Pennsylvania Senate iGaming Hearing Details

John Mehaffey June 3, 2014

The Pennsylvania Senate Committee on Community, Economic and Recreational Development held a hearing on iGaming this morning. The entire morning was dedicated to the casino industry. Much of the other debate centered on potential expansion of the live casino business. At 11:45am, the discussion moved entirely to iGaming.

Michael Cohen, Senior Vice President of Caesars Acquisition, was the first to speak during this segment. Caesars Acquisition owns the World Series of Poker brand and is thought to be the company behind the pending House and Senate bills that have been drafted in Pennsylvania. The Pennsylvania iGaming bills would only legalize online poker, something Cohen and Caesars support.

Cohen started by giving a background on how his company is combating the concerns of underage gambling and money laundering in Nevada and New Jersey. He also cited an internal Caesars stat that 91 percent of New Jersey online gaming players are new to the Total Rewards players’ club, the marketing program offered by Caesars Entertainment. This counters the concern that online gambling may cannibalize live gaming. He closed by stating that Pennsylvania should act now so that it can be grandfathered in if there is federal legislation that bans the activity.

The next speaker was Greenwood Racing and Parx Casino Chairman Bob Green. He appeared to be less enthusiastic about online gaming in Pennsylvania than Cohen. He encouraged the state to only allow live licensees to operate gaming sites. He made his position clear that he felt offshore sites are illegal and taking away business from Pennsylvania casinos.

Green also stated that the Parx poker room had lost at least 15 percent of its business since New Jersey legalized online poker. This could also be seasonal, as this has not been the case with Atlantic City casinos. In his closing statement, he encouraged the state to consider low tax rates so that Pennsylvania gaming sites would be able to compete with offshore sites.

Robert Pickus, Chairman of the Board at Valley Forge Casino, spoke next. He commented on the economic impact of Pennsylvania iGaming. This included taxes and jobs, as well as the importance for Pennsylvania to be among the “first adopters at the center of the action”. He feels that getting to the market quickly will benefit the state by having interactive gaming companies headquarter there. He also stressed the importance that being a first adopter is to state compacts. He agreed with other speakers that casinos should be iGaming operators and that cannibalization is not likely.

Andrew Abboud, Senior Vice President for Government Relations and Community Development at Las Vegas Sands Corp, was the last speaker during this segment. As usual, he stated his company’s opposition to all forms of online gaming. He talked about the dangers of children gambling online. He went so far as to claim that the fact no children have been caught gambling online means that the safeguards do not work to catch them. He feels that the federal government can shut down offshore sites and has failed to do so.

The question and answer period was next. Michael Cohen from Caesars Acquisition was asked why only poker would work. He compared it to Pennsylvania rolling out slots before table games, implying it may be a first step. Asked if players at illegal sites can be converted, “We believe we will over time, New Jersey has made a dent in the illegal markets”. He also asked for enforcement from state officials.

Andy Abboud from Las Vegas Sands was challenged as to why his company was so opposed to something while the rest of the industry is either cautious or enthusiastic. He stated that he felt class action lawsuits similar to Apple’s iTunes case may find their way to the iGaming providers when technology fails to detect underage gambling. He also used the Joe Camel reference in claiming that online poker sites market to children.

The hearing was forced to stay within the scheduled times. This kept the question and answer section short.

There are bills headed to the Pennsylvania House and Senate. The details may be found here.

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