The challenges facing the iGaming Industry in the US

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The gambling industry has always thrived in the US, although different states have their own rules about what games can be played.

While some states like Nevada have wholly embraced the experience, others like Utah have remained closed to the idea of gambling. Never has this divide been more apparent than when considering the expansion of the online gaming industry across the US.

You would think that the internet would exist outside of state laws, being a universal platform, but this is not the case.

The Wire Act of 1961 prevents the transfer of monies over state lines, and this has been judged to apply to online gambling as well-meaning that someone in New Jersey could not legally place a bet at a Las Vegas-based online casino. This is as complicated to police as it sounds, and so the blanket solution had been to ban all online gambling activity across all the states.

However, the demand for online gambling did not go away. Many global casinos accepted US customers and, in reality, trying to prosecute individual players proved pointless. Slowly, states began to reconsider their positions. The North American online gambling market is the now fastest growing market in the industry.

 

State Laws

The iGaming industry has met with problems along the way. The Department of Justice (DoJ) recently announced its intentions to repeal a previous decision regarding its interpretation of the Wire Act. Where players had previously been able to place bets online without of state casinos, they were now restricted to their own state. And if that state didn’t have anywhere for them to play, then they were stuck. This drove a lot of people to play illegally or to access online casinos based off-shore.

State governments fought back against the DoJ, and some have been successful in legalizing online gambling in their own state. In July 2019, Pennsylvania became the fourth, and largest state, to open online casinos. One of the major benefits of doing so is that the state government can now benefit from taxes and license fees paid by the online casinos – something that wasn’t happening when they were operating illegally. They invited online casinos to partner with existing local casinos.

One side brought the online expertise needed to run a successful site, the other side provided a recognized local brand and brought thousands of existing customers. It was a win-win situation for all parties.

Sports Betting

There has been greater success in legalizing online sports betting, with almost half of the states allowing this in some form. The difference in attitude between the two is another hurdle that the iGaming industry needs to overcome.

Gambling is often portrayed in a more negative light, with many seeing betting on sports as an accepted part of the fun. But casinos have to shed the image of being associated with vice and sin – even Las Vegas is still known by the nickname Sin City. Given the deep-rooted religiosity in many states, especially across the Bible belt, this is probably the biggest obstacle to online gambling’s success.

But other states are not giving up. California has been trying to pass an online gambling bill for years, one that would regulate online poker specifically. Here in New York, there has been several proposals to legalize online sports betting, but these continue to be turned down, leading to online revenue bleeding into neighboring states. But perhaps the next success story will come from Massachusetts, where the state Lottery and state Gaming Commission are both pushing hard for changes.

However, in all these states, the opposition has come from existing land-based operations. In California for example, legal gambling operates on tribal land. The tribes have argued strongly that the opening of online casinos would strip them of their profits and prove detrimental to their livelihood. Similar arguments have been made by casino owners and operators countrywide.

The most vocal amongst them has been Sheldon Adelson, owner of the Las Vegas Sands casino company. While online poker is prolific in Nevada, all online casino games are prohibited, including online slots. It seems that the casinos are worried about online providers moving in on their territory too.

 

Summing Up

Online gambling in the US has a significant demand coming from the public and this is keeping the questions at the forefront of state governments’ consideration. But, as with the prohibition of the 1920s, online gambling has not disappeared just because states refuse to legalize it.

There are many casinos reaping the benefits of American customers, operating from off-shore locations or one of the few legal states. And these casinos are taking profits without paying taxes to the states they are operating in, meaning that the American economy is missing out on taking a slice of a billion-dollar industry. Refusing to legalize the problem is not helping it to go away, and the sooner states wise up to this realization, the better for all concerned. States will find their reserves boosted, while players will benefit from better-regulated sites, bringing them more protection on their payments and transfers. iGaming is here to stay, whether the US likes it or not!

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