company’s experience with iGaming in the state.

A market leader, Boyd’s Borgata casino is teamed with bwin.party entertainment. Together, the Borgatacasino.com and PartyPoker.com control almost half the market. Boughner said Boyd’s strategy of limited capital investment, a leading technology partner, and superior products and customer service have enabled the company to carve out a good chunk of the market.

But he identified technology problems that still must be overcome. While the geolocation issue is less of a problem today than it was in the beginning, and the “know your customer” (KYC) strategy is progressing, Boughner said payment processing is still unresolved, and that is preventing many potential players from logging on.

“Payment processing is still very challenging,” he said. “We need greater education to banks and credit card companies to make them understand that what we’re doing is legal and licensed.”

Other panels examined the issue of payment processing with little resolution. While there are ways around the difficulties to get credit card companies to process online gaming payments, they are usually multi-step procedures that are difficult for potential customers to get around. Marcus Yoder, a former IGT executive now president of consulting firm Accelarus, hinted that there were conversations going on with online payment giant PayPal that would permit payments to and from online casinos, which would be a huge step for the industry.

Education was cited as one of the major needs of the industry at iGaming North America. Player signups in Nevada and Delaware have flattened, and New Jersey account creations have slowed. Boughner said a more focused effort must be made to teach potential players how to sign up, how to deposit money and how to play the games.

A panel on interstate iGaming compacts—apparently called “liquidity agreements”—was light on details of how they would work because each state has different regulations, requirements, tax rates and player status. Delaware Rep. Helene Keeley said those details would be left to the regulators in the recently approved pact between Nevada and her state. But she agreed that the multi-state iGaming agreements were still in the formative stage.

“We’re going to fall down and skin our knees now and then,” said Keeley, “but we’ll get it perfected and then other states will join us.”

Nevada Governor Brian Sandoval spoke to the group early on the third day and stressed that the his state is ready to work together.

“These agreements are important,” he said. “We need to expand liquidity but at the same time, respect each other’s laws and regulations.”