James Scicluna, Partner, WH Partners, speaks to eGaming Review North America about the opportunities and challenges that lie ahead for European operators in America and outlines some of the key considerations.

Nevada and New Jersey have both introduced legislation to regulate interactive gambling. Is one jurisdiction more favourable for European operators than the other?

James Scicluna (JS): Looking at things from across the Atlantic (Ocean not City), both , perhaps to a different extent, seek to give local operators a “first mover” advantage.  Nevada’s regulations are open;  whereas Nevada justifiably won’t allow businesses which took US customers illegally to enter the market immediately, NJ will only grant egaming licenses to land-based casinos, which I find protectionist.  European operators wanting an NJ licence will have to do a deal with an NJ-licensed casino or buy one! The possibility of inter-state online poker compacts is interesting.  Seeking a Nevada egaming licence would become much more appealing if Nevada had a compact with say California or Texas.

Which other states will follow in the footsteps of New Jersey or Nevada in introducing similar legislation?

JS: My understanding is that California, Illinois, New York, Massachusetts, Pennsylvania and Texas are all ones to watch.
How do the regulatory environments of US jurisdictions compare to their European counterparts?

JS: Malta regulated this industry a decade ago and the UK adopted legislation in 2005. Skimming through Nevada’s regulations, it seems the drafters looked at what’s going on in Europe and tried to adopt the better elements of such regulation while relying on their experience of regulating land-based gambling insofar as due diligence, reporting and responsible gambling requirements are concerned. This is an intelligent approach and other states would do well to emulate it.

You have previously said there are opportunities for partnerships to be struck between US and European gambling businesses. Can you elaborate on this?

JS: This was based on my observation that it is mostly European firms which were primarily responsible for developing egaming technology and products, mostly due to Europe’s more permissive regulatory environment overall and also perhaps to the uncertainty regarding regulation in certain European states.
Few European firms can tackle the US market without a local strategic partner, either because they lack knowledge, because US regulations won’t allow them to or because they are quite stretched dealing with regulatory developments in their core European markets.
Are European gambling operators trying to set up in US markets such as New Jersey?
JS: Many larger operators have started establishing a US presence by looking at acquisitions of local distressed assets, providing US businesses with technology and/or online business-to-customer knowhow or by setting up there. We’ve seen a number of deals – in the making and failed – attempting to create synergies and I think we will see a few more.
Competition in US states which have regulated intra-state online gambling will be fierce and to be sustainable, the market needs to extend.  It’s a catch-22 situation for European operators: there are no assurances that the market will be there, yet if they don’t move now it could be too late.
James Scicluna, spoke to eGaming Review North America about the opportunities and challenges that lie ahead for European operators in America and outlines some of the key considerations.  The article was published in eGRNA Issue 14.