Sportingbet boss has positive views on poker - Saturday 12th of March 2005

The CEO of Sportingbet.com which now owns Paradise Poker.com, one of the largest online poker companies was in Bismarck, North Dakota last week to give evidence to the Senate Judiciary Committee on legalised poker. He was interviewed by Marketwatch and had positive things to say about the benefits of US legalisation.

 

In very summarised 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. Legalisation 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 legalisation, 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 legalisation, 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 thrpough 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 PartyGaming rumoured 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 legaise 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.

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