May 12, 2011
"This deal is essentially a bet on the U.S. [online poker] market opening up."
A couple of weeks ago I commented that a cynic might be tempted to view the recent prosecutions of online poker sites as the first step toward fully regulated online poker in the U.S.:
I have a friend who grew up in Cleveland Heights back in the 60s, and he likes to tell a story about how the cops came in and busted up the local number-running ring because gambling was illegal ... shortly thereafter the state started generating revenue by selling lottery tickets in Cleveland Heights and throughout Ohio. While it is hard to predict with any certainty, my best guess is that we will have some form of federal and/or state regulated online poker in place within the next 18 months. A number of states (as well as the District of Columbia) are already actively pursuing establishing regulated intrastate sites (I believe the potential annual national tax revenue is estimated to be in the billions). I'm not suggesting this is some sort of organized conspiracy. Rather, a confluence of events and opportunity. However, as always, it is ultimately too soon to tell.
Now it appears we have at least some further evidence from the market that this may well be the case. Casino City Times reports that, "Reno-based IGT has offered $115 million to acquire a Swedish technology company that operates one of the world's largest online poker networks and supplies online gaming products and services to the industry." The story goes on to quote Roth Capital Partners gaming analyst Todd Eilers as saying that, "This deal is essentially a bet on the U.S. market opening up.... We believe it's only a matter of time before the U.S. market opens up with a push at both the federal and state levels."
Meanwhile, a related story is developing onshore that I can only describe as dripping with irony. Casino development in Ohio has halted, despite voter support for the projects via a constitutional amendment, because Ohio Governor Kasich (R) wants to increase the taxes on the casinos. The Cleveland Plain Dealer reports:
Kasich has said often in the last several weeks that th[e previously approved] fees are not enough and the operations should do more to help the financially struggling state. "You like to ask people to step up and help us in tough times," he said last month.