Online Poker Report

MA Internet Gambling Forum: Panel 5

Online Gambling Massachusetts
This article may be outdated. Get the latest news on Massachusetts here.

The Massachusetts Gaming Commission hosted a day-long forum on Internet Gambling at the Boston Convention and Exhibition Center on Tuesday, March 11. The forum consisted of five panel discussions, with noted speakers representing virtually every corner of the iGaming industry as well as regulators from all over North America.

Below you’ll find the highlights from the fifth and final panel at the forum.

This article covers the fourth of five panels. Coverage of panels number one and two can be found here.

Coverage of panel number three can be found here and coverage of panel number four can be found here.

Panel 5: Lottery, Internet gaming and casinos -peaceful coexistence?

Panel number 5 was the largest of the day, and unlike the previous panels, the men and women of this panel took part in a question and answer session with Jim McHugh playing the role of moderator.

Overall, there wasn’t much debate – or even back and forth – but there were some thought-provoking takeaways and the panelists’ answers provided a look inside the heads of many of the people that will most likely be at the forefront of online gambling in the US.

Here is a look at the men and women on Panel number 5:

  • Hon. Jennifer L. Flanagan, Vice Chair, Committee on Ways and Means, Massachusetts Senate
  • Hon. Bruce E. Tarr, Minority Leader, Massachusetts Senate
  • Stephen Martino, Director, Maryland State Lottery and Gaming Control Agency
  • Vernon Kirk, Director, Delaware Lottery
  • George Sweny, Senior Vice President, Charitable and iGaming, Ontario Lottery and Gaming Corporation
  • Chuck Bunnell, Chief of Staff External and Government Affairs for the Mohegan Tribe
  • Kim Sinatra, Senior Vice President, General Counsel and Secretary, Wynn Resorts
  • Tom Beauchamp of Penn National Gaming
  • Marcus Prater, Executive Director, Association of Gaming Equipment Manufacturers (AGEM)

Cannibalization

One of McHugh’s primary concerns with online gambling in Massachusetts is the potential effect on the Massachusetts state lottery, which is considered one of the best in the nation.

So it came as little surprise that his first question to the panel got right to the point as he asked if there had been any cannibalization of lottery sales in states with other gambling options.

Steve Martino of Maryland described the situation in that state (which does not have online gambling but did recently expand its brick and mortar gambling options with table games), telling McHugh that there had been some cannibalization of lottery sales (down 2.5% in 2013 and down a further 2.1% in 2014) since table games were introduced, but overall revenue has increased across the board.

Martino stated that total revenue was up $179 million, a 27.6% increase. And while lottery sales are down slightly, it’s just shift in where the money is coming from.

Vernon Kirk from Delaware simply stated that all three – lottery, brick and mortar casinos, and online gambling -coexist in the state quite nicely.

Marcus Prater of the Gaming Equipment Manufacturers Union was even more bullish, going straight to a recent CI poll showing play rates and potential liquidity that has been getting a lot of publicity as well as citing data released by the Borgata.

Prater noted that there is clear brand correlation between brick and mortar and online gambling, and that 97% of online gamblers also gamble in land-based casinos.

Prater went on to throw out even more statistics:

  • 48% of online gamblers have been to a land-based casino a couple times or less.
  • 18% go just once per year.
  • 35% were enticed to play because of land-based promotions, most prominently hotel stays.
  • 85% at Borgata’s online players are not rated players.

Lessons from eCommerce

Tom Beauchamp of Penn National Gaming drew a connection between the current attitudes regarding online gambling and the attitudes about eCommerce 15 to 20 years ago.

Beauchamp compared the emergence of iGaming to the early days of online shopping. Traditional retailers feared online retail sites would put them out of business, but once those companies embraced the Internet they were able to use it in an effective way.

Beauchamp called Internet gambling “another channel not a replacement” and said, “Customers who visit you in multi-channels (online and live) are worth more.”

Kim Sinatra goes against the tide

While virtually every speaker throughout the day was at the very least receptive to online gambling, Kim Sinatra of Wynn Entertainment was the day’s first real naysayer.

Wynn Entertainment has started to shy away from online gambling in recent months, and Sinatra was sticking to the company’s talking points.

Sinatra didn’t outright poo-poo online gambling, but she did try to douse the panel with buckets of cold water, and pointed out the lackluster revenue generated so far.

Sinatra called online gambling “the most divisive issue in our industry” and went on to mischaracterize the AGA’s position, saying that the group’s members are split and unsure on the issue.

