The Best of Both WorldsWill President Obama spread the wealth of his new economic stimulus package to the online gambling industry? And if so, will he do it without turning back the clock?
In keeping with the groaning economic issues, President Obama has a lot of potential methods to help spur on market growth in the hopes of getting back to the US halcyon days of the late 1990s. Capitalising on the cash-rich online gambling industry being one of them.
As the online industry took off in 1997, and as accelerated internet access sped up, it boasted an annual turnover increase of 200 percent from 2001. And by the time 2006 came around, online poker, bingo, slots, sports and other forms of gaming totalled an income of $3.5 billion. But then it all came to a screeching halt when the Unlawful Internet Gambling Enforcement Act was passed. Instead of licensing and regulating online gambling, and creating strict conditions on player acceptance, the US banned the means to process funds via online gambling, thus cutting the lifeline out of the US market. Companies evacuated and were left to the vastly reduced numbers in Europe, Russia and Asia.
But all that’s history. The rest of the world is picking up the slack in online gaming, but without the US in the game, however, the industry is still feeling like a shell of its former self. But with two and a half years and counting wandering the wilderness, the US has cautious reason to celebrate. Obama being an avid poker player helps in some regard, but the fact that there are billions of dollars from online gambling within reach to help get the country back on its feet is testament to the need to give the people what they want—in a pro democratic, rather than a prohibitive, way. The benefits are obvious:
1. A substantial profit increase to the US economy from license and profit related taxes in online gambling.
2. An increase in work opportunities for US citizens.
3. A broad-scale clearing of illegal gambling and creating a controlled, regulated environment.
4. A change in the US image from the timid and conservative to the new and revised.
But on the other side of the Pond, The European Commission is getting a bit twitchy that all this might come to pass. The strict protectionist ideals encourage narrow, old-world vision during a time, and certainly within an industry, where borders are non-existant. Encouraging the use of solely US products under the new Obama stimulus package, thereby cutting off a majority of the online gambling market from the rest of the world, is iliciting cries of discrimination. And for US citizens restricted to only gamble on sites that are given the nod by the government—a method, nevertheless, that is already proving successful in the UK since the 2005 Gambling Act took hold in 2007—may create more problems than it solves. As we mentioned on page 14 in the news, land casino operators like Harrah’s and MGM are toying around with the idea of moving online when US laws are reformed. And casino industry pundits wonder if US gaming companies will get first looks at licensing over established foreign online gambling sites, thus getting a leg up on the competition.
But as flag-waving as most Americans are, they still like a good bargain, and buying all-American products would override cheaper foreign alternatives from coming through, even if they are made within strict US labour guidelines. And experts are collectively saying that protectionism exacerbated the recession during the Great Depression. “We believe it invites reciprocal restrictions on US exports,” says General Electric spokesman Peter O’Toole said. “We’re in a globalised world—we can’t turn back the clock.”
The biggest rallying cry that pushed UIGEA through was its intent to quash money laundering, so to reintroduce online gambling while at the same time satisfying that need, companies will have to be transparent from the very beginning, paying for a license to operate and adhering to the law. And above all, the US government, or Uncle Sam, will be the proverbial dealer, taking a certain rake so the country on the whole can share the spoils. It’s the rest of the world, however, that may be left out.