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Joining Forces? Nevada and Delaware Discussions Held

Representatives of the state Governments of Nevada and Delaware recently had discussions relating to the viability of an interstate compact agreement that could boost their online gaming industries.

The talks were recently confirmed by Delaware State Lottery Director Vernon Kirk at a Delaware Lottery Advisory Council meeting. A compact agreement between the two would likely centre around both states combining their player pools, which would allow players in both states to play on both Nevada and Delaware’s online gaming services.

While discussions are believed to be ongoing, any progress would likely be shown sooner rather than later, given that both states are expected to have more companies launch online gaming services before the end of the year.  

Geographically, such a deal does not look viable at all. Delaware is perched on the east coast of the country while Nevada is a few thousand miles away in the deserts of the western mainland. In almost all other ways, however, the potential deal would be an asset to both states both now and in the future.

With both states being among the first to establish legal online gaming industries in the US, the best time for them to maximise their potential is now. With New Jersey the only other state currently establishing an online gaming market, Nevada and Delaware are viewed as potential goldmines by online poker operators.

That can be seen by the fact that companies like the World Series of Poker, Treasure Island, South Point Poker and others have expressed enthusiastic desires to establish online poker sites in at least one of the legal states. A consortium consisting of Scientific Games, 888 and Williams Interactive have been named as the primary vendor in Delaware’s industry, with other vendors set to follow in the near future.

There is one downside to both states going it alone with regards to their online gaming industries, their size. Despite being one of the places to go in the world for gaming, Nevada is actually a small state with a population of roughly 2.7 million people. Delaware, the US’s second smallest state in terms of size, also has a small population of just over 900,000.

Small populations mean both states’ online gaming markets would also likely be quite small. Sure, Las Vegas has a live gaming industry that generates billions per year, but it is fair to say that a fair chunk of that comes from tourists who come in, stay a short while, play a few games and then go somewhere else.

With Nevada’s online poker market only being open to those who are physically in the state, it is unlikely that it will generate anywhere near the same amount of money as its live gaming industry. Yes, tourists in Nevada may be able to play online poker when they are there, but the general tourist would be less inclined to online gaming than live gaming. That is especially the case if they can play online poker in their home countries, whether legally or illegally.

Such an argument is backed up by PokerScout figures that state the current poker traffic to Ultimate Poker, Nevada’s only legal online poker service, is 193 players (seven day average). This number is reflective of Nevada’s small population and may decrease when other companies, like those mentioned above, establish poker services of their own in the future.

This would also be the likely scenario in Delaware, which would probably struggle to attract more than a few hundred players to any legal online service due to its small population.

Nevada and Delaware may be two of a few states to have regulated online gaming, but that may not be the case for long. A number of states, including California and Pennsylvania, are also currently considering regulating online poker an online gaming in general.

If further state regulation occurred, online poker companies may be inclined to invest in the larger states instead of smaller ones like Nevada and Delaware due to the fact that they would likely yield greater turnover and profits. This further makes a joint deal in the near future between the two states more viable, attractive and mutually beneficial.

A major part of why Nevada and Delaware chose to regulate online poker in their states was due to the financial benefits such an industry could bring. By collaborating with one another, those financial benefits would likely be maximised, making it a viable deal for both states.  

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