US Poker will post continuous updates of today’s hearing in front of the Pennsylvania Senate CERD (Community, Economic and Recreational Development) Committee.
In a hearing last week the CERD Committee heard from the states stakeholders in regards to SB 900, a bill that would overhaul the state’s gaming laws. This time around they will hear from regulators, law enforcement officials, and problem gambling experts, for a different perspective on online gambling expansion.
The hearing will begin at 9 AM and is expected to last two hours.
9 AM: Hearing starts on time
For the second straight time the Senate CERD Committee hearing started on time… Perhaps a harbinger of good things to come
9 AM: PGCB Kevin O’Toole
The first witness is Pennsylvania Gaming Control Board Executive Director Kevin O’Toole.
O’Toole believes PA gaming industry will exceed $3 billion for fourth straight year, but will not see much growth nor any decline.
PGCB approves changing license renewal lengths from 3 to 5 years.
PGCB would like to see law amended to clarify law to allow PGCB to use independent labs to test slot machines.
O’Toole “Board is confident [internet gaming] can be regulated.” Calls for law to allow temporary regulations to keep up with ever changing online gaming industry.
O’Toole calls for amendment to SB 900 that would allow PGCB to create interstate compacts.
O’Toole cites other states track record (dating back two years) as reason to believe safeguards and regulations work.
PGCB has “experienced and capable regulators” .. Paraphrasing O’Toole, “we would be ready to regulate Internet gaming in an efficient and controlled manner.”
9:15: Douglas Sherman of PGCB
Sherman giving an overview of laws relevant to online gambling.
Sherman starts with the Wire Act, explains 2011 OLC opinion that narrowed the focus of the Wire Act to sportsbetting only.
Sherman next talks about UIGEA, notes UIGEA defines unlawful Internet gambling as using the internet to place bets where it’s prohibited. Sherman notes UIGEA carved out Fantasy Sports AND intrastate online gambling.
Sherman’s opinion, the 2011 Wire Act opinion and UIGEA’s intrastate carve out would allow online gambling expansion.
Sherman brings up RAWA, coyly says (again paraphrasing) “what the proponents see as the original intent of the Wire Act.” If RAWA passes, online gambling discussion becomes “moot.”
Sherman notes most PA casinos already have some kind of social (freeplay) online gaming sites. Interestingly, these sites cannot award rewards for real money gambling, but can award non-gambling comps.
9:25: Kim Ward opens up questioning
Ward: How long before you could be live for online gaming?
O’Toole: Depends on application process speed. Range of 9-12 months from law passing to sites launching, but “an awful lot of things have to occur” to keep that timeline.
O’Toole calls geolocation “impressive technology.”
O’Toole chuckles at 20-mile in-person registration in SB 900, says he’s “not sure how you enforce that.” Notes other states do all registrations online.
O’Toole: “Age verification at time of registration has a high degree of confidence.” adds, it’s “more challenging to verify at subsequent logins.”
O’Toole notes other techniques to verify ID such as challenge questions or e-mail messages when someone logs in.
9:30: Senator Wiley now questioning panel
O’Toole “first 12 months of any gaming activity is going to be a growing activity.” Notes New Jersey is continuing to grow in terms of revenue, “reasonable expectation it will improve over time,” don’t overshoot your expectations.
Wiley asks about payment processing issues. O’Toole notes it’s been a struggle in NJ, NV, and DE, “but advances have been made.”
Wiley, “Prudent for us to evaluate impact of iGaming on B&M casinos.” Wiley asserts there are a lot of unknowns – someone get this guy the massive amount of data on his concerns.
“iGaming can be viewed as another amenity,” O’Toole says. Explains how NJ operators speak glowingly of iGaming, and once again chuckles at the question.
Senator asking if there is any evidence from any casino with iGaming of cannibalization. Short answer from panel, “NO.” “Internet gaming population is a totally different population, and you’d reach a new segment of the population – in other words it would be beneficial.
What happens if someone disputes they were the person playing?
9:45: Senator Tomlinson is up
Senator Tomlinson (he doesn’t ask questions, he lectures) says a PA casino lost 20% of its players to New Jersey’s online gambling industry – never heard this information or seen any evidence of this claim.
Tomlinson continues to worry about cannibalization, and is very hung up on tax rates.
Tomlinson once again conflates iGaming tax with B&M tax, thinks lower tax rate will incentive casinos to switch to iGaming. Problem is the margins are different.
Tomlinson doesn’t understand tax rates for interstate agreements. The tax is taken by the state on the operator, not on the players’ wins and losses at the tables.
9:50: Ward asks important question
Senator Ward: could we be grandfathered in if federal government bans online gambling. Short answer, “it depends on the way federal law is written.”
9:55: Racing representative
Kevin Kile Director of racetrack gaming for Gaming Control Board making remarks.
Kile thinks iGaming won’t have any impact on racing, but racinos and online gambling can be mutually beneficial.
Ward, what can we do to enhance horseracing in PA? Kile, “simplifying the racing process (racing form is too confusing).”
Sen. Wiley, questions wisdom of adding OTB’s, as these would cannibalize racino business. Kile calls it a “policy” question.
Several senators pointing out that OTB’s seem to be far more cannibalistic than iGaming, although as Senator Tomlinson noted, a lot of money goes out of state without being taxed ($687 million according to panelist), something that more OTB’s could prevent. Not my forte, but seems like a very complicated issue. Panelists states, without slot machines there might not be OTB’s at all.
10:15: Michael Cruz, Chief Technology Officer PGCB
Cruz would look towards New Jersey model for PA iGaming.
Cruz in response to Wiley, “geolocation technology in NJ calls for users closer to boundary to be geolocated more frequently.” Anna Sainsbury of geocomply recently stated this frequency can be increased to multiple pings in a minute.
Cruz comfortable they could setup regulation to put effective procedures in place to secure networks from hackers.
10:20: Problem gambling
Ken Martz speaking in regards to problem gambling controls and initiatives.
Martz will likely call for increased stipends from operators for problem gambling if iGaming is legalized – NJ currently requires iGaming operators to contribute $150,000 each per year to problem gambling efforts.
Martz, “better to prevent than treat,” a large part of the funds are used toward preventive measures.
Martz on Internet gambling, potentially higher rates because of accessibility. Recent research refutes this claim. Martz does note there is an initial spike that levels off over time.
Elizabeth [Liz] M. Lanza, Director, Office of Compulsive and Problem Gambling (PGCB) not sure how much should be set aside for problem gambling initiatives if iGaming is legalized.
Hearing is winding down now, with a lot of talk on addictive behavior and access.
Senator Tomlinson livens it back up with the cell phone prop at 10:44 Am for those in the pool.
One of the last comments was also one of the most grossly mischaracterized. Equine representative completely flubs the cannibalization research done by UNLV, saying there would be a 27% decrease in B&M revenue if online gambling is legalized.