The AGA’s real position is almost unanimously in favor of online gambling regulation with the exception a very well-known member, Sheldon Adelson and the Las Vegas Sands Corporation.

To her credit, Sinatra did wonder aloud if the same customers play both online and live (hinting at cannibalization), which she thoughtfully answered with “probably not.”

Later in the panel she also scoffed at the interstate agreement between Delaware and Nevada, saying the compact was about necessity because the two states are “puny on liquidity.”

Overall Sinatra’s remarks were not what I would term anti-online gambling, but rather signal a cautious approach, which has become the M.O. of one of the two Massachusetts senators on the panel.

MA senators weigh in

When the topic got around to Massachusetts, Senator Flanagan seemed to be of the Kim Sinatra mind, telling the panel that casinos need room to breathe. He believes the state should wait until the brick and mortar casino industry is up and running before addressing online gambling.

Senator Tarr, who introduced the current online gambling bill in MA called online gambling an “inevitability.”

Tarr seems to be of the opinion that on can’t hop on a train once it starts moving and he does not want Massachusetts to get left behind.

Tarr also brought up the often overlooked point that online gambling already exists in the form of unregulated sites.

Tarr told the panel, “It’s not a situation where this activity isn’t occurring because we don’t regulate it, it IS occurring AND we don’t regulate it.”

Calling the Federales

From there the conversation turned towards the federal government’s role. The panelists were all somewhat leery of federal involvement but also conceded that it would be necessary on some level.

Two pertinent quotes that summed up the panelists thoughts came from Senator Tarr and Steve Martino.

Senator Tarr remarked, “The federal government should harmonize with states not restrict them.”

“Each state can make their own decision on Internet gaming,” said Steve Martino.

For a dissenting opinion, I’ll use the words of Marcus Prater.

“Some federal oversight would be a good thing but it’s not going to be there anytime soon,”said Prater, who also seemed to have some concerns that a federal ban wasn’t out of the question either.

Big thoughts

At the end of the discussion each panelist offered up one big thought for the MGC to ponder.

Marcus Prater believes everything will work out fine as long as forward-thinking groups do their homework in advance. Prater says he has “great confidence in the industry.”

Tom Beauchamp urged the MGC to look outside of gaming to financial services, health care, and retail for viable models and ideas.

Kim Sinatra called the panel a “helpful dialogue” and cautioned the MGC and Massachusetts to take it slow and see what happens with other states.

Chuck Bunnell offered up Mohegan’s services, saying, “Use us as a resource.”

“There is always something to learn and challenges on the horizon,” George Sweny stated. Sweny then echoed the thoughts of Tom Beauchamp saying, “There is a lot to learn outside of the gaming business.”

Vernon Kirk was more terse, telling the MGC, “Take your time, and choose your partners very carefully,” in what seemed like a somewhat cautionary tone.

Steve Martino, who came across as an online gambling advocate during the panel, told the MGC to stay “supple and adaptive in your approach. It won’t look the same in a couple years.”

And finally, Senator Flanagan reiterated her previous thoughts saying Massachusetts must “do our due diligence and tread lightly.”

What you might have missed during Panel 5

Steven Martino of the Maryland lottery said the state was “mapping out” online gambling, hinting that Maryland may be a serious candidate for online gambling in the coming year or two.

One of the funnier moments of the day was Jim McHugh’s lighthearted comment about companies that failed to embrace eCommerce 15 to 20 years ago, jokingly asking about the “dinosauric disappearance of Tower Records” and whether it was a failure to adapt.

Delaware and Nevada consulted the multi-state online lottery to get a framework for their interstate bill.

George Sweney’s spot-on thoughts in regards to where the money needs to come from should be disseminated to all affiliates.

“We don’t want any problem gamblers in any of our business,” Sweney said, adding, “We’d rather have a large number of players spending small amounts of money than a few players spending large amounts of money.”

What we learned from Panel 5

The key takeaway from Panel 5 is that online gambling is new and nobody knows what is coming around the corner.

Even these experts realize the fluidity of the situation and stressed the ability to adapt to the changing environment.

Sign Up For The Grove Report – US Online Gambling Industry Insights Delivered To Your Inbox:
Steve Ruddock
- Steve covers nearly every angle of online poker in his job as a full-time freelance poker writer. His primary focus for OPR is the developing legal and legislative picture for regulated US online poker and gambling.