New Jersey Governor Expecting $1 Billion From Online Gaming

Ultimate Casino
Ultimate Casino

New Jersey Governor, Chris Christie, is at again. He’s blustering about gaming and spewing information that he can’t and won’t back up. If you remember, last year, Christie famously was going to legalize sports betting in New Jersey no matter what was legal.

“If someone wants to stop us, then let them try to stop us.”

That fight will continue to the Supreme Court. So much for Christie’s brash tone. While sports betting may not become legal in New Jersey any time soon online gaming just went live. It’s gone live in a big way with over 51,000 people signing up in the first few weeks.

More than 14,000 new online gambling accounts were created with Atlantic City casinos since Friday, bringing the total to 51,352 since a trial period started on Nov. 21.

Response for online gaming in New Jersey has been massive. For comparison Nevada has about 1,000 online poker players. Nevada is a much smaller state with no major cities like New York and Philadelphia bordering so take the comparison lightly – it’s just a reference.

It will be interesting to see how many of these accounts stay active and how many more will open in the next year. Chris Christie seems to think that online gaming will produce $1 Billion in revenue by July.

Gov. Chris Christie said today that he still expects online gambling in New Jersey to produce about $1 billion in casino revenue by July 1.

Nobody believes Christie will be right.

Industry analysts have said Christie’s projection — part of the current state budget, which anticipates $160 million in tax revenue from the venture — is far too optimistic….analysts said they expect about $300 million in revenue by this time next year.

In order for Chris Christie to be correct each of the 50,000 players that are signed up must lose $20,000 in 7 months. Even if sign ups double to 100,000 active players each would have to lose $10,000 in that period.

It’s not that this is a lofty goal but it’s irrational. Online gamblers traditionally play much lower limits than people who play in live casinos. You may be familiar with the term micros from the poker world.

I trust industry analysts more than I trust any politician. I hope his budget has a backup plan for the 70% of revenue shortfall that this line item will produce.

Is An Online Poker License In New Jersey Worth $15 Million?

Atlantic Club Casino
Atlantic Club Casino

PokerStars tried, and failed, to buy Atlantic Club Casino to get their foot in the door for when New Jersey legalizes online poker. The deal they thought they had been for only $15 million.

What do you do if you’ve got a purchase agreement with Colony Capital and the latter allegedly reneges on you? If you’re Rational Group, which thought it had a $15 million deal in place to purchase the Atlantic Club Hotel, the answer is simple: “We’ll see you in court.” 

While the deal with PokerStars is, publicly, still up in the air it seems as if Atlantic Club Casino is still searching for a buyer. But is $15 million even worth it to buy a casino just to earn online gaming revenue? Not so fast my friend.

Online wagering could bring in a comparatively scant $30 million … not surprising given the difficulty that some of the major players are having getting onto the field.

If you divide online gaming revenue between 10 companies that’s $3 million per company. That’s not much revenue at all and certainly wouldn’t make buying into a dying casino market worthwhile. However, this is short-sighted. Online gaming is an investment today.

Online poker will grow once it becomes legal. Online poker is also a gateway to other online gaming revenue for a casino. Whenever sports betting is legalized it will also earn revenue for online gaming companies.

Looking much further into the future online gaming will include slot machines and video poker. Playing slot machines online has always felt a little sketchy but the most trusted companies for online gaming will be the familiar companies with a good track record elsewhere.

Further, Atlantic Club Casino has undergone renovations over the past few years. It’s not a dump in need of a major facelift. With minimal investment it could be made into a marginal casino that could someday turn a profit – even if it’s a small profit. There is still some value in connecting online business with a brick and mortar business.

So, is an online poker license worth $15 million and whatever investment you’d have to make in the Atlantic Club Casino? In the long-term, absolutely.

Photo – Atlantic City Insiders

People Barely Like Sports Betting But Hate Internet Betting

The American public has spoken and the majority of them are OK with sports gaming. However they want you to get off your butt to be on sports.

The nationwide telephone poll found 51 percent in favor of sports betting and 27 percent backing Internet gambling.

The article goes deeper into the demographics of the poll. The article seems to be angled towards putting a positive spin on legalizing sports betting in New Jersey.

The one really interesting nugget that really should be the headline is that 20% of American men have bet on sports.

The article also states that the 51% approval is up from 39% in March. It seems as if the general public is coming around on sports betting.

Between ESPN’s Colin Cowherd talking about sports betting every week on his radio show and CBS Sports including spreads in their matchups online there has been a building awareness of sports betting in mainstream America.

