iDEA’s Founder Jeff Ifrah and Business Operations Manager of Ifrah Law Moriah Kairouz Batza talk to Gambling Insider about the road to America’s legalisation of online gaming.
Click here for a link to the full article.
iDEA’s Founder Jeff Ifrah and Business Operations Manager of Ifrah Law Moriah Kairouz Batza talk to Gambling Insider about the road to America’s legalisation of online gaming.
Click here for a link to the full article.
WASHINGTON–(BUSINESS WIRE)–Pennsylvania has finally decided to follow the lead of states like New Jersey and Nevada in legalizing online gaming, with the hopes that this fast growing industry will help the state in its ongoing budget shortfall. Members of iDEA applaud this progressive step by the Commonwealth:
“Our organization firmly believes that rational regulation is key to the successful implementation of online gaming in the United States. Online gaming has been proven to deliver positive economic benefits in the states where it is legalized and regulated.
“While we applaud the legislation, we also urge lawmakers to consider future revisions to more align the tax rate on online slots (currently, 54%) with industry norms and rates levied in other jurisdictions that have achieved an optimal level of tax revenue generation and market sustainability, such as New Jersey (17%). Our members remain available to help facilitate discussions and analysis in this area.”
Featured in Gambling Compliance | By Chris Sieroty
Whether the federal sports-betting ban is overturned or upheld by the U.S. Supreme Court comes down to the simple question of whether Congress has the right to compel a state to ban wagering, according to gaming industry lawyers.
In their 71-page brief filed Monday with the U.S. Supreme Court, the National Collegiate Athletic Association (NCAA) and the U.S. professional sports leagues argued against the idea that the 1992 Professional and Amateur Sports Protection Act (PASPA) impermissibly “commandeers” states’ rights to implement laws and regulations banning sports betting.
Paul Clement, an attorney with Kirkland & Ellis in Washington, D.C. who represents the NCAA and professional leagues, wrote that PASPA “does not compel state or state officials to do anything.”
“That is because PASPA only prohibits states from sponsoring, operating, advertising, or promoting sports gambling schemes, and prohibits states from licensing or authorizing third parties to engage in that conduct.”
But such an argument is questionable, said David Yellin, an attorney with Ifrah Law in Washington, D.C.
“Were PASPA as the leagues describe it, they might be correct,” Yellin said. “They treat PASPA as akin to any complex federal regulatory scheme when it is, in fact, quite unusual in requiring states to regulate in-state conduct.”
According to Yellin, “the question is not whether state law is pre-empted by federal law.”
“It is whether Congress, by requiring states to do the dirty work of prohibiting sports betting, has impermissibly commandeered the states for its own purposes.”
Keith Miller, a professor with Drake University Law School in Des Moines, Iowa, said federal law takes precedence over state statutes.
“So it really does become a matter of whether PASPA requires the states to do anything except not operate or authorize sports betting,” Miller told GamblingCompliance.
Over the years, the NCAA, National Hockey League (NHL), National Basketball Association (NBA), National Football League (NFL), and Major League Baseball (MLB) have successfully blocked New Jersey’s efforts to permit sports betting by arguing they would suffer harm from gambling.
But any mention of potential harm to the leagues is contained to just one paragraph in Monday’s Supreme Court brief, which argues that “Congress has long recognized and sought to contain the harms that can flow from various forms of gambling.”
The traditional argument that betting would cause harm to the leagues may have been undermined by recent decisions of the NHL and NFL to allow professional sports franchises in Las Vegas.
“That is probably part of it, particularly since [NHL commissioner] Gary Bettman has not been particularly concerned with gambling,” Yellin said.
Miller said it may be the leagues “thought it was a distraction to their central point.”
The NHL’s Vegas Golden Knights began their inaugural season this month playing their games at the T-Mobile Arena on the Strip, which is owned by MGM Resorts International.
NFL owners voted 31-1 in March to allow the Oakland Raiders to move their franchise to Las Vegas by 2020.
“It also probably reflects the fact that the commissioners of the NBA and MLB have both publically come out in favor of legalized sports betting,” Yellin said.
The Supreme Court will hear oral arguments in the New Jersey sports-betting case on December 4, with a decision likely to be issued sometime before June.
Sports wagering advocates are hopeful that justices will strike down PASPA as unconstitutional and open the doors to widespread sports betting across the United States.
However, Miller said the court could also “issue a very narrow ruling that really leaves most of PASPA intact.”
“Regardless of the court’s decision, I think it is inevitable that Congress will get involved in this” he said. “The leagues are not likely to stand by and allow states to offer sports betting according to their differing regulatory and licensing practices, even if the court would
give the states authority to do that.
