Bill Pascrell: "In the next three years the US market will be valued at half a trillion dollars"

Expert in the online gambling sector, advisor, board member and one of the men who lobbied and got the legalization of sports betting in the United States. Learn more about the US market, responsible gambling and many more things in this interview.

— In Dollarpa and the CIS not everyone knows you well. Tell us a little more about yourself, please.

- I was born and raised in Paterson, New Jersey. My father is a politician, who for all 30 years held the position of the member of Congress. He now sits on the House Ways and Means Committee. So, basically I was born into a family of politicians.

I went to Rutger University, and then I went to the John F. Kennedy School of management, which is one of the faculties of Harvard. But I realized that administrative duties did not appeal to me, I wanted to study law. As a result, for several years I worked for the government, I was an adviser to the governor of New Jersey, and then chief of staff to one of the congressmen. I have also worked on dozens of political campaigns at both the local and federal levels, including Bill Clinton, John Kerry, Barack Obama and Hillary Clinton. And then, starting in January 1995, I started working in my company, where after a few months I became one of the main partners after 27 years working in it. Princeton Public Affairs Group is the largest government relations and affairs firm in the United States.

We have more than 200 clients in completely different fields: gambling, lotteries, horse racing, marijuana, petrochemicals, energy, pharmaceuticals, manufacturing, cybersecurity, trade unions, banks and education. When I arrived at the company, I got into the Brick and Mortar casino. My first client was Donald Trump : I represented all of their casinos in New Jersey. It wasn't the best experience in life, honestly, I'm not a big fan of his.

I can say that it all ended when I started working for Wynn, a very, very large American company. They have casinos in many states, in Las Vegas, and even in Macau. When I was working at Brick and Mortar, in 2009 I received a call from an organization called iMEGA (Interactive media Entertainment Gaming Association). They represented 38 Offshore online betting companies and illegally accepted bets from US citizens.

I told them that they had to put an end to this, and I myself began to do everything possible to legalize online gambling in the country on their behalf. At that time I met a man who changed my life - Isai Scheinberg - founder of PokerStars. We've been through a lot together, and it's been great. It has been spending $40 million a year to achieve the legalization of online gambling in the United States. I told him to stop spending money on a questionable Federal decision, offering to work at the state level and start in New Jersey. He agreed.

- 40 million a year just to push?

- Just to push. I said, "Isai, listen, my father is in Congress, he supports your bill. But this is never going to work. For how many years have you been spending 40 million annually?"- "About six to seven years." It's just a waste of money, as if there will never be a tomorrow. I said, "Take 10% of that and give me three years. I'll do everything in New Jersey and the ripple effect will do the rest." And I did it at the state level - In American democracy, a lot of the things that are decided on a large scale start at the state level.

I lost all my casino-related clients, both in Las Vegas and in Atlantic City, because they were against online gambling. They thought this would devour their industry . Two years later the bill became law . But what we did was that online and offline games were connected: to obtain a license to operate online, you must be a casino partner.

An excellent, very low tax rate was established: 13.5% of gross gaming revenue (GGR) online and 8% — offline. Since I managed to do it, I started working on the legalization of sports betting throughout the country. In the United States, there was only one place where you could legally bet on sports - Las Vegas, and only since 1952. I was in for a court battle that dragged on for 10 years.

The NFL, the NBA, the NHL, the PGA, the NCAA, the MLB - they have all filed lawsuits against New Jersey and against me personally, demanding a ban on sports betting . We have reached the Supreme Court of the United States. Perhaps, apart from the birth of my four children, May 14, 2018 was the happiest day of my life: we won and were able to launch online sports betting in New Jersey. It is now allowed in 24 states, in many it is allowed online as well. It's been a boom for my business. What usually happens when a state becomes interested in legalizing sports betting? Either the governor or the legislator or someone relevant calls me and asks if I can advise them on the issue. And yes, I'm going to help them.

