Gambling Insider - Who is Willing to Roll the Dice?

Written and Published by: on Wednesday, 12 October, 2016
Unfortunately the original article is offline, this is an archived version:

Legalising online gambling: Who is willing to roll the dice?

The arguments for legalising online gaming in the US seem compelling, but one state needs to take the lead in regulating it, says ActiveWin Media Ltd Head of Affiliate Marketing Natalie Merrison.

The USA is seen by many as the home of gambling. It’s the location of Las Vegas, Reno and Atlantic City, which has come to be known as America’s playground. The casinos are iconic, the stakes high and the revenue essential to the cities in which they operate.

Yet of the 50 states currently recognised in America, only three offer legal online gambling – Delaware, New Jersey, and Nevada. The three states account for a mere 3% of America’s overall population, and as the legal age to gamble online in all three states is 21, the number of Americans legally gambling online is even lower.

Compare this to the UK, where a recent survey by the Gambling Commission found that 46% of respondents had participated in some form of gambling within four weeks prior to the survey, and 16% had participated in online gambling within the same time period.

An estimated £5 billion is generated each year by online gambling in the UK, and this figure is expected to rise significantly by 2020 (Information Age). Much of this money comes from the 15% Point-of-Consumption tax which online casinos have been required to pay since the introduction of the 2014 UK Gambling Bill. As the only industry that pays more tax than it generates in profit on an annual basis, online gambling is a major driver of the British economy.

In the US, $81bn was generated by casinos in 2013, with $38bn paid in taxes (CNN). But increasingly gamblers worldwide are leaving the slots and going online, and sooner or later America will surely have to join the party.

It’s not actually illegal for Americans to use online gambling sites, however international sites can be prosecuted if real money is at stake. For the most part, states regulate their own gambling, and have appointed commissions or lottery boards to do so.

There have been many attempts to legalise online gambling in various states, but progress is very slow. In 2015, it was thought that nine states would at least consider legalising online gambling during the course of the year. Actually seven states submitted bills, but none got off the ground. Pennsylvania, the great hope of many, actually submitted six bills, but to no avail.

Pennsylvania was expected to be the catalyst, if The Keystone State could legalise online gambling, other states would follow suit. Unfortunately for those other states, such as California and Ohio, it didn’t happen. Attempts have also been made to ban online gambling across the country. In 2015 Senators Lindsey Graham and Marco Rubio tried to introduce the restoration of U.S’ Wire Act. It sought to rewrite the Federal Wire Act of 1961 to essentially ban most forms of online gambling, but provide a loophole to introduce daily fantasy sports, and other similar activities.

Daily Fantasy Sports (DFS) may be an easier sell than traditional online gaming, and it’s clear that the American public want it. In a poll conducted by Seton Hall University, 63% of respondents thought that sports betting should be legal, with 68% believing it should be monitored at state level.

In May this year, a House subcommittee in Washington held a two-hour long hearing, ostensibly to discuss the merits of DFS, but actually to look at decriminalising sports betting across the country.

Sporting giants such as the NBA and Michael Jordan have publicly backed initiatives to legalise online sports betting in the US, even signing up to a partnership with Sportrader to post live in-game data.

But it’s not just the Wire Act which has made it difficult for gambling companies, and for software providers such as Playtech. In 2006, the Unlawful Internet Gambling Enforcement Act (UIGEA) was passed, and in 2011 several high profile games providers were indicted for violating UIGEA.

In United States v. Scheinberg, U.S Attorney Preet Bharara tried to prosecute PokerStars, Full Tilt Poker and Cereus, alleging that transferring funds to and from players online was tantamount to bank fraud and money laundering. The companies settled for more than $731 million and were allowed to continue to operate, but it understandably provided a serious deterrent for other online sites to accept American players.

However, this hasn’t stopped a number of states making steps to legalise online gambling.

Despite being unsuccessful in consecutive years, Pennsylvania is still expected to lead the way, having included online gambling revenue in its budget projections, although the vote itself has been put back until Autumn this year.

New York is another solid punt on for the first state to legalise online gambling in 2017, having seen its online poker bill pass the state senate, but be rejected in the assembly. Meanwhile California remains a wildcard, due to its powerhouse stakeholders’ inability to agree terms.

Prohibition is rarely an effective tactic, making the disallowed substance or service all that more attractive and therefore valuable, and most people believe there will eventually be legalised online gambling across the country. The only questions are; when it will it happen? And which will be the first state to take the gamble?