The New York Times has taken a positive look at Internet gambling in the United States in an interesting piece written by Eric Pfanner and titled “Is online gambling coming in from the cold?”
Pfanner goes back to the introduction of the Unlawful Internet Gambling Enforcement Act in 2006 and examines its implications, with major European listed companies departing the US market, and the commercial damage they suffered at the hands of US legislators who pushed the UIGEA through in questionable circumstances.
Moving to current times, the article notes recent developments which have international gambling groups considering a second tilt at the US markets, and the growing trend toward more enlightened gambling laws in European Union countries, spurred by the compliance actions of the European Commission.
With the need for governments and states to raise revenues under the pressure of dwindling taxes due to the tough economic times, and a more liberal and citizen-oriented Democratic administration in power in the United States, the time may finally be right for the legalisation of online gambling which upcoming legislation from House Financial Services Chairman Barney Frank envisages, the articles points out.
The New York Times article reprises the results of a PricewaterhouseCoopers study that the U.S. government could raise more than $50 billion over the next 10 years from taxes on legalised online gambling, and quotes the UK’s trade organisation the Remote Gaming Association, Clive Hawswood, as saying: “I’d be amazed if it [the legalisation os US Internet gambling] didn’t happen over the next two or three years. It’s just a question of what exactly the regulations will say.”
The article recognises that the passage of US legalisation may be a stormy one, noting that organisations like the Christian Coalition of America and the National Football League, have vowed to fight any new effort to end the ban.
Michele Combs, a spokeswoman for the Christian Coalition, told the Times that it was gearing up for a “massive campaign” of letter-writing and lobbying to try to prevent any loosening of the UIGEA.
“We’re not saying people shouldn’t go to Las Vegas,” she said. “But when it’s in your home, it’s too easy. It breaks up families.”
“There’s a better chance now for some sort of gaming legislation to be approved,” Nick Batram, an analyst at KBC Peel Hunt, a brokerage firm in London told the NY Times. “But it took longer than expected to put anti-gaming legislation in place, and it will probably will take longer than expected to remove it.”
Interestingly, the piece quotes figures from H2 Gambling Capital to support its claim that Asia and Europe have now overtaken the United States as online gambling markets. H2 says online gambling generated revenue of $6 billion last year in North America, more than a quarter the global total of $22.6 billion, up from $17.6 billion in 2006.
Writer Eric Pfanner recalls that Party Gaming suffered massive losses in player revenues in the wake of the UIGEA, but now has a more hopeful future following its guarantee against prosecution for pre-UIGEA activities that flows from its recent $105 million settlement with the US Department of Justice.
Pfanner writes: “Analysts say one possibility for European companies like PartyGaming, should the ban be lifted, would be to form partnerships with American casino operators. That would allow the European companies to share their online expertise. Operating alone, they might struggle to obtain licenses, given their history of run-ins with U.S. law enforcement.” But some analysts opined that in the event of a US breakthrough, the licensing regime would favour American operators.
Several other online gambling companies whose shares are traded in London, including 888 Holdings and Sportingbet, are still in talks with the U.S. Justice Department, Pfenner notes. Analysts expect them, along with companies like Bwin International, whose stock is traded in Vienna, to be involved in a round of consolidation in the industry — along with a possible eventual move back into the United States.
Although land gambling groups like Harrah’s and MGM Mirage appear to eyeing the online market with interest, other major land grouip may be less enthusiastic. Approached by Pfenner for comment, Steve Wynn. chief executive of Wynn Resorts, said in an e-mail message that he thought [online gambling in the US] would be “impossible to regulate.”
“Even though it would be a benefit to our company, we are strongly opposed,” he said.