Online gambling in the US – What’s Next?

Online gambling in the US and something to think about

Since the early 20^th century, gambling in the US has been legally restricted and outside of such places as Nevada, Atlantic City or American Indian Casinos, casino style gambling is still in most cases illegal or highly regulated. The American Gaming Association breaks gambling down into several categories: Card Rooms, Commercial Casinos, Charitable Games & Bingo, Indian Casinos, Legal Bookmaking, Lotteries and Parimutuel wagering such as horse racing and sporting events. What’s missing? That’s right – online gambling. So where exactly do online casinos fit within the US market?

As it stands today, individual states are free to prohibit or practice gambling within their borders while significant regulations and limits are placed on interstate and online gambling. In recent years, online gambling has seen harsher regulations. With the Unlawful Internet Gambling Enforcement Act of 2006 (UIEGA), online gambling was not explicitly banned but rather it was online financial transactions that were outlawed. This meant that all online financial transactions from gambling service providers were now illegal which resulted in many offshore gambling operators excluding US customers from their services.

Existing in this legal grey area, it is no longer a question of if online gambling will enter the US market but when and perhaps how. As recently as this month, three states have legalized online gambling and plan to begin offering bets by the end of this year. Naturally, a gaming firm in Las Vegas known as Ultimate Gaming was the first to offer online poker but for now restricting it to only players in Nevada. New Jersey and Delaware have also legalized online gambling and so far ten other states are considering legalizing it in some form or another.

Frank Fahrenkopf, president of the American Gaming Association has said that “Unless there is a federal bill passed, we are going to have the greatest expansion of legalized gambling in the United States. I don’t think that’s what anyone intended, but it is what we’re seeing.” This poses a lot of questions and of course concerns for many existing commercial casinos as well as American policy makers. Will legal online gambling mean fewer people in brick and mortar casinos? Will this create a new source of revenue at the state and national level? What about taxes and regulations? An increase in gamblers?

Many people including Arnie Wexler, former chairman of New Jersey’s Council On Compulsive Gambling has voiced concern that with all the good this could do to generate income and revenue for individual states there could be problems with an increase in compulsive gambling. There is particular concern regarding social media in the US as some places like Zynga have already begun taking real-money bets.

Taking in mind all the questions and concerns, many hotel casinos are already making plans to expand into online gambling to complement their physical casinos. Geoffrey Stewart, general manager of Caesars Online Poker has said “Like any other business, you’re always looking for what is the next distribution channel.”

Feel free to share your thoughts… what do you think about the online gambling trends in the US?