And the last thing I want to say about it, by way of introduction. Why can I call myself lucky? Because I happened to walk into Brick and Mortar. I didn't want to be in the casino business. I have been taught a lot by the behavior of Donald Trump, my first client in the game. Then I got into the field of online poker and casino, representing the best brands. And then I got into sports betting. All these are Moderna, high-tech and developing fields. I was recently hired by the Australians from BetMakers. For the first time in the United States (also in New Jersey), I have been able to promote a bill on fixed odds rates for horse racing. This will be the next boom in the country. In the United States there are 40 thousand horse races a year. That's a lot of content for the bookmakers, and everyone is waiting for it.

- Alexei Kornilov told that you helped a lot to enter the American market.

I love what I do because I meet people from all over the world. I taste their cuisine, I hear about their lives. I love the variety. I really like what we do with Alexei. Because he appreciates who I am. It gives me every chance of a carefree future, because I'm already 56 years old. I'm starting to get on the boards of good companies, like BETEGY. This will ensure me in my old age, I will be able to advise these companies instead of running around the world trying to make some money.

Good thing I had the opportunity to be interviewed. Maybe someone will read it and realize that there are three things you get if you work with me. First of all, no nonsense, all in an honest way. The second is ethics and reliability. Third: When I become part of your team, I will be extremely loyal. And yes, it's not cheap 😊.

The US market is growing at an explosive pace. And people recognize it, they see the numbers. But what worries me is that many companies hire the wrong people. You can't just take a person to the team just because he has an American address on his business card. It is necessary to study his professional path. I like working with Alexei, in his team. I think this business has superior potential. Thanks to our working relationships, I have the opportunity to open Alexei's doors to niche companies, which will also be on the rise.

We have previously talked about BetMakers, they are my clients. Once they hired me as Alexei, they came to Barcelona to meet me. That was 2 and a half years ago. On the Australian NASDAQ, its shares were trading at 3 cents. And now they already cost 1 dollar and 30 cents per share. And that we haven't launched in the United States yet, we just have it planned. Companies like BETEGY will surely thrive, and BetMakers will help them with that. Because getting into the horse racing market on your own is very difficult.

- Let's talk more about the US betting market. How much can it grow in your opinion?

In New Jersey, sports betting has been accepted for three years. Before that, Nevada earned about 5-6 billion dollars a year in gambling. About 18 months ago, New Jersey was making a billion dollars a month with a population of nine million. A billion dollars. This is the number one market, after the UK and Germany, as Germany is the first and Britain the second. This is $12 billion a year for the state, and growing.

I think in the next three years the market will be valued at half a trillion dollars in bets alone. And what needs to be done? It is necessary to enter the market and start processing customers to switch to poker or casino, where the margin is higher than in sports betting. And we have very low taxes.

I think sports betting and horse racing are two very different things. The horse racing betting market in America is dying. It's a $10 billion industry, and that's it.

- Is "dying" the right word for a 10 billion industry?

- Before there were between 14 and 15 billion. Revenues are falling sharply. Why? Because in this area everything is aimed at a more adult audience. They are already used to betting on a horse and then knowing that the odds can change. Young people from 20 to 30 years old want to put their $10 on a horse with a 7.00 odds and know that if they win they will receive $70. They don't want to hear anything about the fact that the quota may change. Therefore, in the United States, it is the fixed-odds horse racing betting industry that is waiting for an increase. We estimate that it will triple revenue and create a stable market.

Why is it important? If another pandemic begins or if the situation worsens with this one, lockdowns await us again. And what content can we count on? You can trust horse racing, because there are not many people involved, and everything happens on the outside. And it's a sea of content. Any bookmaker will be delighted with 40 thousand races a year!

Another area that will be developed is betting is eSports. This market is already growing, and very quickly. This is a huge unmet demand. In 10 years, any casino establishment will no longer look like it does now. They will provide more interactivity. You won't surprise anyone just by having a poker table, a roulette wheel and all that. People need interactivity, the ability to communicate. But all new things will be faced with the need to find the opportunity to regulate them.

Cantor Gaming, a large organization that studies different fields, estimates that 300 thousand gambling jobs will be created in the United States in the next two to three years. The economy is very important.

