Mr Escalante’s Virtual Gaming Worlds operates Chumba Casino, an online world where users play digital poker machines and card games for free, with no chance to win prizes. The ‘social casino’ makes money from dedicated users, who pay for things like extra credits and premium play.

Chumba Casino exists solely as an app within Facebook, but Mr Escalante received a licence from The Philippines in August to begin accepting cash bets on his digital games. He hopes to launch a parallel Chumba Casino outside of Facebook for cash play, within a month.

Countries like Singapore, the United Kingdom, and Malaysia allow online casinos that deal in cash, but many others, including Australia and the United States outlaw them. (US states New Jersey and Nevada have legalised them but only with domestic licences.)

With this in mind, although the licence is a significant milestone, it is not Mr Escalante’s best hope of revenue in the short term. About two thirds of Chumba Casino’s 200,000 monthly active users are based in the US. He intends to target them with “sweepstakes” offers on Facebook, which are made possible by a rule that does not define sweepstakes as gambling for some jurisdictions like the US.

Users can purchase virtual credits to gamble on digital pokies, and then crucially, they can cash out those credits on any prizes won, he said. Such activity would not be allowed in Australia, ­especially NSW where the rules on sweepstakes are very strict. However, Mr Escalante is confident he is playing by the rules as far as US laws are ­concerned.

Before offering sweepstakes play, Chumba users earned Mr Escalante about 10¢ per user, per day. The company has about 15,000 daily active users, which means annualised revenue of about $50,000. By the middle of 2014 he wants to grow his business to 100,000 daily active users and boost daily revenue per user to $1 – or annualised revenue of over $3 million.

It’s an ambitious target. Facebook social casino platform Double Down, which is owned by US slot maker IGT and is the best performer in the space, takes about 40¢ per user, per day.

After one month, with no marketing, he is already seeing sweepstakes users “deposit more and play far more often” than those in the “social casino”.

The former financial planner got the idea for Chumba Casino in 2009 when some friends with whom he regularly played poker moved interstate. The group carried on regular sessions of online role-playing game World of Warcraft but their card nights ended. “We found it crazy we could go into virtual world and kill a dragon together… but we couldn’t replicate that Friday night poker night,” he said.

Mr Escalante is betting that casinos will not escape the online revolution that has wreaked havoc with other sectors like media and retail. The shift is already apparent in wagering, where online-only companies like Sportsbet and Betfair compete aggressively with incumbents Tabcorp and Tatts Group.

As companies like James Packer’s Crown Resorts and Echo Entertainment Group bid for the right to spend billions on casino resorts, Mr Escalante has built Chumba Casino, which he hopes will be profitable by December, with $2.5 million of private investment and digital developers in Chennai, India. Mr Escalante said the start-up is mid-way through raising another $5 million, from unnamed investors.

The start-up has poached a few old world hands to assist in its journey too. The former general manager of pokies maker Aristocrat Leisure, Steve Parker, is a director of the start-up. Aristocrat’s ex-studio manager Edgar Pau, who was recently designed for US company Bally, is the start-up’s head of slot machine design, Mr Escalante said.

The development of more compelling games will be one of the pillars to the start-up’s growth, Mr Escalante said. “Better slot games are the biggest monetiser of a social casino,” he said.

Mr Escalante will also focus on ensuring his advertising is “cost effective”. “Traffic on Facebook is largely on tap – it’s dictated by how much you spend on advertising,” he said.

Public health advocates are horrified at a loosening of online gambling rules. Associate Professor Samantha Thomas said the ability for people to gamble at home is worrying. “The more people can hide their harmful gambling from others the more dangerous it is,” Dr Thomas, a University of Wollongong public health academic said. Greater accessibility also puts harm minimisation strategies at risk. “With online venues you have almost a completely hidden population,” she said.

Mr Escalante argued digital casinos are better placed to identify problem gambling by monitoring users’ activity.

“Nothing is anonymous in the world of online,” he said. “We know everything about a player.”

