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Moment of Truth

The evolution of online gaming

Moment of Truth

Probably the most contentious issue facing the gaming industry is the legalization of online gaming in the United States. It has the potential to be a game-changer in many respects.

To be clear, however, at this point we’re talking about online poker only. But most experts agree (and the industry has vast experience with this phenomenon) that poker will be the foot in the door. A few years later, we’ll be able to lobby for full online casinos, and then a few years after that, sports betting will be considered. But for the purpose of this narrative, let’s just consider online poker.

First, the U.S. casino companies will be able to tap another source of revenue—one which has been very lucrative for offshore online casinos. This revenue flow would obviously come in very handy during these difficult times.

Second, the U.S. casino companies could use an online poker room to drive customers to their bricks-and-mortar casinos. This can be done in many ways—hold the championship round of an online poker tournament in a physical casino, offer bonuses for online play that can only be redeemed at a physical casino, or other creative marketing promotions.

Third, gaming suppliers of all stripes will be able to provide U.S. casino companies with goods and services to operate their online poker rooms. These include everything from games and systems to payment processing companies, online marketers and more.

Fourth, licensing, compliance and harm minimization efforts would be crucial. This would be a boost to the regulatory systems in the U.S. as well as the attorneys and advisers who operate in that space, not to mention the technology providers who can address the issues of problem gambling or underage gambling online.

The issue is, however, that to accomplish legalization, a full-out push is necessary this autumn. The conventional wisdom is that nothing will happen in 2012 because the U.S. presidential and congressional races will cause all candidates to be gun-shy of any issues that look controversial. Certainly, online poker falls into that category. And beyond 2012 is a crapshoot (no pun intended). Depending upon who is victorious in the next election, it throws the entire issue into question in 2013 and beyond. So the last chance for a quite some time is this fall.

You’ll read in this month’s iGames section (and on our iGames website, www.ggbigames- .com) about who holds the keys to success in Congress. But in the end, many experts rate the chances of federal approval of online poker rooms to be 50-50 at best.

So that leads us to the next step. Certainly, the most preferable way to legalize online poker is via a federal bill signed into law by the president. This makes it simple to regulate and simple to tax. But in the absence of federal legislation, it falls to the states to take the lead. And this isn’t necessarily a bad thing. The commercial gaming industry has always contended that gambling is, at its core, a states’ rights issue.

Consider how the lotteries and casino gaming have spread throughout this country. It’s always been on a state-by-state basis. There’s no reason online gaming could not grow the same way.

Now, that brings up serious complications, such as tax rates, regulatory structures and constantly changing parameters via legislative proposals. We get that. But if the choices are no federal bills or state legalization, we’ll take the states every time.

Of course, there are states already out front. Nevada is about to finalize its online gaming regulations, but with the caveat that the federal government either legalize it or offer an opinion that states can legalize it with no repercussions from the Department of Justice. New Jersey is considering a second online gaming bill, which will probably again be vetoed because we all know Governor Chris Christie has not changed his tune. Iowa, Florida, California and others will return to the issue when their next legislative sessions convene.

In the meantime, however, the entire industry should get behind the efforts to legalize online poker this fall. Contact your representatives in Congress and urge them to take action or at least support any bill that comes across their desk. It will be good for everyone in the long run.

Roger Gros is publisher of Global Gaming Business, the industry's leading gaming trade publication, and all its related publications. Prior to joining Global Gaming Business, Gros was president of Inlet Communications, an independent consulting firm. He was vice president of Casino Journal Publishing Group from 1984-2000, and held virtually every editorial title during his tenure. Gros was editor of Casino Journal, the National Gaming Summary and the Atlantic City Insider, and was the founding editor of Casino Player magazine. He was a co-founder of the American Gaming Summit and the Southern Gaming Summit conferences and trade shows. He is the author of the best-selling book, How to Win at Casino Gambling (Carlton Books, 1995), now in its fourth edition. Gros was named "Businessman of the Year" for 1998 by the Greater Atlantic City Chamber of Commerce, and received the Lifetime Achievement Award from the American Gaming Association in 2012.

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