New Jersey may know as soon as next week if they’ll get legal sports gaming (check out the Chad Millman podcast to hear lawyers discuss) and while that won’t change things across the country right away you can bet the other states that have legal gambling will get in line for sports gaming.

 

Voting Is Like Playing A Slot Machine

Nevada has early voting and I decided to partake since it was never available to me before. Early voting is awesome and not stressful since it’s spread out over a two week period and not shoved into one Continue reading “Voting Is Like Playing A Slot Machine”

Atlantic City Wants To Be “Silicon Valley of Internet Gaming”

Hold your laughter now, but New Jersey senator Raymond Lesniak wants Atlantic City to become “Silicon Valley of Internet Gaming.” This was said as New Jersey is trying to make it legal to gamble online…now.

New Jersey gamblers could start placing online bets through Atlantic City-based gaming websites within six months if state legislators succeed in pushing through a new law next week.

The rush to change New Jersey regulations follows a Dec. 23 ruling by the U.S. Department of Justice that removes obstructions to states pursuing online gaming. Also, the state is trying to catch up to Nevada, which established its own rules for online gaming Dec. 22.

While Mr. Lesniak seems to be the only person in New Jersey trying to push gaming, the state is generally a few beers short of a six pack when it comes to getting anything done to put itself ahead of other gambling markets, let alone tech markets. New Jersey, as a whole, always seems like the little brother in gaming and it’s cute to watch them want to play with the big boys. Good luck.

PS: Mr. Senator, you haven’t used twitter in a while, you may want to get on that before you become “Silicon Valley of Internet Gaming.”

PPS: #Seriously

 

 

Wire Act Only Applies To Sports Betting Now

Last week the Department of Justice (DOJ) gave online poker players reason to be excited as they made specific note to mention that the Wire Act applies only to sports betting.

“The Department of Justice’s view is and has been for some time that all forms of internet gambling, including sports wagering, casino games and card games, are illegal under federal law. While many of the federal statutes do not use the term ‘internet gambling,’ we believe that the statutory language is sufficient to cover it,” then U.S. Attorney Catherine Hanaway told Congress. “As we have stated on previous occasions, the department interprets existing federal statues, including 18 U.S.C. Sections 1084, 1952, and 1955, as pertaining to and prohibiting internet gambling.”

But last week, that all changed.

“The Department’s Office of Legal Counsel has analyzed the scope of the Wire Act, 18 U.S.C  Section 1084, and concluded that it is limited only to sports betting,” Deputy Attorney General James Cole wrote in a letter to the two states.

Combine last weeks announcement that internet poker was made legal in Nevada with the statement from the DOJ above and you can see why online poker players (and websites) would have reason to think positively about their future.

While Nevada will be the first state allowed to have legal online poker, it’s hard to imagine that once Nevada residents work out the kinks that the rest of the country won’t be allowed to join in the fun.

I give the DoJ and poker companies until the beginning of 2013 to work out any problems with legal online poker in Nevada before opening it up to the rest of the country.

As a sports better I’m guessing that we won’t see legal, nation-wide sports betting until 2014 or 2015. The government isn’t too good at acting on more than one thing at a time.

Internet Poker Legal Again!

Internet poker is legal again…but only in Nevada. Yesterday the government in the great state set the first regulations for legal online poker play in the United States – as long as you a playing in Nevada with other people in Nevada.

The Nevada Gaming Commission approved the nation’s first regulations for Internet poker play today, opening the door to the licensing of companies to offer online play within the state.

Play across state lines still wouldn’t be allowed because of restrictions imposed by the U.S. Department of Justice.

This is just the beginning of legal online gambling and should clean up what was a pretty shady business. The first companies on the block for online poker licenses are all large and legitimate businesses:

Six companies already have applications in the regulatory pipeline for licensing: Cantor Gaming, Shuffle Master, International Game Technology, Bally’s Technology, Caesars Entertainment and the South Point.

This was bound to happen. While there were legitimate problems with the companies that were taken down on Black Friday, there may be something to the conspiracy theory that Black Friday was all coordinated by the large gaming companies in the United States.

Look for the online poker licenses to be approved (or denied) in the spring of 2012. In the meantime, I wonder how many online poker players will be moving to Nevada. Living is still cheap.

Rumor: Caesars and MGM Merging?

