How Long Will AGA Hold Back Online Gambling Support?

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The American Gaming Association (AGA), the casino industry’s most influential lobby group in the United States, announced in March the addition of six new members. And while this may not seem like big news on the surface – the association has 46 members in all – some of the new members were surprising based on the recent history of the AGA.

Who joined?

The six newest members of the AGA are:

  • BMM Testlabs
  • Choctaw Casinos and Resorts
  • Golden Entertainment
  • GVC Holdings PLC (GVC)
  • Paddy Power Betfair (PPB)
  • The Stars Group (TSG)

Of those six, the latter three are of particular interest to those of us who follow and advocate for online poker, casinos, daily fantasy sports, sports betting and other types of online gambling. All three companies currently operate licensed online casinos in New Jersey, and two of them offer online poker as well.

GVC, whose brands include partypoker and partycasino, has a long history in the United States and will almost certainly be involved in Pennsylvania. Before being bought by GVC, Party Gaming and its founders spent hundreds of millions of dollars on legal settlements in order to protect their future place in regulated US online gaming markets.

The Stars Group’s flagship property, PokerStars, also has an interesting history with the United States. Like Party Gaming, PokerStars began operating in the US years before the UIGEA became law, pushing many of the bigger sites out. Unlike Party, PokerStars continued offering online poker to Americans all the way up until their domains were seized by the US government in 2011 – an event known by many in the industry as Black Friday. PokerStars also paid hundreds of millions to the US to wipe the slate clean and set themselves up for future success in America.

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Paddy Power Betfair has a very different product profile than the other two, with a heavy focus on sports exchanges and horse racing. PPB operates the TVG Network, which broadcasts horse racing on TV and also takes wagers in 35 US states. Of the three newest AGA members, PPB is the most likely to have at least some reasons unrelated to iGaming for joining the association.

Changing positions

The AGA’s position on online gambling has changed many times over the years, and is now as murky as ever. For years, the group was unequivocally opposed to legalization, but around 2010 that stance began to shift. The diverse membership of the AGA has made it difficult get them firmly on one side of the issue.

Hardliners in opposition, such as Sheldon Adelson and Steve Wynn have long held sway. Caesars Entertainment, however, has advocated for licensing and regulation for many years. The disagreement has mostly led to a stalemate, with the AGA taking a neutral stance on iGaming since 2014.

And while you’d think the latest additions to the association would signify a tailwind of AGA support, the association would not confirm anything of the sort. Geoff Freeman, the group’s CEO since 2013, offered only the following when I asked what this all means:

AGA has long supported the Nevada model of intrastate mobile gaming and would support its expansion elsewhere.

Talk about cryptic!

For starters, the Nevada model is terrible. While it may keep their B&M casinos from going to war with each other, it’s hardly a growth opportunity for the gaming business and would be very unlikely to work in the vast majority of states that would want to legalize online gaming. Even in Nevada, there’s been limited success, and most of the products and regulations are built around extracting additional revenue from casino guests, rather than creating a separate online customer base.

The two main products available in Nevada are online poker and mobile sports betting. Online poker has been a relatively small business there so far, though that could change once more states are sharing the same tables. Mobile sports betting is relatively popular, but requires players to create their accounts at an actual sports book. This is not a model that would be particularly effective in a state like Pennsylvania, for example, where the vast majority of customers would not be tourists staying at a casino hotel.

The Nevada model isn’t what companies like TSG, PPB and GVC are looking for, and it seems highly unlikely to show up in many states outside of its namesake.

The dam may have broken

While the AGA is noncommittal about supporting online gambling, there are plenty of reasons to think this will change in the near future.

The main reason is that online gambling regulation is working, and the industry is growing as a result. New Jersey gambling sites generated right around $250,000,000 in revenue in 2017, and will likely do even more this year.

After five years passed without any new states legalizing online poker or casinos, Pennsylvania finally reached the finish line in 2017. And given the success of New Jersey, it’s hardly crazy to assume more states will follow.

Meanwhile, legal sports betting in states beyond Nevada is a real possibility in 2018 and its online counterpart could be an even bigger business opportunity than online casinos. A diverse array of states have begun to consider legalizing sports betting, pending the outcome of Murphy v. NCAA in the US Supreme Court, with a handful already passing laws. West Virginia was the latest to get in on the action, and you can bet more are coming along. Most of these states are explicitly planning for online betting in addition to B&M.

And in terms of their internal politics, well, it’s getting a little simpler for the AGA as the two staunchest iGaming opponents will likely not be able to hold their ground much longer. Embattled Wynn Resorts founder Steve Wynn, recently forced out due to multiple sexual harassment claims by employees, is no longer even a shareholder of the company. Adelson, on the other hand, is 84 years old. While he’s still active in the business, it’s fair to wonder just how long that will go on.

It can’t be assumed that Las Vegas Sands and Wynn Resorts will immediately come on board with online gambling once their founders are out of the picture, but it’s hard to imagine the intensity of the resistance continuing as it has been. With new blood entering the AGA, we might just be witnessing a paradigm shift.

The AGA is staying mum for now, but it makes sense they’ll be feeling some pressure to get on board with online gambling advocacy in more states around the country. The last barriers for support are finally crumbling away.

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Adam Small has been an entrepreneur in the online gambling space since 2004. He is a cofounder of PocketFives.com and owner of several businesses in the industry.

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