Mr Escalante, who said he has problem gamblers in his own family, claimed he would develop in-play reminders for punters to manage their spending levels and warn if they are punting too much. “These are all things that we will do and that’s not an empty promise,” he said.

Original article: http://www.afr.com/p/technology/online_aussie_casino_start_up_to_e5XEqpOMVRZf2lAn5xO6gN

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Quite a controversy was sparked last month when a photograph appeared of Senator John McCain (R-AZ) considering his online poker strategy in the midst of a Senate Foreign Relations Committee hearing on the conflict in Syria. Critics pointed out that he ought to have been paying more attention to the proceedings, but McCain’s own response, posted to twitter, was to defuse the brewing scandal and remark, ‘Worst of all I lost.’

It should not come as a surprise to anyone that McCain is an avid poker fan. His own father, a four-star Admiral in the US Navy, once remarked, ‘Life is run by poker players.’ It is a lesson that McCain has learnt well. The skills involved in playing poker are useful in business and politics. Whether there are cards and chips or treaties and lives at stake, being able to look across a table and read the strategy of your opponent is vital. McCain can sit in a Senate committee room and use his phone to play the best poker online, but rather than being a distraction, it is a way to relieve stress while still focusing on strategic thinking.

Even when one considers it on a wider scale, McCain’s commitment to poker and to the gambling industry is far from being a frivolous matter. Navajo casinos in his home state of Arizona generate an income for the tribe of many tens of millions of dollars. One casino, recently opened near Flagstaff, provides jobs for 800 people, many of them Navajo. McCain, twice chairman of the Senate Committee on Indian Affairs, has played an instrumental role in legislating for the Native American gambling industry. McCain played a key role in drafting the 1988 Indian Gaming Regulatory Act, a piece of legislation that laid the foundations for a multi-billion-dollar industry. He also supported a 1994 expansion of the law, allowing many additional tribes to establish casinos, as well as voting for tax breaks to assist the gaming industry. From the Kentucky Derby to the tables of Las Vegas, gambling is an important part of American culture. The freedom to take chances is part of the American way.

As well as being an important part of American culture, playing poker is also an increasingly important part of the American economy. As the industry grows and innovates, the distinction between online and live gambling makes less and less sense. McCain has, however, been less supportive of online than of offline gambling. In the Senate hearing, he was playing poker free online and not gambling for real money. Nonetheless, by playing poker on his phone, he demonstrated the connection between online and offline play. Many of the same skills and pleasures are involved.

Free online gambling is a great way to learn how to play poker for beginners. American professionals like Gavin Griffin have progressed from online poker to the live tournament circuit. Probably the best known and biggest poker tournament is the World Series of Poker, the main event of which takes place in Nevada. This brings real economic benefits to the country, and the recent openness to and growth of online gambling in the United States has been driven, at least in part, by the tax revenue that it can generate.

While the gambling industry provides employment and raises billions of dollars for the economy, any US military intervention in Syria will cost millions or even billions of dollars. Even then, one must consider how many lives it might cost. It may be that McCain had the right idea when, in the midst of a tense hearing, he decided to play online poker and have fun instead. It might appear to have been disrespectful, but it was serious as well as fun. Both George Washington and Andrew Jackson were keen card players and gamblers. They understood, as John McCain’s father did and as the Senator himself seems to, that the worlds of politics and business have a great deal in common with the world of the Texas holdem poker table. If you can use a phone to play poker free from inside the Senate, then the game has changed. Nonetheless, the stakes on Capitol Hill are as high as ever.

Read more: http://azcapitoltimes.com/news/2024/10/11/mccains-commitment-to-poker-is-no-frivolous-matter/#ixzz2htdW5T5v

For the original version please visit http://azcapitoltimes.com/news/2024/10/11/mccains-commitment-to-poker-is-no-frivolous-matter/

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Poker devotees will soon be able to skip the smoky casino and legally gamble their dollars away on the couch at least in the state of Nevada.

A Las Vegas-based social gambling company is expected to launch the first legal, real-money poker website in the United States on Tuesday morning.

The site, run by Ultimate Gaming, will accept wagers only from players in Nevada for now, but likely represents the shape of things to come for gamblers across the country.

