Why would Pala, whose majority shareholder, the Pala Band of Mission Indians, operates a California casino, attempt to crack a challenging market on the other side of the country?
And what impact would Pala Interactive CEO Jim Ryan’s connection to the scandal-plagued Ultimate Bet – a chapter of online poker’s history still far more populated by questions than answers – have on Pala’s ability to operate in New Jersey?
On the same day where the NJ Department of Gaming Enforcement took the unusual step of publicly commenting on Pala’s approval to conduct iGaming business in the state, OPR conducted an interview with Ryan, covering the landscape for online poker in California, his time at Ultimate Bet and Pala’s plans for New Jersey.
Chris Grove: New Jersey is far from a soft target for an online gambling operator, at least at this stage. What drove Pala’s decision to enter, and what are the core goals for the company in the near-term? To put it another way: How does Pala measure success in New Jersey?
Jim Ryan: Online gaming is still a nascent industry in the U.S. and New Jersey is one of first and the largest states to legalize online real-money gaming. We believe that we will surprise and delight the marketplace here with the Pala Interactive offerings, and we hope to give the market a boost with our experience, proprietary iGaming platform and innovative promotions.
We believe having players on our site will help us refine the user experience so that we have a strong and engaging offering as we roll out throughout the rest of the U.S.
Grove: What form do you see your poker product taking in New Jersey? Standalone or part of a shared network?
Ryan: We have our own proprietary poker platform and network – PalaPoker.com – that we look forward to introducing to the New Jersey market in early 2015. This will be a standalone network initially and we will consider network partner opportunities.
Grove: Why do you think you’re the first California operator to venture into New Jersey?
Ryan: Pala Interactive is associated with the successful land-based Pala Casino Spa & Resort in Southern California that’s been around for 20 years. The Pala Band of Mission Indians combined with the Casino’s management and the executive team at Pala Interactive had a vision to grow and participate as the U.S. iGaming industry expanded beyond their back yard, which is what brought us to New Jersey.
Grove: Does the partnership with Borgata extend beyond New Jersey?
Ryan: The relationship with the Borgata is specific to New Jersey. We look forward to identifying best in class partners as other U.S. markets regulate.
Grove: What makes 2015 any different from 2014 for online poker in California?
Ryan: 2014 was a critical year for the evolution of online gaming in the state of California. Specifically a group of influential tribes and card rooms agreed to cooperate with the objective of developing a unified online poker bill.
We are hopeful that this momentum will continue through 2015 where we’ll have more time to use that collective voice to settle on a final, consolidated bill to gain support in the legislature.
Grove: The role of the tracks in online is consistently cited as one of the primary stumbling blocks to a bill – arguably the primary block. Do you agree with that assessment? And what possible paths do you see to a resolution of that issue?
Ryan: We believe that the racing industry has a significant voice when it comes this legislation, and we hope everyone can work together amicably to find a solution that is agreeable for all parties and to bring online poker to California.
Grove: There have been some questions raised about the online poker platform Pala plans to deploy in California and New Jersey. Can you talk about the development of the platform and what ties, if any, it has to software used by Ultimate Bet?
Ryan: Pala Interactive has spent the last few years developing a new online Poker and Casino iGaming platform. The Pala Interactive platform and software have no connection to the UltimateBet software. Additionally the software has been subject to testing and has been approved by the New Jersey Division of Gaming Enforcement Technical Service Bureau.
To ensure that a scheme such as that which occurred on UltimateBet never happens in our environment, Pala Interactive has built state-of-the-art software to detect player fraud (including but not limited to player collision, chip dumping, unusual wins/losses and bots) to ensure that its players are protected and will have the best online gaming experience available.
Grove: What response would you offer to those who question your role in the regulated U.S. online gambling market due to your past involvement with Ultimate Bet?
Ryan: The cheating scheme that occurred at UltimateBet during my tenure at Excapsa is extremely regrettable. The cheating scheme occurred from 2003 to 2007 and I was the CEO of Excapsa for 23 months (Jan. 2005 – Nov. 2006) within this period. I had no knowledge or involvement in this fraudulent activity.
This matter has been under investigation by the New Jersey Division of Gaming Enforcement for a number of months; the DGE has saw fit to grant Pala Interactive a transactional waiver and their investigation will continue until a final grant of a license.
I look forward to its resolution and will continue to cooperate with the DGE to bring this issue to a close once and for all.
Grove: Can you clarify when you severed connections with UB?
Ryan: I left my position as CEO of Excapsa in November 2006. The fraudulent scheme relied on a software gaff that was developed and exploited starting in 2003 – long before Excapsa acquired the software (July 2005) – and continued until 2007 – well after Excapsa sold its operating subsidiaries which, which included the software and operating units of the business, in October 2006.
Although the scheme occurred during my tenure as CEO, which is extremely regrettable, I had no knowledge of the gaff and in fact it was so sophisticated that it escaped recognition by three separate management teams during the course of the fraud.
The shareholders of Excapsa refunded approximately $14.65 million to the players affected by the scheme.
After the sale of the Excapsa operating subsidiaries, the board of Excapsa engage a third party liquidator to manage the distribution of the remaining assets of Excapsa which included cash and a note receivable. This process was conducted under the supervision of the Ontario Superior Court.
As part of this process the court appoints three inspectors who have the responsibility carry out a general oversight of the liquidators activities, approve the liquidators fees and expenses and assist the liquidator in carrying out its duties such as assisting with the preparation for the final year of operation tax returns, collection of the long term note receivable or other questions the liquidator may have.
I was one of the court appointed inspectors and I held this voluntary position from November 2006 to May 2008.
Grove: What’s the roadmap for Pala post-New Jersey and California? The rollout in the US looks to be a slow one for the foreseeable future; is an international expansion part of Pala’s primary plan for online? What about products like social and DFS?
Ryan: Our current focus is on the development of our real money gaming platform for regulated and to be regulated markets in the USA. As the U.S. iGaming market continues to evolve, we have every intention of growing with it and tailoring our offering to reach as wide an audience as possible.Interview: Jim Ryan Talks Pala's Plans for New Jersey, California's Chances and His Time at Ultimate Bet Chris Grove