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How Internet Gaming Will Help Atlantic City

An interview with gaming guru, Dr. Israel Posner, executive director of Stockton’s Lloyd D. Levenson Institute of Gaming, Hospitality & Tourism in Atlantic City.

By Jeff Schwachter
Add Comment Add Comment | Comments: 4 | Posted Mar. 5, 2013

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Dr. Israel Posner

In an interview this week from his Atlantic City office inside Stockton's Carnegie Library, Dr. Israel Posner, executive director of Stockton’s Lloyd D. Levenson Institute of Gaming, Hospitality & Tourism, talks about the pros relating to the recent passage of the "Internet Gaming bill" in New Jersey.

Here are excerpts from Atlantic City Weekly's exclusive interview:

Do you see the Internet gaming bill that was just passed in New Jersey as being a big positive for Atlantic City?
I think Internet gaming offers an opportunity not just for Atlantic City, but for the state as well, to be in a leadership position on the evolution of the gaming and entertainment industry. So it offers an opportunity for Atlantic City in terms of being able to draw customers, new customers, into Atlantic City as they use Internet technology to connect to Atlantic City.

Some are saying being able to gamble online legally would keep people from, say, North Jersey away from the casinos because they wouldn’t have to drive down to Atlantic City when they can gamble from anywhere in the state?
People from North Jersey are coming here less often. The convenience gambler is more often coming to eastern Pennsylvania and closer places. What the Internet gaming [bill] does is provide an opportunity to connect to Atlantic City. It’s not an “either or question,” it’s not the case that people who play on the Internet versus who come to a casino — as if that is a choice that someone has to make: one or the other. What happens is that one will facilitate the other. People that come here will go online because it allows them to stay connected with their favorite casino while they’re away. And people who are away have a chance to stay connected to a casino ... as they win points and get offered opportunities to come visit.

What about people in Pennsylvania who used to come down to A.C. before there were casinos in Pennsylvania? They won’t be necessarily crossing state lines to gamble now —
If you’re a convenience gambler, you gamble where it is most convenient. Again, the convenience gambler is coming here to gamble much less often. Atlantic City is transforming into much more of a getaway, entertainment destination. If all you want to do is gamble, why would you travel an hour and a half when you have it right next to where you live?

So how will Atlantic City reap the benefits of this new Internet gaming legislation?
They will reap the benefits by being able to enlarge their database and connect online to people who right now are not connected and only come here occasionally. The value of a casino is its database and as more people in North Jersey and Central Jersey or anywhere sign up for an account they’ll have an opportunity to connect to Atlantic City and their favorite [casino] Web site.

With the bill, for those casinos, rather than their customers coming to A.C. to earn points, they’ll be able to do it through the convenience of their own home — and then redeem them in Atlantic City.
Right, they earn those points anywhere they play in New Jersey and then redeem those points when they visit Atlantic City. So it’s really a way of creating more accounts and more opportunities to earn points toward those accounts and more trips based upon redeeming those points. This is an obvious win for Atlantic City as a destination. Saying [Internet gaming] replaces [traditional gaming] is not understanding how this [new bill] works.

How long until legalized Internet gaming in New Jersey goes into effect?
There are a number of steps that have to be taken before this goes live. Obviously the DGE and the Casino Control Commission have to fully vet the companies that choose to apply for an Internet permit and the technology partners that will be running these games. There are a number of major companies, many of them based in Europe, that provide Internet casino services and the A.C. casinos will undoubtedly partner, and have partnered [with them] and they have to be vetted. So the time frame I expect for this to begin would be anywhere from six to nine months from now to possibly 15 months from now. September, October could be the earliest; latest would be 2014.

Have there already been online gaming operators that have thrown their hats in the ring?

Well, they have them right now, they’ve had them for years. Caesars or Borgata, they’ve had online gaming for years, with “play” money. Caesars will be a major player, Golden Nugget, too, [because] they have existing operations right now of Internet-based gaming with play money.

Atlantic City’s gaming revenue has been down for a while. Do you think Internet gaming will help this consistent slide in revenue over the past few years?

It’s really unknown how much revenue it will add. Clearly the expectation is by the state budget. If you look at Christie’s fy14 budget, it expects probably hundreds of millions of dollars in revenue because it expects a couple of hundred million dollars in tax revenue to come in from Internet gaming, so clearly the state expects quite a bit. I’ve heard estimates of four, five, six hundred million dollars a year in some of the fairly early years of Internet gaming. The state will tax it at 15 percent. The state is budgeting almost $200 million to come in from Internet gaming, and if you do the math it could be $800 million a year possibly from Internet gaming.

Is Internet gaming legal around most of the world?
It is legal in probably about 80-85 jurisdictions around Europe, very common around France, Italy, Spain, legal in much of Canada. It’s taxed at a higher rate than around here, much of it is 30-40 percent taxed. They aren’t affiliated there to land-based casinos like they are here either. Internet gaming is nothing new; it’s been all over the U.S. as well. Many people gamble in this gray area of an unregulated market [and] many people gamble for money. It’s not technically illegal for people to gamble [online]; it’s illegal for financial institutions to be involved in transferring the funds. The UIGEA [Unregulated Internet and Gaming Enforcement Act], which was passed back in 2006 made it illegal for banks to get involved with gaming online. But individuals have gambled online for quite some time. There are many other vehicles people have used to transfer money. It could be handled by secondhand accounts — there are ways that people do it. What’s new with this is that it’s regulated and fully legal.

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COMMENTS

Comments 1 - 4 of 4
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1. Andy Menyhar said... on Mar 5, 2013 at 11:39AM

“Atlantic City really needs sports betting!”

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2. Bet Midler said... on Mar 5, 2013 at 04:35PM

“most experts agree: there will never be sports betting in AC... its the sports teams and associations that are against it”

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3. Steve Norton said... on Mar 6, 2013 at 05:52PM

“Online gaming should be a mixed bag for Atlantic City casinos. Those that introduce an online casino, preferably with an existing Internet operator, should add revenues and profits to their owners balance sheet. But being able to gamble from home will probably reduced actual visits to an AC casino. In spite of physical presence being required, initially to open an account, and subsequently to collect any earned comps and free play. But the comps and free play can be bundled, meaning a number of online sessions may occur before an actual AC visit is required. The plus for New Jersey is that Pennsylvania and New York will probably suffer greater casino revenue losses than Atlantic City, good news for NJ tax collections. Perhaps AC and South Jersey could negotiate some financial assistance for air service into AC International, in exchange for allowing new in-State gaming competition. Even though online gaming could save at least one AC casino, it will probably mean fewer actual visits to the resort, less rooms occupied, lower property wins with the probable result of fewer employees needed.

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4. dave202 said... on Mar 6, 2013 at 08:49PM

“Mr. Posner is an academic who has never worked in the gaming industry, so his opinion is worthless. And Mr. Norton, while very experienced, is "old school" casino industry and doesn't realize the fluid dynamics behind online gaming. it will be a game changer for AC if the state doesn't screw it up...”

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