US casinos set the stage for Online Gaming

Social networks have been delivering virtual casinos nationwide in the US, as players have warmed to the sector through free-to-play games. Now, as online legislation unfolds throughout the country, the industry prepares for the most notable transformation in the history of gaming.

It all started at the end of 2011 when the DoJ effectively removed laws preventing all forms of internet gambling, other than sports betting. With no federal regulation in place, legislators went to work at drafting measures in various states. Delaware became the first to legalise online gaming, with Nevada and then New Jersey passing laws.

Ten other states including California, Illinois and Pennsylvania are considering or are in the process of permitting some form of internet gambling. Moves to pass a national law have dwindled, giving many states the freedom to introduce measures as they see fit, although lawyers have regularly expressed this will not be a simple or quick task.

“It’s no longer a question of if internet gaming is coming; it’s a question of when,” said Frank Fahrenkopt, AGA President, “Unless there is a federal bill passed, we are going to have the greatest expansion of legalised gambling in the United States. I don’t think that’s what anyone intended, but it is what we’re seeing.”

Bricks-and-mortar casinos had long fought online gaming, with resilience from tribes and casino tycoons such as Sheldon Adelson and Steve Wynn, who are worried over cannibalising the land-based sector. However, inevitable, online gaming is now being embraced as an opportunity to innovate the complete gaming landscape. A wealth of innovative offerings could further highlight the industry and create new players.

Since the dawn of online gaming, offshore websites have flourished with US players. Morgan Stanley predicts US online gaming will produce over $9 billion revenue by 2020, the same revenue generated in Las Vegas and Atlantic City combined. In the 85 countries where is it legal, the online gaming market is valued at $35 billion.

Online offerings and promotions can cross between sectors, enticing internet players into land-based casinos. Controlled and regulated under US law, customers will have a new sense of security that could have otherwise prohibited play. Strong brands that have developed in the US gaming market can be replicated online to instantly draw a new wave of players. Companies such as MGM and Caesars are already involved in the sector outside the US, both with online and social operations.

Geoffrey Stewart, Caesars Online Poker Manager, commented: “Someone comes to play with us online, we will be able to offer them seats to the real World Series of Poker, or offer them hotel rooms at Caesars Palace. Like any other business, you’re always looking for what it next in the distribution channel.”

Under the first three laws, Delaware and New Jersey authorised a full suite of online casino games, whilst Nevada only permits online poker. Success in these states will likely determine whether legalisation will occur elsewhere in the US and how fast a national market will emerge. The US is still recovering from the hard financial crisis and politicians are anxious to find new sources of revenue.

Laws stipulate that online operators must have a physical presence in the respective jurisdictions and only players within state borders can place bets and withdraw funds. To ensure players are of legal gambling age, online accounts must be established in person at a casino.

Technology to ensure all customers are within the state must be rigorously tested and in addition to the license process, the sector is coming to fruition very slowly. The first legal online wager in the US was made on 30th April in Nevada on the Ultimate Gaming online poker site. New Jersey and Delaware are working on the technology and licensing procedures and expect to begin offering games by the end of the year.