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March 24, 2014

Report from Energized iGaming Conference

By: Nicole Kardell and Ifrah Law

The iGNA March 2014 conference in Las Vegas started off with a bang. The conference boasted roughly double the attendance of last year’s conference. People were drawn to the vibrant and comprehensive panels.

Attendees crossed the spectrum of involvement and interest in iGaming.  They included land-based and online gambling companies, mobile companies, politicians, media, regulators, suppliers, tribes, and, of course, us lawyers. Topics covered included: analysis of iGaming launches in the three states that have started to regulate online gaming; discussion of state and federal law – what’s in place and what’s to come; takeaways from the European market; challenges in payment processing; and steps to take to attract players and build player pools. There were also several panels discussing the growth and future of fantasy sports.

One of the main attractions during the three-day conference was a charged debate between Andrew Abboud, head of government affairs with Las Vegas Sands and spokesperson Sheldon Adelson’s Coalition to Stop Internet Gambling (CSIG), and Mitch Garber, chief executive of Caesars Interactive Entertainment. The two sparred over whether online gambling should be outlawed or regulated. Not surprisingly, Abboud was in unfriendly territory, but the debate was measured and respectful. Abboud bounced around some divergent points. He argued concerns from “bad actors” entering the regulated market to cannibalism of brick and mortar casinos. Garber identified what he perceived as contradictions in the CSIG campaign and Abboud’s statements. For instance, in response to CSIG arguments that online gaming is a hazard to minors, he noted: “The controls that we have online are not dissimilar – in fact, technologically they’re superior – to the ones we have in our offline casinos.”

While the Abboud-Garber debate generated a fair amount of attention, the other very informative panels were not overshadowed. A panel of representatives from several states, including California, Iowa, New Jersey, and Pennsylvania discussed the regulatory landscape in their respective states. Panel members all seemed to agree that state-by-state legislation was the best way to pursue industry regulation. They expressed a preference against federal regulation. California senator Lou Correa and Iowa senator Jeff Danielson both noted that iGaming legislation was progressing in their states. Senator Kim Ward of Pennsylvania suggested that legislation was the next step in Pennsylvania. The panel, though, was somewhat reserved over whether any state would move on legislation in 2014. New Jersey senator Ray Lesniak discussed the status of online gaming in his state. He expressed disappointment that the uptake had not been as high as predicted, but noted that legislative efforts in payment processing should improve matters and suggested advertising should move from television-based to online advertising. Lesniakalso made a strong case for sports betting laws, highlighting the great opportunity to access the estimated $500 billion underground sports betting market.

We at Ifrah enjoyed the opportunity to host a panel on sports betting and federal laws that sports betting can implicate. Assistant U.S. Attorney Harris Fischman provided an overview of relevant federal laws, including the Illegal Gambling Business Act (IGBA), the Professional and Amateur Sports Protection Act, the Unlawful Internet Gambling Enforcement Act (UIGEA), and the Wire Act. We presented a slightly comic mock trial à la My Cousin Vinny. While incorporating some levity into the subject, we wanted to underline the not-so-humorous reality of how easily one can get into hot water under federal law. Our emphasis was on the IGBA, which requires prosecutors to prove five actors were a party to an illegal gambling business. The 5-person requirement could mean that prosecutors will pull a tenuously-related party into a factual scenario. That person does not need to be an active party to be implicated. Mr. Fischman did note, however, that the Justice Department may not prosecute all members of a gambling business, as they need only to prove the existence of a 5-member operation. A particular highlight was the “Academy Award” we were given for our trial performance.

The conference also featured multiple panels on fantasy sports, with an emphasis on the rapidly growing daily fantasy sports market. The first panel looked at the evolution of fantasy sports from season long rotisserie leagues to online daily games. The second panel on fantasy sports explored the UIGEA exception for fantasy sports and other legal issues relevant to the industry. It featured some lively debate on the issue of skill vs. luck in daily fantasy sports and where these games fall on the spectrum. The devotion of two panels at iGNA to fantasy sports shows just how much the industry has grown recently and the interest that it has generated.