“The leagues are likely talking to members of Congress about this now.”
In early September, iDEA was a party to an amicus brief filed with the United States Supreme Court in the case of Christie vs. NCAA, the New Jersey sports betting case whose outcome is expected to have a significant impact on the gaming industry in this country and upon the issues of states’ rights generally.
In this filing we challenge the constitutionality of the law called The Professional and Amateur Sports Protection Act (“PASPA”), which outlaws sports betting in all of the states except four. Our membership is committed to allowing all communities seeking to broaden their revenue and employment opportunities the right to welcome the gaming industry under rational regulation.
Click here to download the brief.
The purpose of the report was to conduct a comprehensive study relative to the regulation of online gaming, fantasy sports gaming and daily fantasy sports. The report is receiving much attention over the fact that in it, the Commission recommended that DFS be defined under the umbrella of “online gaming”.
Legal Sports Report has done a great article on what that means for the state and DFS is general.
The Commission’s report also cites and draws conclusions from iDEA’s economic impact study. iDEA’s study is noted in the report regarding two important aspects affecting the online gaming debate: underage gaming and problem gaming. Also, the organization’s perspective was accurately reflected in relation to the contradictory results of the Rutgers’s study.
Brad Allen | EGR North America
As Hollreiser tells the story, he expected the usual rebuttal from Ryan, but instead he was told: “I absolutely agree.”
“I must be on to something,” thought Hollreiser. And the exchange didn’t go unnoticed by the man moderating the panel, gaming lawyer Jeff Ifrah, who took it upon himself to bring the industry together. Ifrah is now the chairman of North America’s first online gaming trade association, iDEA – the internet development and economic association.
Below, Ifrah explains how the association came about and how it can help the nascent egaming industry in New Jersey spread across the country.
EGR North America (EGR NA): Why you decide to put this association together?
Jeff Ifrah (JI): Most of us have known for a long time we should be pushing for legislation on a state-by-state basis. But most of that lobbying effort has fallen on the shoulders of Caesars and Amaya, and MGM to a lesser extent.
It’s a very expensive and daunting effort and the smaller operators, many of whom don’t operate on a national level. And it’s very expensive at a time when they are not necessarily turning a big profit in New Jersey.
The problem has always been the cost of this body and what the association will do. If the objective is national lobbying, how are the members going to afford it? There have been approaches to the industry about this in the past, but it’s always been too expensive to do it.
So I asked what contribution we can make to push for other states to come online. What can we afford to do?
I met with some clients and companies I knew and we came up with this idea of a study. Instead of trying to do something huge, why don’t we contribute a few dollars to hiring an economist and putting together an impact study looking at all the ways the industry has created a positive economic impact?
EGR NA: Why did you personally decide to drive this forward?
JI: After almost three years of watching New Jersey grow, but watching the legislative push in other states stagnate, I became concerned about the future of the industry. I felt if we didn’t do something now to start pushing online gaming, we would be stuck in this rut, and my concern was that one state wouldn’t be sufficient for the companies. Some of my clients were also talking about leaving the US market all together, so I decided to do something about it.
Everyone was asking me what I was going to charge. And I told them I was doing it pro bono because if this doesn’t happen we could be in trouble as an industry and we all need to participate and make sure legislators hear from us. I’ve put 100 hours a month into this project for the last year and haven’t charged for my time.
EGR NA: And what do you hope your study can achieve?
JI: Nobody ever talks about jobs. You have all these hearings in New York and Pennsylvania and no-one is able to say: “This is how many jobs were created in New Jersey,” and that’s such an important issue. It was an issue in the Trump campaign, and it’s an issue on the state level. Pennsylvania, Michigan and Wisconsin are all states considering online gaming and all states Trump campaigned in about jobs, but no one has stats about jobs. They talked about tax revenue, but that’s not going to win the day. We already know that.
EGR NA: What’s the structure of the organization?
JI: We tried to get together at the major conferences like ICE, G2E, but of course we never get everyone there. We’ve also had teleconferences once or twice a month and we do a lot of online surveys on those to make decisions while we talk. i.e. how often should we meet, how they feel about the white paper, or the communication strategy. It’s a way for everyone to participate while we’re spread around the world. The group needs to make some major decisions about what we do in the future. But if Pennsylvania comes online, that will make everything a lot easier.
EGR NA: According to your recent statement you’re up to 20 members, with nearly every major company from New Jersey involved. Have you been surprised with the uptake?
JI: Most recently IGT and Scientific Games have joined, and they are obviously huge companies. It takes a while to grow enough to get the attention of an IGT and the fact they’ve joined up is an indication we’re getting stronger and the industry thinks we’re worthwhile.
