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Friday, 27 September 2013 07:42

Bets on the US Online Gambling Market

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Is this the calm and rational opening of a profitable market, or the beginning of the end?

It's been the subject of much debate on online gambling blogs: is the re-opening of the US market the start of something lucrative for the government and operators, or the end of family life as we know it? Those in favour of online casinos comment about the vast wealth able to be generated for governments through tax revenue and the additional employment opportunities available through the operators who will supply the service. Those against the legalisation of online gambling paint a stark and grim picture of addicts helplessly wandering streets rife with crime.

Like most situations, though, the reality will be neither as easily win-win nor as hopelessly dire as these extremes suggest. Although it's true consultants H2 Gaming Capital predict that the US online gambling market will be worth $7.4bn in gross winnings by 2017, this is based on an assumption that 17 states will have regulated online gambling by this time and this is not a done deal. Nevada and Delaware have passed legislation and New Jersey is set to go online in the next few months, and New York, Pennsylvania, Illinois and California are all actively planning for the legalisation process.

But if nothing else, the states that have already passed online gambling bills should show us that it's no easy process. Politicians have not easily come around to the idea of legalised online gambling and many are only in favour solely because of the tax revenues that it will bring. A slow, cautious approach has been adopted by all states looking at legislation.

Oddly enough though, one of the strongest voices of opposition has been from online gambling's forefather: the offline casino. Fearing that it will impact their business, offline casinos have begun talking online gambling down, with Steve Wynn of Wynn Resorts saying 'I don't know how to make the experience on a computer screen 17 inches in diameter particularly unforgettable' and the chief executive of Las Vegas Sands, Sheldon Adelson, calling it 'a toxin which all good people ought to resist'. Nevertheless, they know it is coming and Wynn has admitted that his company will need to figure it out.

But it is precisely because of this caution and opposition that it is unlikely that the darker scenarios will come to pass. With all the debate and precautions in place, it seems a much more likely scenario that the US will end up with an extremely well-regulated and profitable market, although operators salivating at the thought of entry will probably find it more difficult and less lucrative than they expect.

It is going to be an interesting time in US online gambling history, as it takes tentative steps back to a place of seven years ago. No matter if you're player, operator or statesman, there are likely to be many surprises all around.