ldquo;The reality is, it takes time,” says Matthew Katz, founder and CEO of CAMS LLC, a California company that provides software for online gambling operators in Nevada and New Jersey. “It's not all of sudden you go live and everybody comes and plays. It takes time to educate the marketplace.”
Katz also is founder and CEO of Verifi Inc., whose software helps merchants around the world process more than $20 billion worth of transactions annually.
"As every state legalizes online gambling, they've got to be really concerned about the process they create and how expensive it is. Will it actually disincentivize operators?"
Katz spoke with Player's Advantage on June 28, the day the Pennsylvania House approved a bill calling for a broad expansion of gambling in the state. Pennsylvania already generates more gambling revenue than any other state except Nevada. The expansion would give Pennsylvania casinos a lineup of options designed to bolster the industry and attract younger adults bored by traditional casino games. The bill includes:
Internet gambling: Casinos could offer all types of casino games, including slots, blackjack and poker. Players would have to be physically in Pennsylvania, but the state could agree to allow those in Pennsylvania to play against bettors in other states that allow online gaming. Currently, only Nevada, New Jersey and Delaware allow online gaming.
Skill-based slots: These games allow a player's skill at a video game shoot-'em up or similar challenge to determine a payout. Currently, all slot payouts are purely a matter of luck.
Daily Fantasy Sports: Bettors would be able to draft teams of professional athletes and win based on their statistical performance. Participants would not be allowed to write their own computer scripts to automate the process.
Off-site slots: Racetrack casinos would be allowed to install up to 250 slots at as many as four locations off the main casino property.
Airport slots: Casinos would be allowed to install slots or provide tablet computers for Internet gaming for passengers in the secure areas of major airports.
Simulcast expansion: Through agreements with licensed racetracks, casinos without racetracks would be able to take horse-race bets and simulcast races from across the country.
CAMS paid about $350,000 to be licensed in New Jersey, compared with $50,000 in Nevada. Covering the New Jersey cost will take “years and years and years,” Katz says
Katz says the grouping of online gaming, DFS and airport gambling is “a brilliant decision” and that approval of online gaming in Pennsylvania could signal similar expansion in other states next year.
While Pennsylvania can build on the experiences of Nevada, New Jersey and Delaware in writing iGaming regulations, Katz says the state should avoid New Jersey's precedent of imposing high costs on vendors and operators.
“We want to come into Pennsylvania, but if the costs are going to be similar to that of New Jersey, we would probably have to make the decision not to,” he says. He says CAMS paid about $350,000 to be licensed in New Jersey, compared with $50,000 in Nevada. Covering the New Jersey cost will take “years and years and years,” he says.
Political leaders must set realistic revenue targets for the state, he says, and regulators must understand the costs that online operators and vendors incur to set up operations.
An online operator could have a dozen or more vendors providing services such as payment processing, customer identification and loyalty programs and geolocation to ensure that gamblers are in the state.
Although the United States' first legal online gaming sites opened in 2013, “Nobody's making significant money” yet, Katz says.
“As every state legalizes online gambling, they've got to be really concerned about the process they create and how expensive it is. Will it actually disincentivize operators?
“I'm hoping they create a balanced set of rules and regulations that not only protect the customers and the integrity of the industry but really make it desirable for operators to invest.”