Editorial: Time for American Operators to Step Up

7 February 2002

Late last week Frank Fahrenkopf, president of the American Gaming Association and the land-based casino industry's most powerful lobbyist in Washington, D.C., said his group has not yet decided what stance it will take toward any of the Internet gambling prohibition bills presently facing Congress.

According to a Las Vegas Review Journal article published on Jan. 31, Fahrenkopf told lawmakers the AGA could take an official position on Rep. Bob Goodlatte's (R-Va.) anti-Internet gambling bill within the next two weeks. The following day, in an interview with IGN's Kevin Smith, the AGA chief said he and his group remain opposed in principle to online gambling.

The only way, Fahrenkopf said, that the AGA would support online gambling is if, "The Nevada Gaming Control Board, or the New Jersey Gaming Commission, or the Mississippi Gaming Control Board, or all of them, say we can control, regulate and police this."

Only one person in the AGA, Fahrenkopf said, has changed his mind about the organization's long-standing support of Internet gambling prohibition. He referred to Terry Lanni, chairman of MGM Mirage, a company that holds an online gambling license in the Isle of Man but has not launched its Internet casino yet.

However Fahrenkopf may feel about the legal status of online gambling, a look through the membership list on the AGA's Web site and IGN's archives shows that MGM Mirage is not the only AGA member to show interest--and possibly even a change of heart--about Internet gaming.

The most glaring exception to Fahrenkopf's statement is Sun International Hotels Ltd. The company--an AGA member--was awarded an Isle of Man online gaming license at the same time as MGM Mirage was. In fact, Sun International became the first of that initial group of licensees to actually launch its Internet casino. The Web version of its Bahamas-based Casino Atlantis went live at the beginning of January.

Another Internet wagering-minded company Fahrenkopf overlooked is Penn National Gaming Inc. In April of 2001, Playboy and Penn National announced a partnership to operate PlayboyRacingUSA.com, with Penn National being responsible for the site's operations and overhead. The site taps into the company's subsidiary, eBetUSA.com, to offer horse race wagering on live races from nearly 30 tracks in America.

While Penn National's involvement in Internet wagering is licensed and regulated in Pennsylvania, and therefore OK by Fahrenkopf's standards of only supporting I-gaming that is policed, PlayboyRacingUSA.com sends an important message about online wagering. The message is that the Internet is a viable way for gaming companies to grow their business.

And while other land-based casino and wagering companies haven't publicly revealed any intentions they may have to launch Internet gaming sites with real-money play, a major player on the Strip hinted in January that online gaming might be in its future. Upon hiring a new senior vice president for e-commerce, Frank Han, Park Place Entertainment President and CEO Thomas E. Gallagher said Han's appointment "also means creating new online products that ultimately may include gaming-related offerings where they are legal and appropriate."

The association itself rightfully doesn't want to support anything that might be illegal. Nor does it want to appear to endorse an expansion of gambling when its existing college sports wagering activities are at risk due to the McCain bill. But, given the pressures from shareholders to make money, Internet gambling offers a fresh market to companies that were hard hit by the economic woes and travel halt brought on by the Sept. 11 attacks.

In light of that, we recommend some frank discussions between AGA members and Fahrenkopf regarding their interest in this new distribution channel for gaming products and how best to advocate it. It's time for the members to provide some leadership in development of a regulatory proposal so that U.S. gaming operators can catch up with their colleagues in the rest of the world.

Anne Lindner can be reached at anne@rivercitygroup.com.