GPWA Times Magazine - Issue 28 - April 2014

Abboud also knows the American gam- ing industry fears competition. Casinos spendmillions of dollars to prevent new casinos from opening up in "their" terri- tory. That's why he links Facebook and Zynga toPokerStars. Let's go back to Abboud's original state- ment: "I'm not worried about the Mitch Garbers of theworld. It's everyone else, in- cluding PokerStars, Facebook and Zynga." Facebook andZynga are not "bad actors" in the regulatory sense. They're two behemoth online companies with lots of traffic (Facebook) and lots of players (Zynga). They've never held gaming licenses in the U.S. before. But if either chose to enter a regulated U.S. market, theywould be licensable and formidable challengers to the industry's status quo. Abboud clearly does not want this to happen. As much as he and Adelson paint this as a moral objection, this is about not disrupting Adelson's current economic model for success — investing billions in land-based casinos and seeing the investments return billions more with players staying at casino hotels, eating at casino restaurants and losing billions at gaming tables. By linking PokerStars to Facebook and Zynga, he's trying to make land-based operators afraid of a future that includes onlinegaming. This line of thinking also ties directly into Abboud's next argument, that online gam- ing is destroying the brick-and-mortar casino industry. Abboud maintains that the "European experience" does not re- flectwhatwill happen in theU.S. and that online gaming threatens the existence of land-based casinos, both from a business standpoint and a regulatoryone. The "European experience" that Abboud alludes to is that there are no large land- based casinos in Europe. So there can be noway ofmeasuring how online gaming impacts large casino resorts. But that'snot true. As Garber noted during the debate, online poker helped revive a moribund poker industry in Las Vegas and led di- rectly to dramatically higher participa- tion levels in theWorldSeriesofPoker. In 2002, 631players entered theMainEvent. By 2006, the number of entrants had grown to 8,773 because of the explosive growth inonlinepoker. New Jersey's initial online gaming results show online casinos are expanding the customer bases of land-based casinos as well. Borgata President and COO Tom Ballance told CNBC earlier this year that "the great majority of players who were playing online have not been to Borgata in well over a year. And the vast major- ityhavemade fewer than two trips in the past year. So it's adifferent customer." Garber, whose portfolio now includes a few brick-and-mortar casinos, said he views online gaming as a complementary business. "It drives land-based revenue. Iwouldn't do it otherwise." Why does Abboud seem willfully igno- rant of this? Fear. He wants brick-and- mortarcasinos tobeafraid for their future. The regulatory fear thatAbboud is trying to sow suggests online gaming is so dif- ficult to regulate that gaming companies are going to make mistakes that jeopar- dize their brick-and-mortar licenses.Why would you do anything to jeopardize your brick-and-mortar licenses? Once again,Abboud is playing onhis au- dience's ignorance. The iGaming North America audience knows that online gaming can be effectively regulated – as do the states of New Jersey, Nevada and Delaware. But the politicians and brick- and-mortar casino executives this mes- sage is designed for don't; he's trying to take advantageof that ignorance. Abboud's third argument, the potential for rampant underage gambling, is de- signed to scare legislators and parents alike. The argument is based on two premises – know-your-customer (KYC) technologydoesn'tworkandkidsareway smarter and more technologically savvy than their parents, and they're running aroundwilly-nilly buyingwhatever they want on the Internet. What's particularly galling about this argument isn't Abboud's rampant fear mongering. That's becoming par for the course. What is particularly infuriating about thisargument ishisabsolute refusal to learn about or inability to comprehend howKYC checkswork in the online gam- ing industry – and how they prevent un- deragegaming. Abboud describes an instance where some suppliers tried to explainhowKYC checks work, and "they just lost me." Really,Andy?They just lostyou?This isn't rocket science. If you don't understand something, ask. Don't just "check out." TakeGarberuponhisoffer to share infor- mation on how Caesars stops underage gamblers from playing on WSOP.com. Take the time to find out how this stuff works. Not knowing how KYC technol- ogyworks doesn't mean the system can't prevent underage gamblers from play- ing. It means you don't know how the systemworks. As to the actual "problem" of under- age players gambling for real money, it's not much of a problem at all. There hasn't been a single reported instance of an underage online gambler in the regu- latedU.S. market. Aswe come up on the one-year mark of licensed and regulated online gaming in the U.S., that's a pretty remarkable accomplishment – one the brick-and-mortar casinos (including ones ownedbyAdelson) cannotmake. “ Will anyof . . . (Abboud’s) argumentsstick? Yes. They're designed toelicit fear and take advantageof the fact thatmost legislatorsdon't knowa thingabout onlinegaming.” 36 DeconstructingAbboud