The 2016 iGaming North America Conference took place this week, and one of the panels on Tuesday, called "Emerging Jurisdictions," involved New York State Assemblyman J. Gary Pretlow and Illinois State Representative Michael J. Zalewski. The two provided insight into the legislation progress of both online poker and daily fantasy sports (DFS) in their respective states, with Pretlow much more confident in DFS legislation moving forward than he was with online poker.
"As far as online poker is going, we're moving ahead very slowly and cautiously," said Pretlow to begin, citing "constitutional issues," although he did say that he believed he'll be able to get around those issues.
As for DFS, Pretlow's statements provided insight into a process that is further along than online poker, despite the determination of illegal gambling by the Attorney General of New York, Eric Schneiderman.
"With DFS, I know that everyone knows that the Attorney General of New York, Eric Schneiderman, had deemed daily fantasy sports operations to be illegal gambling under the State of New York's laws, and I've agreed with him," Pretlow said. "I've been in constant contact with FanDuel and DraftKings and we're in the process now of proposing legislation to legalize them. I'm halfway through looking at the various proposals in other states to see how they did it.
"I've come to find out that there are dozens of smaller daily fantasy sports operations operating in New York right now, so we're looking at it very closely. I really have until the end of our session, which is the end of June, to come up with some regulation. Otherwise the courts are going to rule that they're illegal operations and shut them down in September. Both large operators, FanDuel and DraftKings, have both ceased operations in New York, and I believe Yahoo has also ceased operations."
It would be like betting on Secretariat in the Belmont Stakes — it's better than even money.
The reason for these shutdowns in New York, according to Pretlow, was because Schneiderman went to the banks and told them that with these operations being deemed illegal gambling the banks are complicit in it and would be fined. Pretlow also said that the Attorney General also put out that he wanted DFS operations to refund all the money that people have lost since these sites began operating.
Despite all of this, Pretlow was highly confident later in the panel when asked to handicap the possibility of proposal.
"With regards to daily fantasy sports, the passage of the legislation that I am going to propose, if I was going to handicap it, it would be like betting on Secretariat in the Belmont Stakes — it's better than even money," he said.
Pretlow also said he'll "probably have a bill by the end of April" regarding DFS.
As for online poker, the current bill proposed in New York — Senate Bill S5302B — isn't said to be the final product, according to Pretlow. That bill did work its way through a committee hearing in an extremely efficient manner, which has given lots of hope to many about its eventual passage. That said, Pretlow wasn't about to equate the passage of the online poker bill in New York to wagering on the greatest racehorse of all time.
"On the other hand with online poker, there are some issues there and we're not really prepared to introduce legislation tha'’s going to go to the floor for a vote, so you're looking at a 100-1 shot to hit the floor — a 1,000-1 shot to hit the floor," Pretlow said. "The DFS [bill] will hit the floor this year and I believe passage is better than even money."
Opposition and Pooling
When asked about opposition, Pretlow acknowledged that there are opponents, but pointed to the normal anti-gambling parties and didn't seem to think that was much of an issue. With these being the same parties who are aways going to take an anti-gambling stance, this is nothing new.
Regarding the idea of interstate pooling of player bases, this is a no-go for New York, as Pretlow was more firm on his stance.
"We have looked at it," Pretlow said. "I have never been a fan of pooling... I think this should generally stay within each individual state, because we all have different rules on how we operate. Like I said, New York's legal age is 21, and our neighboring state New Jersey's age is 18. Then we can't really have a pool because the 18 year olds will be in the New York pool, which would be problematic. We looked at it, and I haven't made a decision on it, but I'm pretty sure that anything that happens will be New York-specific."
Although some might view this as a negative, touting the benefits interstate pooling can bring to the markets, there is something to be said about Pretlow just coming out and taking a stance, as opposed to dancing around on the fence. At least this way we know where New York stands.
What Are the Biggest Challenges?
Pretlow did have some concern over age verification. He stated that he wasn't confident when it came to the regulatory process involved in keeping underage participants off online gambling sites.
"How they guard against a young person getting their parent's credit card and using their parent's age, I don't trust the answer," he said. "The answer that I've been given is 'we have algorithms that deterrent that out.' I don't know how true that is, and that is always going to be an issue."
Although there was an obvious lack of confidence in this message, Pretlow did say that he believes the sites will do everything in their power to prevent such a thing from happening in an attempt to not lose their license. It's important to point out that to date there have been no instances of underage gambling in the states with regulation, New Jersey, Nevada, and Delaware.
When it came to geolocation, Pretlow didn't have an issue, stating trust in the system that is in place in current regulated states. He even said he traveled to New Jersey to get a first-hand look at geolocation technology in action.
"I was convinced that the geolocating system does work," Pretlow said. "No one has been able to crack through that yet and be in a neighboring state, be it Pennsylvania, New York, or any other state that borders New Jersey, and bet on their casinos."
Another big challenge highlighted by Pretlow was the need to come up with something that works for everyone involved, all stakeholders, which seems to be a common theme when it comes to any sort of online gaming legislation. You see this currently in California, where the phrase "too many cooks in the kitchen" is often used when describing the Golden State's current process.
Pretlow also brought up how the "sharks" (the professional players) win the majority of the money in DFS, stating how those players "have algorithms, computer programs, and play 1,000 games" to win the majority of the money despite being only a small percentage of the total player pool. He believes this is a discrepancy that needs to be overcome.
Towards the end of the panel, it was asked if it being an election year would be an issue. Pretlow gave a firm no.
*Image courtesy of clemmesen/FreeImages.com.