GPWA Times - Issue 21 - May 2012

The Full Tilt online fiasco impacted land-based gaming as well Foxwoods Resort Casino is the world’s third-largest casino and the big- gest in North America. And Anshu Kalhan, the Executive Director of Business Development at Foxwoods Development Company, has been one of the key people driving its online gam- ing strategy. Here he discusses busi- ness ramifications of Black Friday for both the Foxwoods online strategy and brick-and-mortar property. VN: Let’s start at the beginning – Black Friday – where were you, and how did you hear about it? KALHAN: I was in the office, in my office in St. Louis, and I think I got an EGR news blast coming out, breaking news. And we had already been in discussions with a handful of operators who had pulled out of the market in 2006, so I started getting pings from them as well, saying, “Great news.” It was shocking. VN: On a scale of 1-to-10, how sur- prised were you, and why were you that surprised? KALHAN: I was an 8 or a 9. The level of silence from the DOJ over the course of the better part of five years, from 2006, had many people second-guessing wheth- er they’d made the right decision to pull out in 2006, because those guys were run- ning scot-free for quite some time. So I was very surprised. But at the same time, to develop a legal case obviously takes some time and I know there was a lot of behind-the-scenes work going on there, but still it was very shocking. VN: You’re talking about some of the peo- ple you were in discussions with. What was the nature of their reactions? Was it celebratory? Was it gloating? What was the general nature of it? KALHAN: I think it was generally cel- ebratory in a couple of respects. First, obviously, it vindicated their decision to some degree to get out of the market. I think that had been a head-scratcher for them for some time, wondering, “Did we make the right decision? Did we leave a lot of profits on the table?” But second- ly I think it also kind of signaled maybe an additional step towards regulation in the U.S. The authorities were taking the steps to combat the offshore opera- tors that were still operating post-2006, [and] maybe it was a stepping stone to- wards a regulated market. VN: Let’s follow the timeline a little bit. PokerStars pays their money back almost right away; they set something up with the DOJ. Were you surprised or not surprised at how quickly they moved? KALHAN: I actually wasn’t surprised. I’d followed the PokerStars story quite closely and it was clear that they were flush with cash, and with their substantial U.S. busi- ness they had developed a pretty good European market as well for themselves. You kind of expect that you have corre- sponding assets to pay your liabilities, so I wasn’t that surprised. VN: The next step, Full Tilt going under. How surprising was that to you? KALHAN: Extremely surprising, espe- cially given the fact that it had been such a trusted brand and many of the top poker players had put their names on the line there. You see Howard Lederer and Chris Ferguson on TV all the time and they kind of seemed like the stand-up guys for pok- er, and to hear that they were involved in a fair amount of corruption . . . to say the least, it wasn’t something that I saw com- ing at all. VN: So now, as you take a look at how the online poker landscape has evolved, you’ve got American players without their top two poker rooms, and also without Absolute Poker and UB.com. From a pure business standpoint, did you look at this and say, “All right, we have an opportunity here”? KALHAN: Absolutely. There’s obviously a lot of political forces at work here, so to get something to happen quickly was going to be a very big uphill battle, but at the same time, we talked about it at Foxwoods, a lot of online poker players just lost their home, and here’s an oppor- tunity where if the industry does it right we can give them a regulated home in the near term. We were also monitoring the effects on our land-based casino, if people were coming in to play more in the poker rooms, and actually it was a relatively neg- ligible effect, which was a bit surprising. And like a lot of people have brought up, they shut down three sites so people start to migrate elsewhere, and some of the oth- er networks that are still U.S.-facing, have picked up a lot of that business. “ Poker revenues have been dropping for a lot of operators. But at the same time, it is an American-centric game. So we’ve got a huge population here of Americans that would love to be able to have a fully regulated compliant site that’s based here in the U.S.” 27 Where to now in the U.S. – and who’s driving ?