The Seven Stars Insider newsletter is always chock full of interesting information. In the December edition posted last week there was a particularly interesting nugget of information that you may have missed.

MGM-Caesars Merger?
My e-mail receipt from a late-October stay at Caesars Palace came from “MGM Caesars”:
Could this be a hint of what’s to come?

I haven’t heard or read about a potential merger between MGM Resorts International and Caesars Entertainment anywhere, so I’m not sure there’s much smoke to this rumor but it’s certainly interesting to think about.

I’m not even sure that the government would allow this merger because, essentially, it would create a monopoly on the Las Vegas casino market with about 90% of the strip being owned by one company. It would also probably be considered a national monopoly, but I’m not sure of that.

It’s interesting to ponder a merger of this size, even if it may never happen.

Full Tilt Poker May Have Been A Ponzi Scheme

News that Full Tilt Poker may have been a ponzi scheme broke last week when the US Government alleged that, indeed, Full Tilt Poker was a ponzi scheme.

“Full Tilt was not a legitimate poker company, but a global Ponzi scheme,” said Manhattan U.S. Attorney Preet Bharara in a statement Tuesday. The U.S. government views online poker operations, at least those that cross state lines, as illegal.

Even crazier is that two of the most known poker pros, Howard Lederer and Chris Ferguson, were implicated as part of the illegal activities.

Federal prosecutors in Manhattan on Tuesday added Ferguson’s name to a civil money laundering complaint, claiming that Full Tilt Poker improperly used funds of online poker players to pay members of its board of directors—including Ferguson and Howard Lederer, a fellow poker champion—$440 million since April 2007. 

To no surprise Ferguson’s lawyers refute that he was a part of a ponzi scheme.

“While the government has obviously taken issue with the underlying activities of FTP, under any reasonable interpretation, the worldwide operations of the online cardroom are not a so-called Ponzi scheme,” said Ian Imrich, a lawyer for Ferguson, in a statement. 

Yesterday it was Full Tilt Poker’s turn to say that they are not a ponzi scheme. Here is their official statement.

“On September 19, 2011, the Department of Justice issued a release stating that Full Tilt Poker was ‘A Global Ponzi Scheme.’  While the government has taken issue with the underlying activities of FTP, under any reasonable interpretation, there is no way to characterize the operation of Full Tilt Poker’s virtual online card room as a global Ponzi scheme.

“A ‘Ponzi’ scheme is an investment fraud that involves the payment of purported returns to existing investors from funds contributed by new investors. Ponzi schemes do not involve any legitimate investment, but rather use the new investor funds to pay ‘dividends’ to the initial investors.

“Despite recent events, FTP remains committed to identifying a suitable investor and paying back its players in full.”

There is a whole lot of mess here. None of the statements that are against Full Tilt NOT being a ponzi scheme say much. I usually live by the motto, where there’s smoke there’s fire and I think FTP stepped into a big one here.

Further, if this is true I can’t imagine Lederer or Ferguson ever showing their faces in Las Vegas or any poker events in the future. This isn’t done yet, but it doesn’t look good for those that have their money tied up with FTP.

“You’d have to be stupid” to Visit Las Vegas in the Summer

“You’d have to be stupid” to visit Las Vegas in the summer. This is what New Jersey Governor Chris Christie said on Wednesday while making a speech to help “save Atlantic City.

New Jersey Gov. Chris Christie says “you’d have to be stupid” to visit Las Vegas in the summer. Atlantic City, Christie says, is a much cooler summer destination.

The governor made his comments Wednesday while introducing a redevelopment expert whose new job is helping to save Atlantic City.

John Palmieri is the new executive director of the Casino Reinvestment Development Authority. Christie put the revamped agency in charge of efforts to make the nation’s second-largest gambling market cleaner, safer and more successful in the face of withering competition from casinos in neighboring states.

As usual, the Las Vegas media gets defensive, but the truth is that a lot of people from the east coast feel this way. People from the east coast aren’t used to the heat and tend to avoid travelling west in the summer for vacation.

The warm weather feels much better to us in the winter when it’s the west considers it cold. The picture above was taken from my back yard last winter around 7am. By 4pm everything was dry and I was outside in shorts as the temperatures were up to the 50’s.

After spending my first summer in Las Vegas I can confirm that the heat isn’t a big deal and there really is something to the term “dry heat”, although 115 sucks with or without humidity.

The governor could have chosen his words better to support Atlantic City, but the sentiment isn’t far from how many people on the east coast feel. In the end, it’s no big deal.