Legal Online Poker Makes U.S. Debut With Fertitta-Owned Site

Photographer: Jason Merritt/Getty Images

A file photo shows Lorenzo Fertitta, left, and Frank Fertitta attending the Ultimate Fighting Championship on Fox: Live Heavyweight Championship at the Honda Center on November 12, 2011 in Anaheim, California. Close

A file photo shows Lorenzo Fertitta, left, and Frank Fertitta attending the Ultimate... Read More

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Photographer: Jason Merritt/Getty Images

A file photo shows Lorenzo Fertitta, left, and Frank Fertitta attending the Ultimate Fighting Championship on Fox: Live Heavyweight Championship at the Honda Center on November 12, 2011 in Anaheim, California.

Station Casinos LLC, the casino company led by Las Vegas’ Fertitta family, is opening the first legal, online poker site in the U.S. today.

Players must be at least 21 years old and physically present in the state of Nevada, the company said in a statement. The site, ultimatepoker.com, will be marketed in collaboration with the Ultimate Fighting Championship, the mixed martial arts business separately owned by the Fertittas.

Nevada has granted 20 online gambling licenses to casinos and service companies that provide technology, according to A.G. Burnett, chairman of the Nevada Gaming Control Board. Only Nevada-based casinos can offer actual play under state law. While New Jersey and Delaware have also passed online gambling laws in the past year, operators have yet to get started.

“This is the beginning of what’s going to become a very big industry,” Chief Executive Officer Frank Fertitta said in an interview. “We hope to be in every state.”

Station will collect about 4 percent of the money bet, as well as fees from customers participating in tournaments. Games will have buy-ins ranging from a few cents to $100. The site will ensure players are in Nevada by tracking Internet addresses, mobile phone locations or other data.

The online gambling industry, already a multibillion dollar business overseas, is forecast to reach $7.4 billion in the U.S. by 2017, according to researcher H2 Gaming Capital. Nevada should contribute $400 million by then, according to H2’s founder Simon Holliday.

Field Trial

Station is controlled by Frank and Lorenzo Fertitta, brothers who took over their father’s casino company in Las Vegas. Station operates 17 casinos in Nevada and Michigan, according to its annual report.

The Ultimate Poker rollout is technically a 30-day “field trial,” according to Burnett. The gaming control board and the Nevada Gaming Commission have to formally grant full approval, provided the test goes well, he said.

Ultimate Poker represents a multiyear effort by the brothers, who shut down a joint venture with casino operator Kerzner International a decade ago amid U.S. Justice Department scrutiny. In December 2011, the department released a letter paving the way for states to enact their own laws.

The same year, the Fertittas acquired Cyberarts Licensing LLC, an Oakland, California-based online gaming technology company. Ultimate Poker employs more than 100 people in the U.S., Eastern Europe and China, they said. Station paid $20 million for half of the interactive business in November.

Legal Hurdles

The American Gaming Association, which represents casino owners, has been lobbying for a national online gambling bill that would limit the taking of online bets to poker, which accounts for a small part of total casino betting.

Efforts to legalize online gambling parallel the growth of the Ultimate Fighting Championship, the brothers said. That sport, which involves combatants kicking and punching each other in an octagonal ring, was licensed in only one state when the Fertittas acquired it for $2 million in 2001.

The Fertittas lobbied to get it permitted more widely and signed a television deal with News Corp. (NWSA)’s Fox in 2011. UFC caught on with a new generation of fight fans who weren’t interested in traditional boxing. The Fertittas have already begun promoting Ultimate Poker at UFC matches and will utilize fighters in their advertising.

‘We feel the UFC caters to a very similar demographic to the people who are most likely to be online poker players, kind of that male 21 to 48, that have a high propensity to be online in a game,’’ Lorenzo Fertitta said. “There’s a really strong crossover here.”

Station has held talks with casino owners in New Jersey and racetracks in Delaware about licensing its technology and database of gamblers from Nevada, Frank Fertitta said. Online poker won’t be a threat to traditional casino play, he said, citing mobile sports betting, which is already allowed in Nevada.

“The online component has actually grown the business and the number of users,” Frank Fertitta said.

To contact the reporter on this story: Christopher Palmeri in Los Angeles at cpalmeri1@bloomberg.net

To contact the editor responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net

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