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Legislative Developments in Internet Gambling

Gambling Compliance. Legislative Developments in Internet Gambling . National Council of Legislators from Gaming States (NCLGS)| January 10, 2014. Gambling Compliance. Gambling Compliance. U.S. Office 1250 Connecticut Avenue NW Suite 200 Washington, D.C. 20036 T: (202) 261-3525

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Legislative Developments in Internet Gambling

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  1. GamblingCompliance Legislative Developments in Internet Gambling National Council of Legislators from Gaming States (NCLGS)| January 10, 2014 GamblingCompliance

  2. GamblingCompliance U.S. Office 1250 Connecticut Avenue NW Suite 200 Washington, D.C. 20036 T: (202) 261-3525 F: (202) 261-6583 info@gamblingcompliance.com U.K. Office Suite 501, Capital Tower 91 Waterloo Road London SE1 8RT T: +44 (0)207 921 9980 F: +44 (0)207 960 2885 info@gamblingcompliance.com About us:GamblingCompliance provides government officials and gaming industry professionals with independent and timely regulatory, legal and policy analysis – in one, fully-customizable online subscription service. • Comprehensive analysis of legal, legislative and regulatory changes • Monitoring Internet gaming legislation • Bespoke research on gaming issues • Congressional hearings and conference reports • Global market statistics via GamblingData GamblingCompliance

  3. GamblingCompliance Nevada Operates Two Websites: www.wsop.com www.ultimatepoker.com According to Pokerscout.com, WSOP is averaging around 110 cash players, while Ultimate Poker is averaging around 90. Nevada • Nevada originally passed an Internet gaming law in 2001. In 2011, the state amended the 2001 law to require regulators to begin licensing Internet poker websites operated by the state’s land-based casinos. • The first Internet poker website went live in Nevada on April 30, 2013. • State passed two bills in 2013 allowing Governor to enter into interstate gaming agreements. • The tax rate in Nevada is the same that applies to the state’s land-based casinos, 6.75%. Estimates for annual tax receipts range between $2m and $3m. GamblingCompliance

  4. GamblingCompliance “What we are trying to do is emulate online what we have on the casino floor. It’s best if they use the same product that they see on the casino floor.” -- Ed Sutor, C.E.O. Dover Downs Hotel & Casino Delaware Poker is averaging 18 players according to Poker Scout. Delaware • The Delaware Gaming Competitiveness Act was passed in June 2012. Among other points, the act legalized Internet gambling if offered through the state’s three casinos in conjunction with the lottery. • Casino-style games experienced full launch on November 7, 2013. However, poker will likely be delayed until agreements for liquidity sharing can be reached with other jurisdictions. • The state hopes to see at least $7.75m in taxes on an annual basis. The tax rate is 33.9% for table games and 56.5% for slot games. GamblingCompliance

  5. GamblingCompliance • Six internet gaming permit holders went live with Internet gaming in November, a seventh followed in December: • Borgata • Caesar’s Atlantic City • Golden Nugget • Harrah’s (owned by CZR) • Tropicana • Trump Plaza • Trump TajMahal • As of Monday, 1/6/2014, DGE announced 148,487 accounts had been set up. (Includes multiple accounts by individuals.) • PartyBorgata has highest traffic at 280, followed by WSOP NJ (Harrah’s) at 170 according to Poker Scout. New Jersey • New Jersey legalized Internet gambling in February 2013. The new law allows for both casino games and poker to be operated via the state’s land-based casino licensees. • New went live November 26, 2013. Initial player-traffic has been strong. • PokerStars saw its application suspended for two years due to issues with one of its founding members. • Governor Christie hopes to see $160m in annual tax revenue from Internet gambling. The tax rate is 15% (plus an additional 2.5% investment levy). Annual revenue projections have ranged from $175m to $1.5bn. • The first revenue figures are expected next week. GamblingCompliance

  6. GamblingCompliance GamblingCompliance

  7. GamblingCompliance • Upcoming Developments: Internet Lottery • Illinois and Georgia commenced online lottery ticket sales in 2012. Georgia began operating Internet keno in December. • Michigan, Minnesota, and Kentucky are on-track to expand their lottery. • Michiganannounce “iLottery” service providers, plans for broad web gaming suite. • Minnesota instant tickets to launch by mid-December/early 2014. • Keno launched in Kentucky, Internet ticket sales to launch in 2015. • Legislation is pending in Massachusetts to permit the lottery to offer a limited number of draw ticket games on a pilot basis.. GamblingCompliance

  8. GamblingCompliance • Notable Developments: Tribal Internet Gambling • Tribes have begun to form coalitions that hope to offer Internet gambling on tribal lands, and maybe beyond. • In 2013, the Tribal Internet Gaming Alliance released a treaty seeking member tribes to offer Internet gaming through the alliance. The Lac du Flambeau Band of Lake Superior Chippewa Indians ratified the treaty in October, becoming the alliance’s first member tribe. • Tribes are looking at operating Internet gambling in international markets. • In 2013, the Cheyenne and Arapaho Tribes reached an agreement with Oklahoma Governor Mary Fallin’s office, twice, that would allow the tribes to operate Internet gambling outside the U.S. The agreement was rejected, twice, by the NIGC, and has led to the tribe filing a lawsuit. GamblingCompliance

  9. Internet Gambling Legislative Issues Checklist GamblingCompliance • What types of games should be offered? • Under which regulatory model will gambling be operated (i.e. Delaware v. New Jersey/Nevada models)? • How might different Internet gambling models affect lottery operations or tribal/ commercial casinos located within the state? • What entitieswill be permitted to operate Internet gambling in the state? • Which agency is best suited to regulate Internet gambling within the state and what type of rule making authority should that agency be given? • What types of licensing requirements should apply? • Where should Internet gambling equipment (servers etc.) be located? • What is the optimal tax rate(s) for revenue generation and job creation? • What type of player protections should be put in place? • What happens if a federal Internet gambling law is passed? • Should the state consider entering into agreements with other jurisdictions for inter-jurisdictional play? • Who should be permitted to participate in Internet gambling? • Are there legal, statutory, or constitutional requirements that affect how gambling can be offered, what types of gambling can be offered, or where gambling can occur? GamblingCompliance

  10. GamblingCompliance U.S. Office 1250 Connecticut Avenue NW Suite 200 Washington, D.C. 20036 T: (202) 261-3567 F: (202) 261-6583 info@gamblingcompliance.com U.K. Office Suite 501, Capitol Tower 91 Waterloo Road London SE1 8RT T: +44 (0)207 921 9980 F: +44 (0)207 960 2885 info@gamblingcompliance.com Thank You! For a copy of this presentation or an explanation of the underlying material please feel free to contact me on the details below. Kevin Cochran, Esq. Senior Legal Analyst, Americas T: (202) 261-3525 E: kevinc@gamblingcompliance.com GamblingCompliance | www.gamblingdata.com www.gamblingcompliance.com

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