Wednesday, March 11, 2009
Posted today from EMarketer.
Internet Gambling Back on the Table?
MARCH 11, 2009
Rolling the virtual dice…
Smart money is betting that Congress will repeal the 2006 Unlawful Internet Gambling Enforcement Act (UIGEA) this year, or at least soon.
Barney Frank (D-MA), chairman of the House of Representatives Financial Services Committee, plans to bring back legislation to repeal the UIGEA this month. Rep. Frank maintains that online gambling is a fundamental freedom, and that attempts to make it illegal smack of Prohibition in the 1920s and 1930s.
In addition, much of the political momentum for repeal of the act is coming from online poker players who are fighting back.
“There is a dramatic need to have a regulated system that protects American consumers,” Jeffrey Sandman, a spokesman for the Safe and Secure Internet Gambling Initiative, told Reuters. “Right now, it's the Wild West.”
PricewaterhouseCoopers (PwC) estimates that the amount the US could raise from regulating and taxing Internet gambling is about 22% higher than it was in 2007—because US online gambling has grown despite the ban.
In fact, comScore Media Metrix found that as of last November, online gambling was the ninth-fastest-growing category online.
Making it illegal for businesses to knowingly transfer payments to Internet gambling operations, including payments by credit card, wire transfer or check, the 2006 ban was approved when Republicans still controlled both houses of Congress and President Bush was in the White House—and before the economy collapsed.
There is a lot at stake.
“A Better Hand,” an article in the Financial Times, reported that Global Betting and Gaming Consultants estimated that worldwide gambling generated $370 billion in annual gross win—the amount retained by operators after paying out winnings—and online gambling accounted for $17 billion of that total.
According to the “Mobile Gambling: Casinos, Lotteries and Betting” report, from Juniper Research, the gross win from worldwide mobile betting services alone will exceed $1 billion annually by 2012.
Furthermore, Juniper estimates that total wagers placed on mobile phones will more than double this year.
“Gambling is essentially a recession-proof industry,” said the report’s author, Windsor Holden. “While there may be marginal reductions in the level of stakes amongst casual users, the overall appetite for gambling per se will be unaffected.”
If the Congress does not act, a number of European online gambling firms are looking toward Canada to break into the North American market.
According to the Alberta-based gambling news site, Gambling911.com, $13.6 billion was lost by gamblers in Canada in 2007, and two-to-one that take is growing.
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