Online Poker Report

WRB Day 2: States Debate the Road to Interstate iGaming Liquidity Agreements

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The second and final day of the 2013 World Regulatory Briefing in Philadelphia took place on October 23rd. 

Marco Valerio attended the WRB and captured the highlights for OnlinePokerReport. For key takeaways from Day 1, click here.

The iGaming compact conundrum

Day 2’s leading session at WRB saw officials from four of the gaming industry’s top regulatory agencies nationwide discuss the entire crux of this year’s event: the viability of interstate iGaming compacts, also known as liquidity agreements for online poker.

From the start, the entire panel was quick to dispel the oft-repeated notion that there exists some kind of “competition” amongst gaming regulators.

To be sure, there is plenty of competition in the gaming industry, says New Jersey’s Division of Gaming Enforcement director David Rebuck, but this is purely on the commercial level. Gaming regulators across multiple jurisdictions work together and share information all the time – a positive sign for eventual interstate agreement negotiations.

But forging gaming compacts with other states can be tough, added Rebuck.

Recently, New Jersey passed legislation allowing Atlantic City casinos to form progressive jackpots with casinos in other states. According to Rebuck, not one such compact has yet been able to be agreed upon, owing primarily to the very complex legal nature of compacts.

For more insights from Rebuck, check out OPR’s exclusive interview here.

NJ and others see liquidity sharing as a next-stage concern

Rebuck isn’t a pessimist about interstate iGaming agreements and he believes earnest negotiations involving New Jersey may begin as early as next year, but he is quick to admit that the prospect of compacting is not significantly on his mind at the moment.

With less than a month to go before full online casino goes live in New Jersey, Rebuck and his agency have plenty to worry about as it is. He is hopeful New Jersey’s iGaming regulations can be successful and eventually serve as a model for other states – but if the launch should falter significantly, it will be a heavy blow to any compacting momentum.

The other panelists agreed that interstate compacts, while interesting to discuss, are a thing of the future, at least as far as their states are concerned.

One panelist, Kevin O’Toole, is the Executive Director of the Pennsylvania Gaming Control Board. Pennsylvania has been frequently labeled as a desirable iGaming liquidity partner should favorable legislation ever pass there, but O’Toole put a momentary damper on that fantasy by speculating that the state may prefer to spend a significant amount of time experimenting with intrastate gaming before doing anything further.

California could join the party – if the conditions are right

California Gambling Commissioner Richard Schuetz’s position on interstate liquidity agreements is by now well known to be the most isolationist.

With that said, Schuetz made it clear in a private interview later that he isn’t at all opposed to interstate liquidity agreements in principle. He looks forward to California entering into them, but on California’s own favorable terms.

Schuetz believes most of the compacting talk nowadays is driven largely by Nevada, which is supposedly lacking in sufficient liquidity and thus needs to pool with players from other states to get by, Schuetz asserts.

In describing California’s current iGaming situation, Schuetz made reference to the pre-existing online poker bills – the Correa bill and the Wright bill – and then teased the audience with fresh rumors about upcoming legislative activity in his state.

He hinted at a third and a fourth bill, one of which is likely to be some variation of the tribal draft that was circulated in May of this year. Before the audience could get too excited, Schuetz reminded them that next year is also an election year, meaning that in California, like virtually everywhere else in the nation, divisive gambling issues are unlikely to become priorities.

Articulating the barriers to liquidity sharing

Asked to brainstorm about what some practical considerations for interstate liquidity agreements might be in the future, O’Toole named patron disputes, game integrity, testing of equipment, revenue allocations and accounting of internal controls as priorities for state regulatory agencies.

A separate session later that day focused on tax considerations for interstate liquidity agreements and featured Benjamin Blair, Greg Mullally and Brad Polizzano, the latter of whom authored a white paper specifically on the subject.

All four regulatory agents eventually agreed that online gaming, while obviously similar to the “traditional” brick-and-mortar gaming they have historically regulated, is “a whole new industry,” and one that will require exceptional study, dedication, adaptability and open-mindedness.

Rebuck reflected on how significantly changed and amended today’s New Jersey iGaming regulations are compared to when they were first drafted 18 months prior.

And the ability for any gaming regulatory agency to move briskly with compacts, suggested Schuetz, will depend largely on how robust their regulatory culture has been but also how on many new resources and personnel the states will be willing to allocate to what Schuetz himself described as “a different animal.”

The World Regulatory Briefing is organized by Clarion Events. This year’s conference began on October 22nd and concluded on October 23rd.

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Marco Valerio
- 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 Agentmarco.com.