Gaming regulators back IGT interactive game licensing

Executives for International Game Technology told Nevada gaming regulators Thursday they are in preliminary talks with U.S. Department of Justice officials concerning wagers placed before 2006 by American gamblers with Entraction, a Sweden-based online gaming operator.

The slot machine developer spent $115 million last year to acquire Entraction, an online poker operator in Europe with more than
4 million players.

The discussion with the Justice Department did not stop the Gaming Control Board from recommending that IGT be licensed as a manufacturer and provider of interactive gaming systems under Nevada's newly created online gaming regulations.

In fact, the company's move was praised by regulators.

Control Board Chairman Mark Lipparelli explained that many Nevada gaming licensees may find themselves in similar situations in dealings with Internet gaming companies.

Lipparelli said online casino operators may have accepted wagers from American gamblers and will have "imperfect histories" in the eyes of regulators.

"A policy for perfection will eliminate everybody from the landscape," Lipparelli said.

He commended IGT for taking "proactive steps" when it purchased Entraction, including decisions that put the company "at a competitive disadvantage" against other online casino operators.

"This should be a signal to those who come next," Lipparelli said. "The board will look favorably on anyone who follows IGT's lead."

Nearly three dozen casino operators and gaming equipment providers have applied for licenses under Nevada's interactive gaming regulations.

IGT is now the second company to gain recommendation. On Wednesday, the control board recommended that slot machine rival Bally Technologies be granted an interactive gaming license, the first company since Nevada gaming authorities approved regulations covering interactive gaming, namely online poker within the state's borders.

The recommendations for Bally and IGT will be considered for final approval by Nevada Gaming Commission on June 21 in Las Vegas.

Robert Melendres, IGT's executive vice president of emerging businesses, outlined some of the actions the company took when it acquired Entraction.

IGT immediately closed Entraction's websites in Turkey, Israel, Russia, Norway and other jurisdictions that Melendres said were, "darker than gray" when it comes to Internet wagering laws. The amount of bets Entraction accepted from Americans before 2006 was less than 1 percent of the company's overall revenues.

Michelle Chatigny, IGT's vice president of compliance, said eliminating those markets cost Entraction roughly 15 percent to 20 percent of its player base.

Melendres said it is early in the talks with the Department of Justice.

"The conversations are ongoing and we intend to cooperate fully," Melendres said.

IGT initially entered Internet gaming in legal European markets early last decade, when it acquired British-based WagerWorks in two separate deals. Melendres told the control board the company is licensed in more than 360 gaming jurisdictions, including 10 licenses covering interactive gaming.

Crys Terry, who heads IGT's interactive gaming operations in the United Kingdom, described for gaming regulators the controls the company uses to verify whether a potential gambler is of legal age and is logging on from a country that allows online gaming.

Also, IGT has implemented numerous policies and procedures to guard against money laundering on its Internet gaming sites in Europe.

Melendres said IGT plans to use the Entraction platform to provide Nevada casino companies with a proven Internet gaming system.

"Unlike other companies, IGT can hit the ground running in Nevada," Melendres said.

Gaming regulators questioned Melendres about IGT's $500 million acquisition earlier this year of social gaming company Double Down, which operates a free play casino on Facebook.

While the purchase has "gotten a lot of attention," Melendres said IGT uses Double Down to "help our casino operators" gain access to more than 800 million users on Facebook. Double Down "provides" Facebook members with a chance to play games offered in casinos on a free basis.

"IGT is a business-to-business provider," Melendres said. "That's what we're going to be in Nevada, that's what we're going to be in the U.S."

Contact reporter Howard Stutz at hstutz@reviewjournal.com or 702-477-3871.
Follow @howardstutz on Twitter.