Online poker regulation hailed as victory by casino executives

Early projections of a massive swell of cash from legalized online gaming may have been overly optimistic, but regulation launched a breakthrough in the gambling world, Ultimate Gaming’s top executives told a crowd of about 200 on Thursday at the iGaming North America 2014 conference.

In a joint keynote speech at Planet Hollywood, the company’s chairman Tom Breitling and CEO Tobin Prior pushed for extended legislation across the country.

While creating new jobs, the sites can be trusted and taxed, they said.

“Regulation now means victory,” Prior said.

The two highlighted lessons the company learned in a year of operation since launching the first regulated online real-money poker site in Nevada on April 30. Caesars-owned WSOP.com followed Ultimate Poker in the Nevada and New Jersey markets before South Point’s Real Gaming started taking bets from online players in the Silver State last month.

In that time, Ultimate Poker dealt more than 27 million virtual hands of poker and organized more than 200,000 online tournaments.

Analysts overestimated the profitability of a market primarily driven by players in Nevada and New Jersey, Breitling admitted. Before anyone ever clicked “raise” on a legal online poker site, some predicted upward of $80 million in revenue in Nevada and anywhere between $250 million to $1.2 billion in New Jersey in the first year alone. Though Breitling declined to disclose the actual figures, he acknowledged that the numbers would fall decidedly short. Ultimate Gaming is expected to reveal its data within the next few months.

Gov. Brian Sandoval is scheduled to address the first year of online poker in Nevada as the conference concludes Friday.

Because the states with legalized poker set strict standards for verifying a player’s age and location, gamblers must navigate a much more detailed registration than they did when unregulated sites dominated the market.

“We had incorporated way too many clicks in this process, and so people who had played online poker in the past never had to go through this detailed process filled with all these extra clicks,” Breitling said. “Some people are taking a wait-and-see attitude about playing online games.”

Still, Prior touted the site’s software, and said the company has “no issue” with underage gamblers. Before launching, Ultimate Gaming spent three months in labs tweaking its software, followed by three months of field tests during which they generated the equivalent of 700,000 pages of documents.

He also addressed “huge challenges” in technology, such as payment processing and ensuring that players are located within the state where online gaming is legal.

For instance, the company found that it was easier to create a buffer zone around Nevada’s borders than it was in New Jersey, where more people live around the state line.

And while players can deposit and withdraw at any of the 17 Station Casinos in Nevada, Visa blocks online gambling transactions, even where it’s legal.

“Our online games are far better protected than those in a land-based environment,” Prior said. “And they allow each player to set his or her own limits.”

Ultimate Poker is an offshoot of Station Casinos, owned by the Lorenzo and Frank Fertitta, who also own Ultimate Fighting Championship, from which the poker site gets its name. Breitling said Station Casinos launched Ultimate Poker with the intention of drawing online players to brick-and-mortar properties, where the site is heavily promoted.

“We’re certainly not trying to destroy brick-and-mortar casinos,” he said. “That would be insane. … From the outset, we always saw our business model as bricks and clicks.”

Breitling attacked illegal online gambling sites, pointing specifically at U.S.-facing Bovada, which allows real money poker and sports betting. He projected that further regulation would eliminate “pirate” sites that cost Nevada and New Jersey “millions of dollars in tax revenue.”

Meanwhile, there is opposition to online gambling, the most vocal of which is led by Las Vegas Sands Corp. chairman Sheldon Adelson. His point man on the issue, Andy Abboud, debated Caesars Interactive Entertainment CEO Mitch Garber at the iGaming conference on Wednesday.

In commentary that drew parallels between online poker and the rise in popularity of mixed martial arts, Breitling took one more jab at an resistance to the legalization of web gaming:

“Technology works, and prohibition doesn’t.”

Contact reporter David Ferrara at dferrara@reviewjournal.com or 702-387-5290.