— When the American market opened, it seemed that it was a good opportunity for experienced dollar bookmakers. But in the end, we see that it is American companies that are buying from the dollar companies. Why is this happening?

- There are two reasons. The first is technology. DraftKings is a good company, but they haven't really won anything. Because all the money they have they spend immediately to attract players. They are trying to acquire a larger market share like Amazon. I told my dollarpeos clients that if DraftKings, which has zero profits and huge debts, can afford to buy a company like Entain, why not think about buying American casino companies like MGM, Hard Rock or Golden Nugget? Maybe it depends on the culture. Maybe the dollarpeos are somewhat more conservative. But I think it will be different soon.

It seems to me that right now on the market the best possible purchase is MGM. A solid company, Brick and Mortar, with good technical capabilities. MGM tried to buy Entain for 11 billion, but was rejected. Then came the agreement between DraftKings and Entain, but I think it will not be realized. We shall see.

America is a great country and all that. But the technology is really in Dollarpa, Israel, where all the engineers are. We are still a long way from being on par with them in innovation and technology. The consolidation of the market will continue, and that's good for BETEGY itself. Very well. The only question is when BETEGY will be ready for sale. Is it necessary to do this now or is it better to wait? It's always the hardest thing to understand when one has to agree.

— What do you think about the agreement between DraftKings and Entain?

- Remember how DraftKings became a public company. They did not make a usual IPO, but did it through the SPAC Special-purpose acquisition company, a company that is created in order to merge with another and enter the stock exchange. The first in the country in the field of gambling. Now everyone wants to take advantage of this scheme. There is a large amount of capital on the market that will help Draftkings acquire Entain.

But the question is why Entain is doing this now. Just to get paid? Well, then yes, go ahead. I don't think it's true that DraftKings can afford it all. Maybe 5 or 8 billion. But in general, the rest will be given by the papers. This interview was recorded before the deal was broken.

Now DraftKings is buying Golden Nugget Interactive, and this is a much smaller deal. It's a matter of only $350 million, relatively little. DraftKings has some problems with regulators. The deal is going to happen one day, 100%, but first they have to learn how to work with regulators. A good relationship with them is very important for reliable work.

The stricter the regulatory rules, the better the market

— How much experience do regulators have in the United States?

Until 2013 they had no experience in the field of sports betting or online, except in Las Vegas. But I think the market has grown. What I like the most, and I'm proud of it, is that the American regulatory market is very strong. It's serious. The stricter the regulatory rules, the better the market will be, and this will attract more capital.

- But it's also not worth over-regulating it.

It depends on what you want to say. New Jersey has the strictest regulatory standards in the world. Clearly in the first place. And at the same time, the state is in third place in the world in terms of performance. When the New Jersey gambling market was primarily controlled by criminal gangs, it was essentially black or at least gray. When we legalized the casino in Atlantic City, we did everything so that the influence of these dubious personalities were no longer involved. We have strict anti-money laundering rules, verification, identification and compliance with licensing requirements.

And if I am an investor, and not a fraudster, I want to work in a market with a stable regulatory regime. In this case, there is confidence in the future. In the case of weak regulators, it is not known what to expect, the government can make the most convenient decisions. This makes investors nervous.

— What should be the ideal regulation system?

There are three things that the markets need to focus on (and the CIS markets too). Regulatory rules, smart taxes and responsible gambling. Entain is arguably the most powerful public online gaming company in the world. And they pay a lot of attention to responsible gambling. They do a lot to build a strong, active and mutually beneficial relationship with all regulators.

Without orderly, concentrated and understandable self-regulation in the field of responsible gambling, it can only be achieved that regulators introduce very strict, hostile and intrusive rules, as happened in the UK.

Many casinos in the United States prefer to perceive players who have gambling addiction problems as their VIPs. But you can't do that. If your best VIP clients are gamepaths, then it's already an unreliable business. Make them slow down or ban them altogether. People with gambling addiction in any market average about 2%. In some cases, there may be a little more. You have to be careful not to create the feeling that you are hunting a helpless consumer. Otherwise, you may encounter the fact that the authorities will come and close the company.

