888 Senior VP Yaniv Sherman Q&A About Online Poker, Wire Act

888 Senior VP Yaniv Sherman Q&A About Online Poker, Wire Act

The federal First Circuit Court of Appeals ruled in January that the 1961 Wire Act applied only to sports wagering thus rejecting an opinion issued by the Department of Justice’s Office of Legal Counsel during the Trump administration that the law should apply to other types of gambling.

Regarding poker, the First Circuit’s ruling gave clarity for interstate poker networks and largely removed from gambling operators the concern that an interstate poker operation in jurisdictions where compacts existed might be shut down by federal authorities.

Yaniv Sherman is a senior vice president with 888, the digital gaming company that has partnered with Caesars Entertainment’s World Series of Poker to offer the WSOP’s online poker rooms in New Jersey, Nevada and Delaware. So far, the WSOP/888 network is the only interstate poker operation in the U.S.

That interstate arrangement allowed the WSOP to offer an all-online summer tournament series in 2020, and also to create the tournament structure for the American side of the 2020 Main Event that was held in conjunction with a Rest-of-the-World counterpart to eventually determine a Main Event champion.

Sherman discussed the impact of the First Circuit’s Wire Act ruling and the future of online poker.

Questions and responses were edited for clarity and flow.

Gambing.com (GDC): Over the years, various gaming opponents had tried legislative approaches and other interventions to impede the growth of the industry. How did the Office of Legal Counsel’s opinion in 2018 (which itself was a reversal of a 2011 opinion by the same office) fit into that narrative?

Yaniv Sherman: There were a lot of forces trying to stifle online legislation or regulation, in general. But once the (Professional and Amateur Sports Protection Act) was struck down by the U.S. Supreme Court, I think they came to the realization that that ship had sailed and states had begun legalizing and regulating online (intrastate) sports betting, and in some cases, online gaming. … (However), the DOJ opinion was a very effective way of creating a lot of uncertainty around (interstate gaming).

That had a certain amount of success for that lobby because it created some murky waters, especially with states that were deliberating around poker. It didn’t stop anyone who were progressing on sports wagering because sports were always part of the Wire Act. But what it did, it threw iLottery, e-payments, poker and (online) casino into the same bucket and created a lot of unclarity.

GDC: What was the impact of that opinion by the Office of League Counsel before the First Circuit’s eventual favorable ruling for the gaming industry?

YS: I had some very difficult conversations because we had, from May 1, 2018, a live and very successful … first and still only (interstate poker network). At that point, we were trying to understand if we were going to be asked to actually dismantle it.

In effect, it threw the agenda (for advancing interstate poker) back a couple of years. Remember we were at the point where Pennsylvania had just regulated online gaming and sports betting and we were ready to go with a compact (to include Pennsylvania) and they decided they wanted more legal clarity.

Demand for Online Poker

GDC: Then came the favorable ruling — what followed?

YS: Fast forward two years, the network is still active, very successful, and 2020 has been a great year for poker. Now with so much pent-up demand for poker as well, the next states that are coming aboard are looking at poker with a very favorable position and I think if anything, 2020 has given us a sneak preview of how much demand has been building for poker.

I don’t know if we’re back to the good old PartyPoker days of the early 2000s when PartyPoker on its own was twice as big as the entire (online) poker world today. But that’s also a result of the fragmentation of poker over the last 10 years.

Certain countries have ring-fenced online poker — Italy, then France, then Spain — now they’re compacting again. The vision we had in front of us is still very much the case. Eventually you’ll have a pan-European network — that’s already in the works. You’ll have an interstate U.S., maybe North American, network. … Between the pan-European network and the American network, I definitely see a chance of some compacts being struck.

But I think in the near-term, poker represents from our perspective a material opportunity. It’s already hit critical mass between Nevada and New Jersey and with the WSOP running their first-ever fully online tournament we saw the great success that brought. By adding more states onto it, you get that exponential effect that you expect poker to yield when you build more liquidity into it.

Matter of ‘When Rather Than If’

GDC: What needs to happen now to get past this starting stage of Nevada, New Jersey and Delaware as linked poker markets?

YS: The other states that we’re looking at now that have regulated or have legalized online poker are Pennsylvania, Michigan and West Virginia. I think the next step is for the regulators in those states to establish their position vis-a-vis that (federal appeals court) ruling and recommend to their policymakers that they move forward.

In Michigan and Pennsylvania, they’ve already baked in important elements — that it would be up to the regulators to join such a compact so they don’t have to go back for legislation. The regulators are the key people right now to drive that conversation. Naturally, we’ll be there with them along with Caesars to facilitate that conversation. So hopefully, now it’s a matter of “when” rather than “if.”

Michigan actually put forward a specific poker bill. It was separate from the casino and sports bill. It was much more explicit about their ability and desire to join such a network. It’s testament to how important that is. Even before the First Circuit ruling Michigan took that position that poker should have that ability (to be played across state lines).

GDC: Since the repeal of PASPA, the majority of the online gaming world’s focus has been on sports betting and just four states have online poker rooms running. It’s a strange twist because 10 years ago, poker was about the only online gambling happening. Does poker have a place in the digital gambling world today?

YS: Poker has taken a back seat to the sports and (casino) gaming craze. I’ve been very vocal about poker for the last two or three years. I still contend that poker is an important vertical and a very important tent-pole in any gaming legislation beyond the direct revenues.

It is an entertainment experience and it’s very important for the industry to be able to offer poker. I hope more states come aboard. It’s important to see that it’s not just the tax revenue. It’s offering players an entertainment destination and an overall better product.

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