Sandoval Markell

Nevada, Delaware Sign Landmark Interstate Online Poker Agreement

Legalized interstate online poker in the United States will soon become a reality, courtesy of a landmark deal between Delaware and Nevada officials that was signed this morning.

sandoval-markell

Nevada Gov. Brian Sandoval and Delaware Gov. Jack Markell sign the groundbreaking Multi-State Internet Gaming Agreement.

Nevada Governor Brian Sandoval and Delaware Governor Jack Markell signed the deal, formally called the Multi-State Internet Gaming Agreement, in the Delaware capital of Wilmington earlier this morning.  Nevada and Delaware thus become the first two U.S. states to enter into any sort of reciprocal interstate deal regarding online poker.  The two states and New Jersey are the only three states to have formerly authorized online poker to date.

The deal establishes a legal framework for the establishment of interstate poker services, allowing players from the two states to compete against each other.  Officials from Nevada and Delaware will continue meeting in Wilmington in the coming weeks to hammer out important details of the agreement.  No date has yet been established as for when the interstate services will go live.

The long-term intent of the deal is to increase overall liquidity, increasing both the total pool of online players and the range of poker offerings that can be provided.  That in turn should increase the number of player from both states willing to participate on the sites, which in turn should produce increased revenue for the states.

Among the first specifics likely to be hammered out are revenue-splitting agreements, with rake likely to be divvied up based on each user’s and each bet’s state of origination.  The two states will necessarily have to reach a consensus on overall rake rates for offered games.

The current agreement is likely to stay poker-only in the short term.  While Delaware has legalized multiple forms of online, casino-style gambling, Nevada has legalized only online poker.  However, proponents of online gambling in Nevada are likely to renew their push for legalization of online casino gambling within the state, on grounds of equivalent marketing, rather than player liquidity, as only poker — as a player-vs.-player game — needs the liquidity boost behind the deal’s intent.

Nevada became the first state to offer real-money online poker with the rollout of Ultimate Poker last May.  Delaware became the second such site in November, narrowly ahead of neighboring New Jersey.

Both states currently offer three live online-poker sites to their residents, though with some significant differences, and several more Nevada sites are likely to be approved for real-money play in the near future.  In Nevada, the three currently available sites are Ultimate Poker, WSOP.com and the brand new Real Gaming, operated by South Point.  In Delaware, the three available sites are operated by the state’s three licensed “racinos” — Dover Downs, Delaware Park and Huntington Raceway.

The three Delaware sites already pool their players on software run by IGT (International Game Technologies), part of the primary-vendor group that serves all of Delaware’s online gaming.  All of the services and sites are run under the auspices of the Delaware Lottery.

However, despite already sharing player pools, liquidity and growth of the Delaware poker sites has been hampered in its earliest months by the state’s tiny size.  With less than a million residents, Delaware ranks 45th of the 50 US states by population, trailing even the postage-stamp-sized Rhode Island in that regard.  As a result, Delaware’s early returns from online gaming have been underwhelming to date: $111,000 in November, $140,000 in December, and $142,500 last month.

Nevada, too, despite its deep poker and gambling history, also faces obvious liquidity issues because of its smallish population.  Even with the explosive growth of the Las Vegas metro area over the past two decades, Nevada still ranks only 35th among all U.S. states, with a population of about 2.8 million.

As expected, the agreement allows each participant state to choose which games can be offered to its residents, with Nevada being only online poker for the time being.  A press release issued by the Delaware Governor’s office clarified this, stating, “Nevada will only allow online poker games, and under this agreement, Member States have the flexibility and discretion to make those kinds of policy determinations for themselves.”

Said Nevada Gov. Sandoval, on the signing: “This is truly a historic day for Nevada, Delaware, and the country.  One year ago the Nevada Legislature passed and I signed an Internet gaming bill into law, and today we are just beginning to witness the potential of this legislation with the signing of this agreement.  Added Sandoval, “The agreement we’ve signed today provides the tools and the structure necessary for us to pioneer this expanding industry together, as states and as partners.”

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