The governors of the US states of Nevada and Delaware have signed the country’s first agreement for sharing online gamblers across state lines.
The revenue potential from the two sparsely populated markets, with less than 3 million residents between them, isn’t huge—and play is restricted to poker, the only online game legal in Nevada—but the compact is significant as a template for interstate cooperation in a sector whose ultimate player pool—“liquidity,” as it’s known in the online poker world, the most important factor in the business—could be worth billions as more states go legal.
“I consider this a landmark intersection in the road of gaming history,” Nevada Gov. Brian Sandoval said.
“We know that more games and more states means more revenue,” said Delaware Gov. Jack Markell.
Months in the making, it is the first such partnership between states since the US Department of Justice opened up the possibility in 2011. Before that the Unlawful Internet Gambling Enforcement Act enacted in 2006 successfully prohibited US banks from processing any online bets originating in the country. In the spring of 2011, the Justice Department effectively killed the sector with indictments that shut down the US-facing operations of the three largest offshore poker operators. But the department’s re-reading later that year of a 50-year-old law banning gambling over interstate phone lines determined that only sports betting was illegal and that Internet transactions between states where gaming is legal should be viewed as legal.
Under the agreement between Nevada and Delaware, players are allowed to compete against one another, subject to the gambling regulations of each state. Each state currently has three licensees through which players can access online poker, and each state would get a share of the money wagered. The agreement includes a set of minimum regulatory standards that states would have to meet in order to participate.
The agreement will be overseen by an association formed as a Delaware company, with a governing board of one representative from each state. As initial members, Nevada and Delaware both would have to consent to any amendments to the agreement or allowing a third state to join. Thereafter, such changes would require a two-thirds vote of member states.
New Jersey, the third state to legalize online gambling, and the most populous, with about 9 million residents, is not included, but a bill in the state’s legislature that is expected to pass will permit the Web operations of Atlantic City’s casinos to participate in cross-state and international player pools.
Officials gave no estimate for how much additional revenue the two-state agreement might generate or a date for when a platform allowing Delaware and Nevada players to play against one another will be in place.
What is known is that in contrast with the high hopes initially attached to legalization, revenues in all three states have been underwhelming.
According to the Delaware Lottery, the state brought in $145,200 in revenues from online gaming in January, $140,000 in December and $111,000 in November. Nevada has not broken out online revenues in the state’s monthly figures but analysts believe it’s ranging from $200,000 to $750,000. In New Jersey, which launched in late November, projections have run from a low of $250 million a year to Gov. Chris Christie’s initial high of $1 billion, a number now acknowledged as wildly optimistic. Through January, the 14 sites affiliated with seven casinos have generated $17.9 million.
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