There are three key firms that haven’t joined up. Firstly Caesars, but we have a very good relationship with them. They’ve helped with introductions and they’re doing their own thing and we share information and data with them. 888 is also not a formal member but again they have provided our economist with data for this report as well. I don’t know what political issues prevent them becoming a member, but we’re hopeful they will.
The Borgata has also given us data, but again they’re not a member. I’m not ragging on them, I’m sure they have some intracompany reasons.
EGR NA: What kind of things are you relaying to regulators and legislators?
JI: This is indeed the first time the legislators have met with the industry in the US. One of the problems we have always had is that lawmakers think this entire industry is offshore in Costa Rica in some shady office. They don’t know these people live in New Jersey and New York and Pennsylvania. One of the great things abbot this organisation is we can walk into Harrisburg and we can say I’m Tropicana, I’m Amaya, I’m GVC, and this is what we do, this is who we employ and that’s a very important story to tell that hasn’t really been told. We can convey all of the important messages about problem gaming, age restrictions, geolocation, and dispel all of those silly myths that exist around online gaming.
EGR NA: So how was your first meeting between iDEA and Pennsylvania politicians?
JI: It went well, the members were very excited. We met with every level of the House and Senate and on the one hand it was surprising how much confusion there was around some of the issues that are second nature to the members; issues like cannibalization, job creation, it was a bit surprising that we were still discussing that. But that was a reminder of the importance of engaging.
A big part of the meeting was the tax rate. Everyone was asking us why we couldn’t tolerate 54% tax when casinos can. Of course it’s completely different. Thomas Winter with the Golden Nugget was helpful there as he could say “Our land-based casino spends 1% of revenue on advertising, whereas its 35% for online gaming.” Jim Ryan showed them some studies comparing France and its 40% tax rate and the UK with its 15% rate and showed how you can increase GGR with a lower rate and increase channelization.
That said, the governor is really pushing this tax rate and that’s a problem. We called them again to talk about this and spoke for another hour about the tax rate, so that’s something we’re working on.
We also had figures showing how every dollar of revenue was spent on bonusing, advertising, revenue sharing and so on. The politicians view online operators as profit machines, so we tried to correct that to an extent.
EGR NA: Do you have any idea what the focus will be after Pennsylvania?
JI: If Pennsylvania passes that will infuse the group with a lot of energy. That will also generate some more profits which can be put back into advocacy in other states such as Illinois and Massachusetts for instance. We’re very much hoping for a domino effect and if that happens this group could be around for a while.
The next step for us is to adopt a corporate integrity model where all members of the group agree to adopt certain corporate integrity values. Every member is already regulated by the DGE, but I want legislators to know exactly what we stand for so I want each member to communicate to the world: here’s where we stand on fairness, consumer protection, fraud and so on. It’s not going to be anything dramatic, just adopting these stances together and making it clear.
And if gaming continues to grow we can be helpful in providing testimony on issues that might come up with state and federal regulators.
Colombia, for instance, was recently looking at what kind of gaming model they should have? A closed market or open to the world? This association would be very helpful in testifying that an open market benefits the players’ companies and tax receipts.
EGR NA: Do you have a model you think egaming legislation in the US should follow?
JI: A place like New York has only been willing to look at poker. We want to try and stop the proliferation of that. While poker is great, it doesn’t generate the type of revenue and jobs that casino gaming does. It just doesn’t. There’s really no reason why the industry should stand behind poker-only bills as if it’s some kind of springboard into more gaming expansion. They don’t want to go all out for casino because they’re worried the public will say no. So the association needs to advise on that too.
When gaming first started in the US almost 100 years ago. Everyone was averse to land-based casino and now they’re legal in 40 states. We don’t have a hundred years to see online gaming expand. But in the next two to five years we’d like to knock off some big gaming markets, especially in the north east, then Illinois and California. We can’t push for real money in every state but we can contribute to the efforts of Caesars and Amaya in these big blocks.
In a recent opinion piece for another news organization, a Franklin & Marshall College associate professor named Jeffrey Podoshen made the baffling claim that online gaming “cannibalizes” revenue from brick-and-mortar casinos.
According to a recently released peer reviewed study conducted by independent researchers Alan Meister, of Nathan Associates, and Gene Johnson, of Victor Strategies, on the “Economic Impact of New Jersey Online Gaming: Lessons Learned,” there was no cannibalization of land-based casinos in New Jersey over the past three years that online gaming was legal in that state.
According to Meister, this is the same result that has been seen in previous studies.
Opponents to online gaming do not seem to understand that adding an online component to land-based casinos has had the effect of expanding the client base, revenues and audience of gaming in New Jersey.
Online gaming brings a player to the online table; it does not transform a land-based player into an online player.
