The CEO of Sportingbet.com which now owns Paradise Poker,
one of the largest online poker companies was in Bismarck, North Dakota
last week to give evidence to the Senate Judiciary Committee on legalized
poker. He was interviewed by Marketwatch and had positive things to
say about the benefits of US legalization.
In very summarized form, these are the high points of his interview:
The US market commands some two thirds of the booming international
online poker market, with Europe catching up fast. Legalization will
bring weed out less successful outfits, and Sportingbet intends to
be a consolidator rather than one of the consolidated.
Since Sportingbet purchased Paradise Poker, shares of Sportingbet
have rocketed 200 percent.
Payne made a strong call for US regulation, saying it was what the
industry craved. He revealed that there are some 2 million poker players
globally and that this number was conservatively expected to soar
by 400 percent over the next three years. Paradise poker alone plays
a million games a day, or 10 games a second.
Asked about the downside of online poker, Payne listed the topics
used by detractors to oppose legalization, among them underage and
addictive gambling. He pointed out that technology to safeguard against
underage gambling was now a reality, and that anti-collusion measures
had improved significantly. He described allegations of money laundering
as "theoretical"..
Taxation under legalization, and how this would affect his company
was covered in the interview, and Payne said that if Paradise was
to relocate to North Dakota, the company would contribute something
like $8 to $10 million in taxes through a user fee of $10 a head which
the operators would pay. He went on to reveal that Paradise Poker
is expected to generate $100 million in gross sales this year, with
a bottom-line profit of $60 million. Of that $60 million, two-thirds
comes from the U.S., but a third from rest of the world.
If the entire online gambling business was regulated in the U.S. the
country would receive $2 billion in taxes per year, Payne opined.
That money exists already. It's a redistribution of income that other
people - offshore banks, credit card companies -- are keeping that
the U.S. could keep for itself.
Payne strongly argued against the proposition that online poker was
illegal in the US, saying that the only piece of legislation is the
Wire Act. "Poker does not fall under the wire act, I'm
not aware of legislation that determines poker to be illegal. If people
are playing online poker with my business, those transactions are
being managed and handled in countries that allow it. To make it illegal,
you have to be violating some law. The courts have held that it's
not illegal under the Wire Act."
In answer to a question on how many companies could go public in the
near future, Payne said he thought the number is now up to 15, with
Party Gaming rumored to be about to list around May/June. "Quite
a few will follow in the U.K.," he said. One of the most
important reasons for that is that the U.K. regulates the industry.
The Senate has still to approve the North Dakota Bill introduced by
Rep. Kasper and intended to legalize online poker in the state. If
that happens, the Bill will then go before a vote of the people, probably
some time in November 2005 or June 2006.