3G Studios Prepares for Online Poker in US: An Interview With CEO James Kosta

3G Studios is the first video game company to apply for an online poker license in the state of Nevada, where real money web gambling is set to launch in the coming months.

Gambling911.com’s Payton O’Brien had the opportunity to interview 3G Studios founder and CEO James Kosta to discuss what the future may hold for his company.

Payton O’Brien:Tell us the objective of getting into the 'real money' online gambling market and how are you going to go about doing this? Do you intend to form partnerships and is 3G Studios looking to offer more of a stand-alone online poker and gaming site?

James Kosta: We have a lot of experience in the free-to-play gaming market and in the terrestrial casino market, so we feel this is going to play out very well for us. Our timeline and our plans as directly as I can relate it, would be to receive partial certification right after the start of the new year. We have 20 products spread over four major forms of gambling, with poker as the only one that is legal right now. So, we will submit our poker products to independent testing laboratories next month. Once those are approved, we will receive certification. We will be launching our free-to-play casino product next month to people everywhere.

In terms of forming partnerships, what we really specialize in is the video games like ‘Rock Band’ and (we) always have a direct relationship with the customer. We are best known for going after the 21 to 45 year-old audience. Typically casino operators really struggle with this market. The people come in, go party and leave. They (the casino operators) are not getting enough people engaged in gambling on the floor. So what we bring to the table is the relationship we have with this audience.The fact is that we are building games that are attractive to that audience.

We are interested in poker and games that become legal, like craps, but we are really less focused on the casino gambler that goes home and logs onto their computer. Whether gambling becomes federally legalized (online) or in other states, I just don’t see this happening. So what we are focused on is introducing social and arcade games that incorporate gambling and use rule sets that have been around for ten if not hundreds of years.

Payton O’Brien: As you are aware, Harry Reid and Dean Heller do not appear to be on the same page when it comes to how they are going to proceed with the federal online poker legislation. While those two are busy pointing fingers, not much is getting done at the federal front and states like New Jersey and Delaware are moving forward with their own laws. What are your plans should federal legislation not pass? Do you believe Nevada will decide to move forward with state compacts (similar to Powerball concept) should the federal government not act? What is your thought process on how this will all shape out in the coming year?

James Kosta: We work closely with Reid and Heller. The bill gives Nevada a head start. Only states that have a proven history of regulating gaming should get into this. States that haven’t had experience in regulation would be an absolute mess. Nevada is considered the gold standard in terms of gaming control. Even speaking to the European operators, they say the same thing. But for my company, I am a little fearful because federally legalized gambling, if it goes through establishing a poker commission and that sort of thing, it will become a mess. It will be extremely expensive. You will only see the biggest players. We would like to see a state-led process. The only thing that Reid and Heller are arguing is whether the bill should go through the House or Senate first.

Delaware has just approved online gambling, but as they are a state with a population of only 947,000 people, they have to come up with $15 million a year for the regulation. So people in the state are saying, ‘Why don’t we just partner with Nevada?’ We say, if you are certified in Nevada, you are certified here. Believe it or not, there are over 10 states in negotiations with Nevada to create reciprocity. I think that is the way we are going to go, state compacts.

Payton O’Brien: So for the time being you are going to launch with your free-to-play platform?

James Kosta: We are going to co-brand our free-to-play platform with an operating partner. We will be launching in states where these particular games aren’t legal and establishing that brand so that, as soon as it does become legal, our games and our operating partner are already well known.

Payton O’Brien: What are your thoughts on Zynga entering the “real money” gambling space?

James Kosta: Well, everybody talks about it and I am yet to see it. Their struggling is well documented.

Payton O’Brien: Any plans outside the US?

James Kosta: Yes. We are currently partnering with operators in Asia and Europe to distribute some of our games, but we are also looking at becoming an operator in some of those jurisdictions. Our primary focus of course is on the US market.

Payton O’Brien: Do you have any interest in getting into the online sports betting market?

James Kosta: Oh, yeah...in a big way. The reinterpretation of the Federal Wire Act is on our minds, but that is a pretty archaic law when you really look at it. The decision that came down (last month) that online poker is a skill-based game excites us greatly and leads us to believe that somebody is going to go back and review the Federal Wire Act in relation to sports betting pretty quickly and that is a huge market.

Be sure to check out the 3G Studios website here

- Payton O’Brien, Gambling911.com Senior Editor