Reinterpretation of Wire Act Officially Delays Pennsylvania iGaming Launch Reinterpretation of Wire Act Officially Delays Pennsylvania iGaming Launch
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Online poker in the Commonwealth of Pennsylvania has been delayed as a result of the recent reinterpretation of the Wire Act by the US Department of Justice.

Official word came from Pennsylvania Gaming Control Board Executive Director Kevin O’Toole last week during a House Appropriations Committee budget hearing.

In response to an inquiry from Representative George Dunbar, O’Toole explained that the unexpected new opinion by the DOJ has indeed impeded progress of the online gaming market launch in Pennsylvania, though it was also confirmed that no operators have decided to pull out of the state as a result of the new DOJ opinion.

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“There had been an expectation that those igaming operators who were partnering with our casinos in Pennsylvania, if they already had infrastructure in another jurisdiction, that they could leverage that to reduce the cost of implementing igaming,” O’Toole stated. “But with that reinterpretation it became quite obvious that everything had to be on an intrastate basis, and that would probably be the biggest challenge, not so much of a challenge but a modest delay, to establish an adequate server location within the commonwealth of Pennsylvania.”

“A Modest Delay”

Originally expected to launch sometime in late 2018 or early 2019, it now appears that it could be the start of Q3 before gaming regulators in the state give online poker operators the green light.

“We are getting close. […] Three to four months. If not right before the end of this fiscal year, definitely at the beginning of the next fiscal year,” O’Toole responded to Representative Jesse Topper who asked what he could tell his constituents that are eagerly awaiting the launch of online gaming in the state.

While a July launch date might not seem like a modest delay, it appears that O’Toole’s classification of the delay was only related to the impact by the revised DOJ opinion.

Following the announcement of the new DOJ opinion, the PGCB gave online gaming operators 30 days to document how they plan to comply with the reinterpretation that requires all gaming functions to be contained in the state. Though that period was scheduled to expire weeks ago, O’Toole stated that the Board has “begun to receive replies” indicating that operators may not have been so swift to come up with revised plans for the location of their igaming servers.

However, the current environment surrounding igaming in Pennsylvania seems to be one defined by caution, also a contributing factor to the delay.

PGCB Chief Counsel Douglas Sherman warned that a key component of online gaming–financial transaction processing—is a potential stumbling block for the industry. “We don’t know at present how the banks will respond or the payment processors—the MasterCards, the Visas—as far as whether or not they will process those transactions for online gaming concerns,” Sherman testified. “We’ll really have to wait and see how they respond.”

Next Steps

O’Toole indicated that though the licensing process is “very far along,” there is plenty of work to be done in the coming months in order to get the online gaming market off the ground.

Specifically noted during the hearing was that testing and certification of software features required to support controls for “compulsive and problem gambling” was not yet complete. Those features include providing players the ability to limit their playing time and wagering amounts at online gaming sites.

In addition, the regulator is still working to ensure that all gaming servers and ancillary equipment will he housed within the state, and it is currently working with operators to establish “appropriate internal controls.”

Shared Liquidity

The ability to combine player pools with those in other states where online poker is regulated is an important facet of “online poker“ for operators, players and the state.

It has been shown around the world in multiple jurisdictions that combining player pools leads to increased revenue for the online poker companies, which in turn provides greater tax revenue for the governments regulating the games. Players also benefit in the form of wider availability of games and bigger prize pools as a result.

To this point, the PGCB’s comments have indicated a conservative approach to the prospect of joining New Jersey, Nevada and Delaware in the MultiState Internet Gaming Agreement (MIGA).

“While an interstate compact could certainly occur, at this junction I can’t predict or comment on the likelihood,” PGCB Director of Communications Doug Harbach told Online Poker Report last year.

But when asked about the prospects of Pennsylvania joining the other US states if and/when the DOJ situation is resolved, Sherman acknowledged that he has been in talks with New Jersey, Nevada and Delaware about joining the MIGA.