In general, I no longer operate with the concept of "responsible gambling". I call it a rational game. This is not only correct in terms of ethics, morality and social responsibility, but also helps in terms of doing business.

- It seems to me that in the United States, regulators often side with customers in their disputes with operators? Even if there was an error in the quota or some technical problem, the regulators are still on the side of consumers. Traders have to pay the profits, but they still make a profit. In the CIS, for example, the situation is very different. Why did this happen in the United States?

There are a couple of reasons. Consumer protection is an important thing for the democratic world. Because you, as a company, do not want someone to close you down for abuse. And on social networks there will be an explosion if people find out that the betting company refuses to fulfill the terms of the contract. Actually, you can even forget about the regulators - after such a systematic attitude, the rest of the users will simply run away. They will keep in mind that the same thing may happen to them tomorrow.

Actually, this is the second reason. Regulators know that the decisive power is not even in the hands of politicians, but of people, customers. Because when people are outraged, everything explodes. The electoral situation is changing and politicians are losing ground, so American politicians are closely watching the situation.

Entain spends a lot on complying with all the rules, a fair and responsible gambling policy. And many dollar companies are wondering: why spend NZD 10 million on responsible gambling? Yes, because if you don't spend, it will cost you a lot more in the end! But not everyone understands this. However, Kindred, Evolution, Golden Nugget, Hard Rock are already beginning to pay attention to this issue and appreciate what Entain is doing. This company is a true pioneer in the field of responsible gambling.

We have a huge game plan. Entain hired me, and we, for 2 million, ordered a two-year study at Harvard medical school on the topic of gambling addiction . Everyone, regulators and politicians, everyone needs to understand one simple thing: this addiction is incurable. Just like alcoholism and other similar things. It is necessary to participate in various programs to quit it, but it is impossible to completely cure yourself. It won't happen that you wake up one morning and say, "Oh, I'm fine. I'm not drinking anymore. I won't play again." To convey this thought, education, education and once again education are needed.

Another thing is that we are trying to convey to American society that there are other ways to put the ideas of responsible gambling into practice. Blocking of users, clinical therapy, availability of a mandatory support service in this regard, limits for specific players, self-exclusion and mass education. We are starting conversations with banks, trade unions, professional and university athletes and many more about the importance of such protection. After all, it is a great danger for mortgages, for example. Let's say for example I have a mortgage and I also have a gambling addiction. I don't care about the mortgage. I will play because I think I will recover. And when I run out of money, what will happen to my housing? It is very strange that in the USA people understand this. The banking community is not there yet. For them, this is a difficult topic.

We also work with sports leagues. Entain, GameDen, Epic Risk Management, the Wager Score and my other clients are working to create an understandable strategy to promote research-based responsible gaming. We are going to go into the locker rooms of the professional and university teams and tell the players that they have to be very careful with the bets. You have to think a hundred times if someone comes up to you and tells you to pretend to be sick, lose the ball or do something like that in tomorrow's game.

And one more story for the end. My children know that I have been playing for years and they ask me: "Dad, why did you get into this topic with responsible gambling? We know your customers just want to get paid." I tell them that my clients, of course, want to be profitable, but they also understand what will happen if the problem of gambling addiction becomes more global. They will simply close. And then you no longer have any benefits. Therefore, the ability to independently regulate such things is the most important thing so that it is not over-regulated from the outside.

- Speaking of rigged matches. The case of Evander Kane made noise, and apparently on time.

Yes, he did. Also, by the way, I want to say that now another thing is noticeable that did not exist before. 10 years ago, in this business, conferences could hardly see a black man or a woman. And now things are changing. In Tennessee, the company recently received a license, the founders of which were, for the first time in history, a man and a woman of Hispanic origin. Harvard graduates. The company is called Wagr, it is strong. After Tennessee, they want to move to Virginia and possibly New Jersey.