Online Gambling Group Aims to Ease Wire Act Concerns in Meetings with Ohio Officials

Lawmakers should expressly allow online and mobile options as part of any bill legalizing sports gambling in Ohio, according to a leading Internet gambling trade group based in Washington D.C.

Speaking with Hannah News ahead of planned meetings with members of the General Assembly, the governor’s office and the Ohio Casino Control Commission this week, iDEA Growth founder Jeff Ifrah said a mobile provision is an important part of any effective legislation allowing legal sports gambling. Allowing Ohioans to legally place bets on their smartphones is the only way to stop sports gamblers from using unregulated offshore websites, he said.

While SB111 (Eklund-O’Brien) spells out that mobile and online sports betting is allowed, HB194 (Greenspan-Kelly) uses the word “device” as a catch-all term that Rep. Dave Greenspan (R-Westlake) said could apply to mobile and online sports gambling once legal issues regarding the federal Wire Act are resolved. (See The Hannah Report, 3/18/19, 4/10/19.)

Ifrah, an attorney involved in litigation against the U.S. Department of Justice’s (DOJ) revised interpretation of the Wire Act, said he understands why Greenspan and other lawmakers are concerned.

“It’s more confusion than anything else, and I totally appreciate why there would be confusion around it. But actually the DOJ didn’t say anything new, and didn’t say anything at all regarding sports betting in its opinion,” he said. “It actually is an opinion that is largely just focused on poker and casino, oddly enough. They didn’t say anything that changed the law or the policy regarding online sports betting.”

He said the technology is sufficiently advanced to avoid any potential problems with violating the Wire Act.

“I think that the question is largely resolved by speaking to people who run the data servers and server farms,” he said. “They are the ones who are able to run the programs, along with GeoComply, on an intrastate basis in a way that doesn’t implicate the Wire Act.”

Ifrah noted that the U.S. Supreme Court’s ruling allowing for legal sports gambling in states outside Nevada occurred nearly a year ago. (See The Hannah Report, 5/15/18.)

“New Jersey has been up and running for almost a full year without any federal incident at all -- not any threats or anything,” he said.

“Certainly you could have language in a state bill that said that any online program will obviously run on an intrastate basis and in compliance with the federal Wire Act. It generally just comes down to the transmissions of the bets or the wagers. You have to make sure that there are no transmissions of bets or wagers outside of state. As for data transmission that might go outside of the state, the federal statute itself provides an exception for that,” Ifrah said.

In addition to the issue of mobile gambling, Ifrah said his group will also advocate for allowing “multiple skins.”

“When a casino launches a sportsbook, of course they want to be able to launch it in its own name,” Ifrah said. “But a lot of times in a particular market, there aren’t enough casinos to really generate enough revenue off of launching a new sports program. What you often need are more participants investing in marketing dollars to raise awareness of the sports betting opportunity. The way you can get more people invested in the market is by allowing casinos to open up additional skins, or have additional partners.”

Under this policy, Ifrah said, a casino could have its own branded domain, but also sell other domains for partners to use off of its license.

“What that ends up doing is -- instead of Caesars taking, let’s say, 15 cents from every dollar that comes in and putting it back into marketing, now you have two people taking 15 cents and making it 30 cents and putting it back into marketing. That’s what helps drive traffic to the regulated sites as opposed to allowing people to go on Google and search ‘sports betting’ and be driven to some site offshore,” he said.

“It’s a way to kind of subsidize the cost of the marketing spend, which is the most significant cost that online operators have to deal with. We studied the economics of this in New Jersey, and what we saw is the more people that participate in the market, then the more revenue that’s brought in by that market. Which is kind of logical, even if it’s a little counterintuitive,” he continued. “Most people hear, ‘Multiple people? So you’re taking this pie that used to be four casinos and splitting it into eight or 16.’ The response is, ‘No, the pie that was four casinos is now growing to a larger pie. It may be split into eight, but the pie’s not the same.”

Indiana and Iowa also use the multiple skins policy, Ifrah said.

Ifrah said he would like Ohio to eventually allow online poker and online casino gambling.

“That’s not on the table right now, and that’s fine, but that is something we hope for. I think a lot of casinos make a lot of money when they can cross-sell opportunities, and it only takes a couple seconds to place a bet online or in a casino, so you want to be able to sell them other things while you have their attention. That’s something we hope Ohio would consider down the road,” Ifrah said.

According to iDEA Growth, meetings to discuss sports betting have been scheduled for Wednesday, May 8 with the following state officials:

- Reps. Dave Greenspan (R-Westlake) and Brigid Kelly (D-Cincinnati), sponsors of HB194

- Sens. John Eklund (R-Chardon) and Sean O’Brien (D-Cortland), sponsors of SB111

- Senate Government Oversight and Reform Committee Chairman Bill Coley (R-West Chester)

- Senate President Pro Tempore Bob Peterson (R-Sabina)

- Senate and House leadership staff

- Members of Gov. Mike DeWine’s office

- Members of the Ohio Casino Control Commission

Story originally published in The Hannah Report on May 7, 2019.  Copyright 2019 Hannah News Service, Inc.