GPWA Times - Issue 21 - May 2012

COVER STORY VN: So it was a negligible effect on people coming into the live poker room. KALHAN: We talked to our poker room manager and she said that, from time to time, they had some additional pickups. Where we actually had a bit of a down- ward effect was on tournaments because a lot of people were coming in and quali- fying on PokerStars and Full Tilt, [where] you can win a free seat. Those weren’t things that were sponsored by us, but where PokerStars and Full Tilt would say that they would pay the entry fee into cer- tain tournaments on the WPT and WSOP, so from that regard we have seen a drop- off somewhat in the numbers in entrants in tournaments. VN: In terms of your interactions with legislators, with other people within the industry, how have attitudes changed since Black Friday? KALHAN: It’s been interesting. For folks that don’t know a lot about the space, I think that was an additional negative ef- fect on them. It tainted the legitimacy of the business to some degree, especially with what happened with Full Tilt. I think it became a question mark out there that you’ve got some really good regulatory bodies overseas watching these guys. How could this have happened? If they can’t regulate it there, how can we regulate it here? But at the same time, it’s about play- er protection and safety and I think a lot of people saw that U.S. players were not be- ing protected with the offshore regulation, and obviously we have the framework on the brick-and-mortar side for pretty strict regulation. Why couldn’t we start to work towards giving that same type of protec- tion to players online? VN: As you pursue an online gaming strategy, what’s the big lesson you’ve learned from the Full Tilt mess? KALHAN: There have to be proper con- trols in place. I think that that’s what our regulatory bodies here do a great job of. Anybody that’s going to be involved in the business here in the U.S. when it’s regulat- ed, there’s going to be strict screening of individuals, of the business. The controls are going to be in place in the exact same way that they are in the offline space. So, fingers crossed, we’ll learn some of the les- sons from over there and we won’t have any of those sort of issues here. VN: Taking a look at the opportunity in online poker now, do you feel like the appetite for online poker in the U.S. has dropped? Or do you feel like if an online poker entry comes into the market in the next year, year and a half, that there’s go- ing to be a healthy appetite for it? KALHAN: I think the appetite is still there. I think you’ve seen globally that 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. There’s certainly a busi- ness there that’s going to be fruitful at some point. I don’t think anybody is go- ing to be making the money that was be- ing made in the unregulated business, and it’s going to be competitive, but the U.S. is a poker market, and I think there’s a great opportunity. VN: So let’s spin it forward over the next two years. How do you see the American online poker market evolving over the next two years? KALHAN: Unfortunately, just based on the number of competing interests, I don’t see a federal bill passing. We at Foxwoods have had a lot of discussions about this, and we’re kind of [in] the mindset that things are going to unravel at a state-by- state basis. Obviously a lot of states are looking at it now. And then potentially somewhere down the road there will be some sort of federal bill that takes a bit more oversight on this. So I would expect to see a couple of states go live and it will be an interesting test run when you’re dealing with a smaller liquidity pool than anybody has ever dealt with before. But things happen slowly and deliberately on the brick-and-mortar side, and I would expect that would be what happens online as well. VN: Foxwoods is operated by a Native American tribe. There is a diversity of viewpoints on online gaming when it comes to the tribal community. Where does your tribe fit into the picture, and how is it different from what we’re see- ing in California versus what you might see in the Midwest and in other parts of the country? KALHAN: We have a unique situation in Connecticut. The two major gaming interests are ourselves [Mashantucket Pequots] and the Mohegan tribe. We haven’t advocated for passage of any sort of online gaming bill, but given the competitive pressures that we’re facing in Connecticut on the brick-and-mortar side, given the current lagging state of the economy, and given the fact that there’s a thriving business online currently that’s completely unregulated, we think it makes sense that if there were to be regulation either at a federal level or state by state, we make sense as an operator. Ideally in the long term, we’d be happy to take our full suite of offline games into the online world. I think that would be a natural ex- tension for us to provide a bit more of a full suite to our customers, attracting new customers but also providing new prod- ucts for our existing customers. VN: Final thoughts – I’ll open it up to anything that you want to add. Where are we one year after Black Friday, and where are we going? KALHAN: I think a lot of progress has been made. It’s been interesting hear- ing what’s happened in California. There [are] a lot of hurdles to overcome, still, but a lot of progress has been made, and I think the more that states take a look at this, the more educated they become, which is good. I think the DOJ opinion opened the door for people to take a hard- er look at this, and you’ve seen states like Connecticut and Delaware and places that hadn’t been in the mix previously starting to take a look at this. I think in the end, everyone would agree that regulation is a good thing, and so if we get there in the next several years, I think that would be great for the industry. As Executive Director of Business Development for Foxwoods Development Company, Anshu Kalhan is responsible for sourcing new business opportunities both domestically and internation- ally for the owners of the largest resort casino in North America. His role includes overseeing the implementation of Foxwoods’ business develop- ment strategy, including strategic and quantita- tive analysis, target opportunity due diligence, negotiating agreements, creating and maintaining financial Pro Forma projections, interacting with banks and private equity sources, and maintaining the relevant financial databases for all Foxwoods Development Company projects. Where to now in the U.S. – and who’s driving ?