Dan D’Arrigo, CFO for MGM Resorts International, said that MGM is still mulling over the pros and cons of launching an online poker room in Nevada as the state has too low a population to enable operators to run a successful online poker business.
Speaking at an interview, D’Arrigo said:
We have to make an assessment on the cost to operate that space. We haven’t ruled it out, but we haven’t given it a green light either. We’re not going to be the first or a pioneer from the state’s perspective.
Nevada recently became the first US state to launch a licensed online poker room when Station Casinos launched an online poker room called UltimatePoker.com. Delaware and New Jersey have also passed online gambling bills and will soon launch live online poker products.
While MGM is closely following licensing procedures in Nevada as well as New Jersey, D’Arrigo and many others feel that either the formation of interstate compacts or federal-level legalization is essential to create larger player pools and more liquidity, which will in turn lead to the generation of revenue worth billions of dollars for state government as well as gambling operators.
Large casino companies prefer either federal-level legalization or interstate gambling compacts to create larger markets and better liquidity. State-level legalization will create a patchwork of different regulations and tax rates.
Some gambling analysts say that the online gambling market of Nevada has the capacity to, generate only around $50 million to $250 million in revenue annually while New Jersey, which has a larger population, can generate as much as $1 billion annually. D’Arrigo said:
Our preference is for something to be done at the federal level. We’re focused on these states by state initiatives, but it makes (operating) more challenging and more complicated. The opportunities are different in each state. Hopefully states will compact with one another and that will create liquidity and critical mass.
MGM earned $6.5 million this fiscal year as against its loss of $217.3 million last year. The company, along with Boyd Gaming, has entered into partnership deals with giant online gambling companies such as Bwin.party so that it can grab a share of regulated US markets such as Nevada and New Jersey.
MGM, along with Boyd Gaming, owns the Borgata Hotel and Casino, which is located in New Jersey’s Atlantic City. This land casino property will enable both companies to launch online gambling products in New Jersey.