Last year, I founded an association of online and land-based gaming companies iDEA (iDevelopment and Economic Association) to fund unbiased academic research which could counter the doomsday arguments propagated by opponents like Professor Podoshen.
Various business interests seeking to protect their own interests make unfounded and untrue claims about online gaming to achieve their own ends, not because they are truly interested in generating more jobs, more tax revenue or a stronger economy for the state.
Here is a case in point. In the undisputed Meister/Victor Strategies research based on over three years of legalized online gaming in New Jersey, this new industry has generated $998.3 million in revenue; 3,374 jobs; $218.9 million in wages to employees; and $124.4 million in tax revenue to state and local governments.
The study also found that concerns raised in New Jersey during the initial legislative debates were unfounded.
There has not been a single major incident of online cheating or player fraud reported and incidents of cybercrime have been extremely rare.
Instead of so-called “cannibalization,” online gaming is expanding the marketplace as gaming corporations are choosing to expand into verticals. Online gaming brings in consumers beyond those who enjoy placing their bets at land based tables and slot machines.
By widening the scope of their offerings to new customers, including a younger and more tech-savvy demographic, traditional casinos can grow their markets, add to revenue streams and create more ancillary jobs, often in the high paying technology sector.
At a time when Pennsylvania desperately needs to find new revenue sources, the position held by opponents is irresponsible.
Statistics and revenue calculations do not lie. The research clearly demonstrates that iGaming can be effectively regulated and channeled into positive job growth, income and tax revenue.
Now that the facts are plainly available, I call on the Associate Professor Podoshens of the world to stop the smear campaigns and get down to what really matters: legalizing online gaming to generate much-needed tax revenue, jobs and economic growth for the state of Pennsylvania.
Jeff Ifrah of Ifrah Law PLLC is nationally recognized in the area of gaming law. He is a founding member of iDEA (I-Development and Economic Association), an association seeking to grow jobs and expand online interactive entertainment business in the United States through advocacy and education
A new report analysing the effects of igaming in New Jersey has found that the industry is generating tax revenue, adding jobs and inspiring technological innovation.
The report, sponsored by the iDEA (iDevelopment and Economic Association), entitled Economic Impact of New Jersey Online Gaming: Lessons Learned, by researchers Alan Meister, Ph.D. of Nathan Associates and Gene Johnson of Victor, looked at financial and sociological data gathered since the 2013 regulation of igaming in New Jersey.
New Jersey’s igaming industry was found to have directly and indirectly generated $998.3m (€891.9m/£779.6m) in output from 2013 through 2016.
The igaming industry in the state also created 3,374 jobs, $218.9m in wages to employees, and $124.4m in tax revenue to state and local governments, including $83.5m in igaming taxes.
Jeff Ifrah, a gaming attorney and one of iDEA’s founding members said: “New Jersey’s experience provides valuable lessons for other US states considering iGaming legalisation in the future.
“The state’s operating environment and regulatory structure provides a portable model which can be modelled by other jurisdictions, bringing much-needed jobs and tax revenue.”
“New Jersey iGaming is also a success from a regulatory perspective, with some of the strictest iGaming regulation protocols in the world; these regulations guarantee that operators are accountable, and that players can trust that they will be protected.”
The study found that negative impacts, predicted by igaming’s opponents, such as a possible increase in underage gambling, money laundering, and fraud, were as yet unfounded.
This bodes well for other states such as California, Illinois, Washington, Massachusetts, Pennsylvania and New York that are considering regulation.
New Jersey’s online gambling market had its best month ever in March, registering an increase of more than 40 percent from a year ago as it helped Atlantic City’s casinos boost their gambling revenue by more than 9 percent. When the shuttered Trump Taj Mahal is excluded from the calculation, the seven surviving casinos saw an increase of nearly 17 percent last month.
Figures released Wednesday by the state Division of Gaming Enforcement show the casinos won $221.8 million in March. That’s an increase of 9.3 percent compared with March 2016.
The results were helped by an increase of 40.2 percent in online gambling revenue, which increased to $21.7 million in March, compared with $15.5 million a year ago.
Of the seven brick-and-mortar casinos currently operating, only Bally’s posted a decrease, and it was only 2.2 percent.
Internet gambling began in New Jersey in November 2013 as a way to help the state’s struggling casinos. It appears to be doing just that, gambling authorities said.
“Every month should be as good as March was,” said Matt Levinson, chairman of the New Jersey Casino Control Commission. “When coupled with the very strong earnings report that came out last week, it’s clear that casinos have started to grow the market and increase their profits. That is generating a lot of positive interest in Atlantic City and has already attracted significant new investment in this market.”