As I was sitting down to write this column this month, my entire premise was blown up.
I planned to address the partnerships announced last month between the two major online poker sites and two major casino groups in Las Vegas. PokerStars and Wynn Resorts announced a deal to offer online poker once it is legalized, and Full Tilt Poker and a group that includes the Fertitta brothers, Tom Poster and Tim Breitling did the same.
I was troubled by these arrangements right from the start. Full Tilt and PokerStars achieved their dominant market position because they flaunted the U.S. law that prohibits transferring money electronically for gambling purposes, the bottom line of the Unlawful Internet Gambling Enforcement
Act of 2006. Now, none of us liked this law when it passed in the dead of night at the end of the congressional session, but it did become law. So whether you liked it or not, it was wise to respect it.
That’s exactly what the market leader at the time, PartyPoker, did. The parent company, PartyGaming, and many other online gambling sites stopped taking bets from U.S. players now that the restriction had been codified. Full Tilt and PokerStars did not.
So as I sat down to describe my unease with the relationships they had forged with reputable individuals in gaming, it was announced that PokerStars, Full Tilt and Absolute Poker—another site that continued to accept bets from U.S. players—had been indicted for a variety of very nasty crimes. (See the full story in the iGames section on page 50.)
Up until this point, these rogue poker sites had claimed to be clean and produced as evidence the fact that the federal government had never challenged them. Now that claim has been laid to waste. But none of the principals of these companies were arrested because they don’t live in the U.S., even though some of them are Americans. If they were so “clean,” why did they avoid U.S. soil like the plague? It is, after all, their major market.
Look, I’m a big supporter of online gaming. Even with the apparent demise of these online poker sites, there are still dozens of sites continuing to illegally accept U.S. bets. So the facts will continue to convince me that online gambling cannot be stopped, so it must be controlled, regulated and taxed for the benefit of the country and the states where it operates.
But the industry needs to be very careful. The indictments last month demonstrate the land mines that lay along the path to legalization, and the industry needs to be nimble enough to avoid them. Before the indictments, the embattled companies were lobbying to be allowed to participate in any legal online gaming industry. Their principal argument that what they were doing was legal has, of course, been blown out of the water, but this is where the danger lies.
The companies that respected U.S. law by halting bets from U.S. players should certainly be allowed to participate. They apparently recognize and respect U.S. law, and most of them have settled any problems they may have had with the Justice Department.
Like all casino operators and vendors, however, they should be required to submit to the complete licensing process that any company must pass. And any gaming company with licenses to protect must conduct the due diligence as it would do with any business relationship.
The gaming industry has nothing if it does not have integrity. If you understand the “illegal” roots of the land-based and the online gaming industries, you know that casinos—land-based and online—have to go the extra mile to guarantee that we are squeaky clean. Not only will the public demand it, but the Department of Justice will demand it too.
So let’s be careful as we move into legal online gaming. The impact of the activity is still not fully understood, but as long as we approach it with integrity, care and contemplation, we’ll be able to proudly add it to the offerings of the casino entertainment industry.