Internet poker, never fully legal, has been strictly outlawed since 2011, when the Department of Justice seized the domain names of the largest offshore sites catering to U.S. customers and blacked them out.

This crackdown, dubbed “black Friday,” left poker fanatics with two options: They could either get dressed and visit a visit a card room, or break the law and log into an offshore site.

More recently, the federal government softened its stance on Internet betting, and three states New Jersey, Delaware and Nevada have legalized some form of online wagering within their borders.

With Tuesday’s launch, Nevada wins the race to bring Texas Hold `em back to the Internet.

“There was black Friday, and now we’re going to have ‘trusting Tuesday,'” said Ultimate Gaming CEO Tobin Prior. “Players won’t have to worry if their money is safe. They are going to be able to play with people they can trust and know the highest regulatory standards have been applied.”

The site, UltimatePoker.com, will look familiar to anyone who participated in the poker craze of the 2000s. Only the account setup and login process have changed. Instead of checking a box certifying they are older than 18, players will have to endure a lengthy account setup process involving a Social Security number and a Nevada address. Only those older than 21 will be allowed to play.

Ultimate Gaming and the two dozen other companies still fine-tuning their Nevada poker sites hope they will win the trust not only of players, but of regulators and politicians.

“It’s an opportunity to show the world how to properly run online poker,” Ultimate Gaming chairman Tom Breitling said.

Several cash-hungry states are weighing legislation that would allow them to tap into what is expected to be a multibillion-dollar market. Some bills would legalize only poker, as Nevada has, while others would throw open the gates to all casino games, including slots, as New Jersey and Delaware have done.

Earlier this year, Nevada Gov. Brian Sandoval approved legislation that gives him the ability to sign deals with other governors to facilitate interstate Internet gambling.

Online gamblers around the world currently wager an estimated $35 billion each year, according to the American Gaming Association. A fully realized U.S. online poker market could generate $4.3 billion in revenue its first year, and $9.6 billion by year five, according to London-based research firm H2 Gambling Capital.

Still, with federal efforts to legalize Internet poker stalled, it may be a while before a critical mass of states link together to lure professional players back from overseas and drive up jackpots.

Nevada, a state of just 2.8 million, attracts 47 million visitors a year more than the population of California. But who wants to go on vacation just to fire up their laptop and play some virtual cards?

“I think the real excitement will be when we get a very populous state like a California or a New York allowing these companies to expand,” ITG casino analyst Matthew Jacob said. “But these changes often take longer to occur than people assume. It requires a change in law and then it takes a while from when the law passes until the sites are up and running.”

Prior says he intends to make Ultimate Poker profitable within a matter of years, in part through cross-promotion with mixed martial arts giant Ultimate Fighting Championship. The companies share a common owner: Frank Fertitta III and his brother Lorenzo, who also own Station Casinos Inc., an extensive chain that caters to locals in Las Vegas.

The Ultimate Poker logo has enjoyed prime placement in the UFC fight octagon for months. The Ultimate Poker Facebook page, which steers fans to a zero-stakes version of the site, features a mix of UFC glamour shots and stock images of guys in hoodies staring into laptop screens.

“When you look at the demographic of the UFC fan and the online poker player, it’s almost a perfect overlap,” Breitling said.

In the coming months, Ultimate Gaming will have to prove that its technology and 111 employees can prevent minors and out-of-state players from wagering real dollars, and guard against money laundering.

It will also have to pay 6.75 percent of its revenue in Nevada state taxes.

It’s unclear how much of a boon the new market will be to the cash-strapped state. In 2012, the Pew Center on the States analyzed 13 states that had recently legalized new types of gambling, and found that more than two-thirds of “failed to live up to the initial promises or projections.”

The gambling industry is hoping the return of Internet poker will revitalize interest in the game and help brick and mortar casinos capture a younger market.

The rise of Internet poker is generally credited with helping spark the poker fad of the last decade. The end of online gambling is thought to have helped quash interest in the game.

