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Learning from a lost Vegas opportunity

N.J. hoping to avoid technical challenges that cost Nevada its head start on Internet gaming

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In trying to build the online gaming industry, regulatory director David Rebuck found few places to turn for help, ‘only a lot of self-proclaimed experts.’
In trying to build the online gaming industry, regulatory director David Rebuck found few places to turn for help, ‘only a lot of self-proclaimed experts.’ - (AARON HOUSTON)

The ink from Gov. Chris Christie's signature was barely dry when David Rebuck had a reality check about the law legalizing Internet gaming in New Jersey.
“There are few people or organizations that have a really clear handle on how to run Internet gaming in the United States,” said Rebuck, director of the state's Division of Gaming Enforcement, who's trying to keep New Jersey on track for a Nov. 26 online gaming rollout. “There are only a lot of self-proclaimed experts.”

The industry, in fact, is so fledgling that Atlantic City’s casinos and regulators can’t look to Las Vegas for guidance, though Rebuck said the DGE has been working closely with its counterparts out West. While Nevada adopted Internet regulations in late 2011, its first online poker platform — and so far, its only one — didn’t go live until April 30.

“That probably speaks to some of the difficulties in getting this off the ground,” said David Schwartz, director of the Center for Gaming Research at the University of Nevada–Las Vegas. “This probably isn’t going to be as easy as people thought it would be.”

Nevada’s model thus far only allows for online poker, and at least two companies — South Point Poker and Monarch Interactive — reportedly pushed back their timelines in the fall, because they needed additional time for software testing. Others, however, say they’re targeting a summer launch.

Rebuck and other experts say casinos with Nevada-based parent companies got a head start in New Jersey largely because Silver State officials have been exploring Internet gaming for several years. That’s helped operators like the Borgata, which is owned by Boyd Gaming Corp., and Caesars Entertainment’s four gaming halls here.

A global reach has benefited Caesars, whose relationship with its online partner, 888 Holdings, goes back to 2009. That’s when the casino giant partnered with an 888 subsidiary to launch Internet games in Europe, paving the way for the deal that Nevada regulators approved in 2011.

“We’ve learned a lot from our experience in Nevada preparing for online gaming,” said Geoff Stewart, senior vice president and general manager of online poker for Caesars Interactive Entertainment. “We’ve solidified our relationship with 888 over the last several months of preparation, so I think that will serve us well as we move forward.”

Moving forward means looking at the physical requirements involved in playing in the digital space.

Joe Lupo, Borgata’s senior vice president of operations, is partnering with Gibraltar-based BwinParty for online games. He said Borgata is “learning a lot right now and trying to understand what we need,” especially in the realm of infrastructure.

His team has been trying to gauge the bandwidth and servers they’ll need over several years, and “looking at capital investment to be able to house that hardware on property.”

Gaming operators and experts have said the state’s timeline is aggressive, but the companies are nonetheless rushing to keep pace. By July 1, each of Atlantic City’s 12 gaming halls had met the DGE’s initial deadline for securing Internet gaming partners. The casinos and those partners now have two weeks to formally apply for Internet gaming licenses.

To help New Jersey’s regulators prepare, Rebuck said the state hired one of Malta’s top gaming regulators as a consultant earlier this year.

For all of Atlantic City’s casinos, Rebuck’s focus has been to “keep the hammer down” ahead of the state’s desired go-live date. Prior to last month’s submissions from all 12 operators, he said some companies had hinted at not being operational for a year. But he has made it clear that he’d “give everybody a fair shot, but I’m not going to allow the weakest to slow up those who are aggressive and ready to go,” he said.

The state can, in fact, push back its launch date. The law requires the DGE to notify the casinos 45 days before the date, but Rebuck said he was “going to keep pushing” to meet that deadline, as his division has devoted itself to since late February.

By July 29, the agency will field the remaining applications from the gaming halls, their partners and the countless firms that provide services like age verification, payment processing and so-called geolocation technology; all are required to be licensed or registered with the DGE.

The agency will then spend the next four months testing software and reviewing any firms new to the market, said Rebuck, who said “the number of companies that are trying to come in to get a foothold here” was “unbelievable.” But there are also firms that have long histories in the state because of their work in Atlantic City, like Bally Technologies and other slot machine makers who have moved into Internet gaming.

“They’re ahead of the game,” he said of companies that have been licensed previously. “We just have to worry about testing their systems.”

He also said his agency isn’t getting caught up in calls to make New Jersey the hub for potential interstate online gaming, which is still illegal under federal law. He is focused on the intrastate platform, though his “sense is, from talking to other jurisdictions, they’re watching us.”

“This is a huge copycat industry, and if it’s successful, people are going to copy it,” Rebuck said. “And if it isn’t, they’ll just sit on the sidelines and watch us struggle.”

E-mail to: joshb@njbiz.com
On Twitter: @joshburdnj

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Joshua Burd

Joshua Burd

Josh Burd covers real estate, economic development and sports and entertainment. Before joining NJBIZ in 2011, he spent four years as a metro reporter in Central Jersey. His email is joshb@njbiz.com and he is @JoshBurdNJ on Twitter.

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