Possibility of UK online poker compact with New Jersey shelved

Top NJ Gaming Regulator Eyes Online Poker Compacts with Nevada, PA In Wide-Ranging Interview

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In an interview with Roger Gros, the publisher of Global Gaming Business, New Jersey Division of Gaming Enforcement Director David Rebuck discussed a number of topics affecting the state’s gambling industry in a podcast.

The interview hinted at the possibility of compacting for online poker with other states. A compact with the UK, however, is out the window.

Here’s a look at the highlights from the interview that occurred in June.

On the right-sizing of Atlantic City

When asked if the Atlantic City casino industry was right-sized at seven casinos, and whether there was room for a Hard Rock casino in AC (which is slated to open next year), Rebuck said:

“Right now I think we’re below what we should be. We do many reports coming out of this division… I think anybody who looks at the numbers in Atlantic City for, I’ll say, the last 24 months would say that we have stability. In that 24 month period we had stability when we had eight casinos.”

Rebuck mentioned the market was stable despite three casinos being in bankruptcy during that time. (Those properties were Taj Mahal and two Caesars casinos.) Despite that environment, it avoided the downsizing the market went through in 2014.

With the Caesars casinos coming out of bankruptcy, the Taj sold to Hard Rock, and capital investments being made, Rebuck is optimistic the market will remain stable or grow, when the Hard Rock opens next year. That’s thanks in large part to its brand and database.

Rebuck also noted the existing casinos have “really stepped up” and are making significant investments in Atlantic City and reinvesting in their casino properties.

On the Revel / TEN AC situation

Rebuck laughed off the notion Glenn Straub, the current owner of the shuttered Revel/TEN Casino, will ever apply for a license.

“He’s clearly not going to apply for a license,” Rebuck said. “We’re in litigation and he doesn’t think he needs one… He clearly has no intention in my mind to operate a casino in New Jersey as a regulated individual.”

Rebuck said Straub’s only recourse will be to open a non-casino property or sell the Revel.

“I remain optimistic that by this time next year, something will be different,” Rebuck said. “What that is is clearly in control of Mr. Straub.”

The NJDGE director also expressed concern that unlike Hard Rock, the reopening of Revel as a casino might be too big of a burden for the fragile Atlantic City market to bear.

“That would be a challenge,” Rebuck said of the possibility of nine operational casinos in Atlantic City. But it’s a challenge he wants Atlantic City to face.

“Can Revel come in as a casino and compete too?” Rebuck rhetorically asked. “I don’t know, but I’d like to see it happen.”

The reason Rebuck wouldn’t mind seeing the market grow over-crowded even though he believes eight is the right number, because it will foster competition, and the strong will survive. Rebuck said that Revel reopening would force other operators to, “step up and compete or make a decision to go by the wayside.”

On the North Jersey referendum

Noting the upcoming state elections, including a gubernatorial race that will usher in a new administration, Rebuck was unsure if the North Jersey casino referendum would be a high priority.

“Whether or not that becomes an issue of first concern to the new administration, we’ll let them make that decision,” Rebuck said. “I will say, if Atlantic City can turn itself and prove this market can improve, you’re going to have less need from a public policy sense,” to expand casino gambling in the state.

Rebuck recommended caution in North Jersey, noting the false assertion that the area is devoid of gaming. On that front, Rebuck mentioned the existing casinos (racinos) in New York City and the possibility of further expansion in the Philadelphia area.

 On the DGE’s regulatory role

When asked about industry complaints concerning the cost of regulation, he noted two key numbers.

Rebuck explained that in 2010,” $70 million were expended for the oversight of gambling in Atlantic City.”

He went on to say that last year the amount expended for regulation had been reduced to $46 million.

The second figure Rebuck pulled out was that when he took over in 2011, the DGE had 343 employees overseeing 11 casinos — before Revel opened. With seven operating casinos the DGE now has 255 employees, and another 25 people working on internet gambling.

Rebuck was adamant that his prime concern is making sure the industry maintains its integrity. While he will listen to concerns, he will not make cuts to surveillance, security, or any other high-cost items the casinos tend to complain about.

He did go on to say that there are some common-sense legislative reforms that could be made that would ease the burden on operators. But as the director he can’t make those changes.

On online gambling’s success in New Jersey

When asked about the successful NJ online gambling industry, Rebuck said:

“I believe at some point in time New Jersey’s going to tap out. When that is I don’t know. We’re on double digit year-over-year increase for 18 months now; can you sustain that forever? No of course not. But, what you need more than anything else is expansion, games or other jurisdictions.”

On a potential compact with Nevada

On the jurisdictional front, Rebuck made some news by telling Gros he had reopened talks with Nevada about liquidity sharing.

“I have reopened the dialogue with AG Burnett to determine if we can try to get an agreement between New Jersey and Nevada to have liquidity,” he said of a discussion with that state’s top gaming regulator.

Rebuck went on to talk about the potential impact on online poker. He also mentioned progressive jackpots and tournaments (such as slot or blackjack events).

On a potential compact with Pennsylvania

“We’re going to watch very closely with Pennsylvania. We’re going to strike hard with Pennsylvania,” Rebuck said, noting that there are already ongoing talks between the two states.

But like Nevada, a compact with Pennsylvania will require a major concession, or a legislative change in New Jersey.

Rebuck said:

“If those states will not allow their gaming servers for online gaming to be here, we really are kind of stuck, unless there is a legislative change. We’re not in a very strong position to effectuate liquidity with those restrictions.”

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On a potential international compact

Rebuck told Gros that talks with the UK about a potential liquidity sharing agreement fell apart, and that prospect now seems unlikely.

“We just couldn’t pull it off,” Rebuck said.

“Our law is very restricted in that the gaming servers, the actual gaming servers that allow for the outcome of the game to be determined, have to be in Atlantic City, and that’s just not a business model that they were willing to adopt.

“There are a lot of factors involved in online gaming, and it’s just not a matter of flipping a switch and saying, we’re going to turn on the Internet today.”

On sports betting

Rebuck emphasized that sports betting is “ripe for online play,” and “We [New Jersey] would definitely move in that area (online sports betting),” if the state is is successful in its efforts to legalize sports betting.

Rebuck was quick to point out that New Jersey has been trying to legalize sports betting for three-plus years. It is currently 0-for-7 in the courts. “We’ve lost every step of the way,” Rebuck said matter of factly.

However, he was very excited to hear that the US Supreme Court would hear the case. He feels optimistic about the outcome, and what it might mean for New Jersey.

“You know and I know that when it comes to sports wagering and online gaming, it already exists in Nevada and they do a great job of regulating it,” Rebuck told Gros. “And some of the strongest proponents opposed to online gaming, today are engaged in online gaming in the sports wagering world.”

- 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.
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