In the coming months, the industry will be watching closely to see if poker players come flocking back from their new hobbies, replacement computer games and illegal offshore gambling sites.

“This is a really huge moment for our company, the state of Nevada and the gaming community,” Breitling said. “We’re hoping to make poker fun again.”
For the original version please visit http://www.cbsnews.com/8301-505124_162-57582028/online-poker-back-legal-site-to-launch-in-vegas/

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NEW YORK (CNNMoney) — The founders of the three largest Internet poker companies have been indicted for bank fraud and money laundering, federal law enforcement officials said Friday.

The United States Attorney in New York unsealed the indictment against eleven people, including the founders of PokerStars, Full Tilt Poker, and Absolute Poker. In addition to charges of bank fraud and money laundering, the companies are accused of illegal gambling offenses.

The sweeping 52-page indictment alleges that the companies, based offshore, used “fraudulent methods” to get around U.S. anti-gambling laws “and to receive billions of dollars from U.S. residents who gambled through the Poker Companies.”

The authorities also issued restraining orders against more than 75 bank accounts, and seized five Internet domain names used by the companies to host their illegal poker games.

The companies allegedly arranged for the money from U.S. gamblers to be disguised as payments to hundreds of non-existent online merchants for the purchase of items such as jewelry and golf balls, according to the indictment.

The defendants include Isai Scheinberg and Paul Tate of Poker Stars; Raymond Bitar and Nelson Burtnick of Full Tilt Poker; and Scott Tom and Brent Beckley of Absolute Poker.

“As charged, these defendants concocted an elaborate criminal fraud scheme, alternately tricking some U.S. banks and effectively bribing others to assure the continued flow of billions in illegal gambling profits,” U.S. Attorney Preet Bharara said in a statement.

Prosecutors also filed civil charges against the poker companies and several individual “payment processors,” seeking at least $3 billion in penalties.

Prosecutors also alleged that John Campos, a part owner of SunFirst Bank in Utah, agreed to process Internet gambling transactions in exchange for a $10 million investment in his bank by one of the other defendants.

Prosecutors said they are working with Interpol and foreign agencies to secure the arrest of the remaining defendants, who are not presently in the United States.

“These defendants, knowing full well that their business with U.S. customers and U.S. banks was illegal, tried to stack the deck,” said Janice Fedarcyk, FBI assistant director-in-charge. “They lied to banks about the true nature of their business. Then, some of the defendants found banks willing to flout the law for a fee.”

The indictment shines a light on Internet gambling in the United States.

“The operation of their business is illegal, and in about half the states the player himself is violating state law,” said Denver attorney Chuck Humphrey, who runs a Website dedicated to online gambling laws.

Alfonse D’Amato, chairman of the Poker Players Alliance, said he was “shocked” by the indictments, adding that his group “will continue to fight for Americans’ right to participate in the game they enjoy.”

“Online poker is not a crime and should not be treated as such,” D’Amato, a former U.S. Senator, said in a statement.

Humphrey said Internet poker companies have argued in court that online poker is legal because it is a game of skill, as opposed to a game of chance.

But he pointed to recent cases involving online sports gambling, which resulted in jail time for some defendants, as an example of what might happen to those indicted Friday.

By charging the defendants with bank fraud, a criminal offense, Humphrey said prosecutors stand a better chance of extraditing them from countries where gambling is legal.

It was not immediately clear what will happen to any money that U.S. citizens had in accounts associated with the poker companies.

In 2007, federal prosecutors charged NETeller, an online payment company, with taking part in an online gambling conspiracy. That case resulted in a so-called deferred compensation agreement, in which the company agreed to return $94 million to U.S. customers.
For the original version please visit http://money.cnn.com/2011/04/15/news/economy/online_poker_indictments/index.htm

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FORTUNE — It’s not often that opportunity arrives in the form of a federal indictment. But that’s exactly what’s happened in the world of online poker.

Online poker is currently illegal in the U.S. and, as a result, the $6 billion industry has developed overseas, catering to the wishes of millions of Americans playing from their homes in Ohio, California, Mississippi and every other state. That’s crazy.

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