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PA Arrests Video Gambling Kingpin - Offshore Poker Crackdown Next?

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In July, Pennsylvania authorities apprehended Anthony Zenner, 58, on gambling charges for running an illegal video poker machine ring. He's estimated to have earned more than $7 million from at least 142 illegal machines housed in 33 businesses in Western Pennsylvania.

More About the Case

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Anthony Zenner has been operating Zenner Vending for more than two decades. Originally, he dealt in completely legal systems, like snack-dispensing and cigarette machines, setting them up in bars, restaurants, and clubs. However, the lure of illicit profits drew him into the world of unlicensed video gaming devices with which he started dabbling in 2006.

According to investigators, he split the revenue from these terminals 50/50 with the owners of the properties where they were housed. These black market gaming devices were distributed throughout Allegheny, Fayette, Washington, and Westmoreland counties. Curiously, every spot that contained one of Zenner's illicit games also had legitimate machines from his company too.

Map Showing Location of Zenner's Illegal MachinesAnthony Zenner's Video Gaming Machines Were Located Throughout Four Counties

The electronic gaming systems had internal mechanisms for tracking winnings and losses as well as clearing the balance whenever a customer left and a new prospect arrived. Players who won were able to receive cash payouts.

Law Enforcement Strikes

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After conducting undercover investigations for more than two years, the authorities pulled the plug on Zenner's enterprise. In April, they confiscated the machines in question along with $83,000 in cash. They also froze another $63,000 in bank accounts belonging to Zenner. He was taken into custody July 12 and faces charges of corrupt organizations, dealing in proceeds of unlawful activities, and gambling devices. A preliminary hearing is scheduled for Aug. 29.

Anthony Zenner could be sentenced to up to 30 years in prison if convicted. Additionally, he may have to pay significant fines.

Reasons for the Arrest

Pennsylvania Attorney General Josh Shapiro commented on the case in a press release:

Today we’ve ended Tony Zenner’s video gambling operation. This defendant raked in millions of dollars in illegal proceeds, draining money from Pennsylvanians – and from the Commonwealth of Pennsylvania — over the last decade. These video poker machines – with the lure of the cash payout – are illegal gambling devices. We’ve taken action with the Pennsylvania State Police to shut his enterprise down.

Here, the attorney general explains what this case is all about: money. Pennsylvania hosts a robust casino economy, and all unauthorized gaming cuts into the casinos' – and more importantly, the state's – profits.

Photo of PA Attorney General Josh ShapiroPennsylvania Attorney General Josh Shapiro

In September 2017, two people were charged for their roles in a similar video gambling enterprise. It's most likely the case that the police are stepping up their efforts against this banned type of gaming in the expectation of more tax revenue coming from the additional forms of legal gambling permitted by a bill passed in October 2017. The newly established types of wagering are expected to contribute a significant amount to state coffers. This sum could be reduced though if patrons instead flock to unlicensed gambling.

Ironically, the 2017 legislation permits video gaming terminals to be legally hosted at licensed establishments. Anthony Zenner could perhaps have run his video poker empire while remaining fully within the law had he only waited 12 years and submitted the necessary paperwork.

About the H271 Legislation

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The gambling expansion legislation that Governor Tom Wolf signed into law last year (H271) adds several new forms of wagering to the already-existing Pennsylvania menu of racinos, commercial casinos, lottery, and charitable bingo. Mobile gaming in airports is now legal, and up to 10 mini casinos will be added to the state's gambling facilities.

Perhaps the biggest change is the advent of betting over the internet. Pennsylvanians will soon be able to log on to websites licensed in the Keystone State and enjoy poker, casino table games, and slots. Daily fantasy sports was legalized too, and the law also calls for sports betting to appear in the state if not prohibited by federal law. This is now possible thanks to the Murphy v. NCAA decision rendered by the Supreme Court in May. All of these gambling endeavors are overseen by the Pennsylvania Gaming Control Board.

