Nevada Bullish on Online Poker Compacts, But California’s Schuetz Sees “A Tough Sell”

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In a previous article covering the winter meeting of the National Council of Legislators from Gaming States (NCLGS), we focused on the summit’s keynote speaker, AGA President Geoff Freeman.

Later at the conference, interstate iGaming policy got its own session.

The participants who were asked to weigh in were Richard Schuetz (Commissioner, California Gambling Control Commission), the Honorable Jon Porter (former Congressman from Nevada turned iGaming lobbyist), State Senator Greg Brower from Nevada and John Maddox (Vice President of Government Relations for Caesars Entertainment).

California Commissioner Schuetz stresses liquidity

Richard Schuetz has become a popular speaker at iGaming conferences due to the widespread interest in a timeline for the legalization of online poker in California.

Schuetz came out stumping for the importance of liquidity as soon as he began talking, quoting lucidly from PokerScout along the way.

With its 40-something million people, California would be a powerful player – arguably the most powerful – in a state-by-state regulated environment.

Compacting with California’s sizable player pool would thus interest many other states, but Schuetz does not see this happening, either very practically or very soon.

“People need to understand the complexity of getting a compact agreement on liquidity, where we’re going to share customers,” explained Schuetz. “For one, you’re going to have to convince us why we’re going to give you those customers.”

Schuetz elaborated:

“If it were true that we were going to have a compact in California, the Governor will have to sign off on that. So will the State Senate, and the Attorney General.

The people who do handle investigation and compliance issues work for the Attorney General – they are some of the strongest union members in the state of California. Someone’s going to have to convince them that they should give those jobs to Nevada. That may be a difficult sell.”

Combining player pools, Schuetz believes, is of far higher importance to smaller states, like Nevada and Delaware, which cannot support an online poker ecosystem on their own.

But Schuetz believes that California would not have this problem and therefore would have no need to make any liquidity concessions to smaller states.

Agreements between states seen as a more vital issue in Nevada

Nevada State Senator Greg Brower made no attempt to rebuke Schuetz’s candid statements.

“In Nevada, this is a big, big deal,” said the Senator, referring to liquidity agreements (a term that he, like Nevada Gaming Control Board Chairman A.G. Burnett, believes is more appropriate in this case than “compacts”).

“We don’t have the liquidity to make this a success,” Brower commented.

Brower is optimistic that 2014 will see progress for liquidity agreements among the states that already have iGaming.

“Delaware is on the list,” he stated, adding that Nevada has also been looking at New Jersey.

“I think in the next year you will see some success in this regard,” said Brower. “I’d like to think that we will see a compact signed.”

Compacts unlikely to be formed easily or quickly

The panel uniformly acknowledged that the path to successful iGaming compact formation, while not impossible, will be a long and challenging one.

“Harmonizing” differing state platforms and regulatory requirements will be a key obstacle to overcome.

Take a supposed agreement between Nevada and Delaware, for example. Nevada has a liberal system whereby virtually anyone who’s qualified could obtain a license to operate iGaming, but in Delaware, this privilege is restricted to only one operator (888), via exclusive permission from the state’s lottery.

If Nevada and Delaware were to combine player pools, would the only beneficiaries be the 888 platforms active in Delaware and Nevada?

Maddox offered the following take:

“My advice to state legislators is that the bill you pass match up with the states you find most desirable to compact with. If you have a choice between doing the Delaware model or the New Jersey model – or the potential California model – you’d probably be smart so sync up your legislation and regulations as closely as possible with those bigger states than with a smaller state.”

No consensus on role of the federal government

Another point of contention is over the role the federal government could play in the formation of agreements amongst states.

Approving “interstate compacts” – a term that long predates the online gaming community’s infatuation with it – has historically been a responsibility of Congress, per the U.S. Constitution.

But Brower disputed the viewpoint that this would apply to iGaming as well, reinforcing his belief that “compact” is an incorrect term for this kind of agreement among states.

Said Brower:

“I know that there is a school of thought out there that says the Constitution requires agreements between states to be approved by the Congress.

But a counter-theory suggests that the type of agreement we’re talking about in this context is not what the Constitution contemplates. I don’t purport to be an expert in that particular article and clause of the Constitution, but I’ve read enough to know that there seems to be a good argument that Congress would not have to approve this. And I think, frankly, that [keeping Congress out] is probably the only practical way to make this work.”

As noted earlier, NCLGS is in the process of drafting interstate iGaming policy recommendations, to be disseminated among its member states and the gaming industry at large – and the organization is eager to hear directly from online poker players who have a vested interest in this development.

“We welcome comments from the players, because the state legislators want to protect consumers,” said Jennifer Webb, who is spearheading the effort. “The poker players are the consumers of this product.”

The 2014 NCLGS summer meeting will take place in San Diego, California, on June 6-8.

- Marco is a contributor to OnlinePokerReport. You can read more of his writing - and catch his epic interviews with a who's who of poker - at a variety of iGaming publications, including TwoPlusTwo, GlobalGamingBusiness and
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