Vegas Eyes Big Legal Online Poker Bet — Facebook Too?
May 24, 2012
Online gambling may soon be legal in over a dozen states, and everyone from governors, global casino giants and maybe even Facebook wants a piece of the action.
Months after shutting down major websites such as FullTilt Poker and PokerStars, the Justice Department said on Dec. 23 it would not interfere with states legalizing web-based poker and other gambling. Online sports betting would not be legal.
California, Nevada, New Jersey and about 10 other states are looking to raise revenue by legalizing and taxing online gambling .
"It is going to occur. They need the revenue," said Richard Bronson, chairman of U.S. Digital Gaming, which helps states implement legal gambling.
Casino giants such as Wynn Resorts (WYNN), MGM Resorts (MGM) and Caesars Entertainment (CZR) have been laying plans and acquiring companies to ante up online.
"When you have a gold mine this big it's only a matter of time," said Brock Pierce, managing director of the Global Gaming Fund of venture capital firm Clearstone Venture Partners. "A lot of billion-dollar companies will come out of this in the coming years."
In December, Caesars acquired Israel-based mobile gaming firm Playtika for an estimated $220 million. Slot machine giant International Game Technology (IGT) in January paid $500 million for Seattle's DoubleDown Interactive, which makes casino-style games for social networking sites including Facebook (FB).
So far Las Vegas Sands (LVS) has not signaled its intentions.
Bronson expects legal gaming sites in 2013. Nevada has already passed legislation authorizing online gaming. Technical issues are still to be resolved but sites could come online as early as Q1.
California legislators have worked on bills for about a year, though it's anyone's bet when legislation might land on Gov. Jerry Brown's desk. But state tax revenue for just online poker could top $5 billion in 10 years, estimates U.S. Digital Gaming. If gaming platforms were linked to social sites like Facebook (FB) and Zynga (ZNGA), revenue could nearly double to $9 billion.
It's unclear what role federal regulators might play. Absent congressional action, legalization might happen state by state, each with their own set of rules.
Last October MGM and Boyd Gaming (BYD) announced a joint alliance with U.K.-based online poker giant Bwin.party, owner of PartyPoker, one of the biggest online poker sites in Europe.
Caesars CEO Gary Loveman, in a May 1 earnings call, said legal online gambling continues to grow in the U.K., Italy and France.
"We remain confident with the progress towards the legalization of online poker here in the United States," he said. Caesars has filed an application for a Nevada Web gaming license "and we're progressing with putting infrastructure in place to support online poker operations," he said.
MGM CEO James Murren, in his post-earnings conference call on May 3 said, "We continue to remain aggressively focused on pursuing federal legislation for online poker. And we're keenly aware of what's going on, on a state-by-state basis."
Betting On Wynn-Zynga
Rumors surfaced a month ago that Wynn plans to partner with online gaming giant Zynga (ZNGA). Both companies declined comment. But Vegas buzz is so widespread "that it's almost common knowledge and people assume it's a done deal," said a source who asked not to be named.
"Zynga Poker is the biggest site of its kind worldwide," said Pierce. "(Zynga CEO Mark) Pincus has said gaming and gambling go hand in hand."
Bwin estimates social gaming revenue will approach $15 billion worldwide in 2015 from $8.2 billion this year.
Social behemoth Facebook so far hasn't tipped its hand. Its initial play could be to let gambling sites advertise on its network.
"But the social casino game space is one of the fastest growing segments of the gaming market on Facebook," said Pierce.
Copyright 2011 by US Digital Gaming