PGCB LogoThe Pennsylvania Gaming Control Board Oversees Gambling in the State

Scramble for Interactive Gaming Licenses

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Nine casino operators have already forked over $10 million apiece for the privilege of obtaining online gaming licenses. After these internet betting sites are approved and open for business, they'll have to pay 16% of table game and poker revenue in taxes and a massive 54% on slot revenue. The State of Pennsylvania has collected $90 million already before the first licensed online gaming operators have even begun to offer games. Who knows how much more will be added to this total after the market becomes active?

One of the instate entities that has filed its online gambling application is the Sands Bethlehem Casino. The chairman of parent corporation Las Vegas Sands is Sheldon Adelson, a longtime vocal critic of gambling over the internet. This raises the question as to why the Sands Bethlehem is willing to pay the exorbitant costs for Pennsylvania licensure given Adelson's views.

Sheldon AdelsonSands CEO and Chairman Sheldon Adelson

The answer lies in the fact that Sands is trying to sell the property to Wind Creek Hospitality. Pursuing an online gaming license is part of the deal so that Wind Creek will be able to offer online poker and casino games if it chooses to do so later on down the line.

Curiously, the rules for daily fantasy sports firms are far more lenient. They only have to pay a $50,000 license fee and a 15% tax on gross revenue. Perhaps DraftKings and FanDuel have better lobbyists in Harrisburg than PokerStars and 888 do?

Online Poker Crackdown Imminent?

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We think it's possible that Pennsylvania will initiate an attack on unlicensed internet poker websites to complement its crackdown on illicit video gambling parlors. The state hasn't acted with any particular hostility to offshore gaming firms in the past, but then, it never really had an incentive to do so because it lacked its own licensed internet gambling economy.

Any steps Pennsylvania takes in this direction would limit competition to the detriment of ordinary players. We've already seen the insipid platforms revealed in the current regulated state online poker markets, and we're not really impressed by them.

For example, there are the three Delaware sites, all skins of each other, that average fewer than 40 simultaneously active players online. Then consider the fact that Nevada, the heart of U.S. live poker, has never been able to support more than two licensed internet poker rooms at the same time. Even in modestly successful New Jersey, all the sites put together struggle to reach the 500-player traffic level.

Maps of New Jersey, Delaware, Nevada, and PennsylvaniaPennsylvania Joins New Jersey, Delaware, and Nevada With Licensed Online Poker

The recently implemented multi-state gaming compact helped a little bit by allowing regulated sites in each of these three states to share traffic with each other, but the effect wasn't as large as was hoped. Even if Pennsylvania joins in this arrangement, it probably won't make too much of a difference. Remember, many of the PA online gambling license holders will be businesses that don't even have a presence in any of the three other licensed poker states, so any traffic sharing will not help them at all.

By contrast, the international poker organizations that serve Pennsylvanians typically have hundreds of players battling it out at the same time, sometimes more than a thousand. They're not hamstrung by sickening tax levels, so they can return a lot of money back to the players in the form of bonuses and promotions.

Sign up for Offshore Internet Poker Now

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You might want to set up accounts at the major offshore card rooms before licensed online poker sites appear in Pennsylvania. You see, many of these poker companies elect to stop registering new users from regulated states rather than taking the risk of legal liability. This is just what happened in Delaware, New Jersey, and Nevada. However, they almost always allow existing users to keep playing.

By getting in now while the getting is still good, you can prepare yourself for whatever happens. If the Pennsylvania legal online gaming environment turns out better than expected, you'll have lost nothing except a little bit of time by opening accounts at offshore sites. If, on the other hand, the PA-supervised internet poker scene ends up disappointing you, then you'll have a ready alternative at hand in the form of these unlicensed operators.

For details of the best sites available to you, check out our U.S.A. poker guide. For Pennsylvania-specific information, you may wish to peruse our page about online poker in Pennsylvania.