Major US gambling operators are already preparing for the online poker and egambling legalization they believe is going to happen soon in the U.S. by making early moves to be 100 percent ready when the time comes. On Monday, October 31st, two of the biggest American casinos – MGM Resorts International and Boyd Gaming Corp. announced they have signed a deal with the world's largest online poker and gambling operator Bwin.Party Digital Entertainment Plc to establish a new online poker entity.
The three companies have already divided new subject's shares with the biggest part – 65 percent going to Bwin.Party, 25 percent to MGM and 10 percent to Boyd. The new entity will kick in as soon as the US government passes online poker legislation running the Party Poker online poker brand as well as other internet gambling and poker sites. MGM and Boyd will also use Bwin’s software to develop sites for their own properties, such as the Bellagio, MGM Grand, and Mandalay Bay.
“We have been putting in place the foundation, if you will, to re-enter the market,” Bwin.party’s co-CEO, Jim Ryan, told The Associated Press. “The deal will help the companies build a large enough pool of players to make the business profitable.”
Bwin.party, which also owns one of the biggest live poker tournament brands, the World Poker Tour, has been planning its return to the US market ever since 2006 when the UIGEA was introduced banning online gambling and forcing Party Poker to retreat from the American market.
Before leaving the US market, Party Poker was the biggest online poker room in the industry, occupying approximately half of the states' market. “Did we sit back and watch in envy and knowing full well that we (had) had 50 percent of the market at that point? Perhaps, but we never questioned our decision,” MGM Resorts CEO Jim Murren said. However, despite the US government making it illegal for banks to process funds for the online gambling companies, Party Poker's opponents continued providing their services to American users until April 15th, 2011. On the day known as Black Friday the US Department of Justice took control of the domains of some of the largest online poker providers including PokerStars, Full Tilt Poker, and Absolute poker, indicted their owners and payment processors with money laundering and fraud, and seized their bank accounts.
Murren said it will be important to have tough new online poker laws because companies that now offer poker online to Americans have hurt the entire gambling industry’s reputation.“Whenever there’s a problem anywhere, it reflects poorly on the gaming industry, of which we are a major player,” Murren said. “The federal government needs to address this. It cannot wish it away.”
Ryan said he thought his company did the right thing in leaving, even as the other operators appeared to flourish.
The two online poker and sports betting giants Party Poker and bwin merged earlier this year to make up the largest online gambling provider in the word – bwin.Party Interactive Entertainment. It is now the biggest publicly traded online gambling company, Party and bwin's last year's combined net revenue was 814 million euros. Now the company is looking to expand with its eye on the US market.
MGM, Boyd and bwin.Party have combined their efforts in pursuit of online poker legalization at the federal level. Should state-based legislation come first, the companies would try to take advantage of it, although it's unclear whether the state laws would not violate the federal laws.
“We know there are millions of U.S. citizens risking billions of dollars at unregulated, illegal sites,” In an interview with MarketWatch Murren said, “And there is no way to enforce good behavior, and that has to change.”
Keith Smith, CEO of Boyd Gaming Corp. told the Associated Press he thinks it’s important for the companies to be able to move quickly if the law changes, to be first to jump on a U.S. online market that once generated as much as $6 billion yearly in revenue. “We want our investors to know we’ve been aggressive in positioning the company,” Smith said. “We believe that the right approach to offering legal online poker in the United States is through a federal regulatory structure that ensures the games are conducted with the greatest possible integrity and security. Should Congress enact legislation to legalize Internet poker, this agreement will allow us to partner with the world’s most experienced and prestigious online operator to offer a secure, fair and entertaining experience for players in the United States.”