US Casinos Brace for Internet Gambling

There is no way now for US land-based casinos to avoid or deter online gaming as the time has come to prepare for it or get left out in the cold. Times have changed and so have consumers playing and purchase patterns. Overall, more and more people are buying merchandise, services and entertainment online as it becomes safer and more trusted.

Online gaming has had a rocky road over the last ten years as the federal government and the Department of Justice have been on a witch-hunt on tracking down and jailing online gaming executives and shutting down offshore gaming companies. Meanwhile, most of these companies located in such areas as Costa Rica, Panama and Antigua continue on to this day and have a large database of US online players, making millions over the past few years. Then the UIGEA was signed into law in 2006 that basically made it illegal for banks to process online gaming transactions from offshore companies. It wasn't until December 2011, when the DOJ clarified its stand with online gaming and confirmed that it only applied to sports betting. That's when the states decided they aren't going to wait for the Federal Government to pass a national online gaming bill, and move ahead to develop their own regulations within the states. Nevada, New Jersey and Delaware were the first to pass interstate gaming bills that would allow companies to set up shop and purchase licenses. Even state lotteries are getting into the game by selling tickets online and eventually adding more variety of games in the near future. Almost every cash strapped state government in the union is looking for tax dollars and gaming revenue to make up for much needed budgets. Gaming tax revenue goes to health care, education and the arts, while state lotteries account for billions of these dollars to add to coffers. Now ten other US states are looking at legalizing online gaming and are currently debating it and figuring out how best to do it. The land-based casinos can't avoid it any longer, they must reach out and embrace online gaming and do what they can to make the most of it. At this point in time some of the biggest land-base casino already now have online gaming licenses like Caesars, Harrah's, Hard Rock Café and Treasure Island to name a few. More casinos are applying for licenses and smart ones are looking to partner with established European based companies and technology providers to integrate with and get going.

History was made in the US last month as the first online gaming site Ultimate Poker began taking its first bets from Nevada based players. Nevada wants to become the gold standard on the US online gaming laws and even passed a law to develop compacts with other states or "intrastate" agreements. "It's no longer a question of if internet gaming is coming; it's a question of when," said Frank Fahrenkopf, president of the American Gaming Association, the trade organization for the nation's commercial brick-and-mortar casinos. "Unless there is a federal bill passed, we are going to have the greatest expansion of legalized gambling in the United States. I don't think that's what anyone intended, but it is what we're seeing."

Some view online gaming will decimate the land-based casino businesses, but if these companies do it right it can be profitable for them as the customer database building and cross-promotional activities between land-based and online brands could be endless. Geoffrey Stewart, general manager at Caesars online poker states it clearly and sees the potential; "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," he said. "Like any other business, you're always looking for what is the next distribution channel."

The state that would fare the best in online gaming would be New Jersey. Nevada has seen record-breaking gaming numbers just in the first quarter of 2013. It's New Jersey that wants to become the "Silicon Valley" of the online gaming world in the US. The land-based casino business numbers there have been on a decline over the last seven years and they need online gaming to revive the industry. Some of the biggest names in online poker like PokerStars have shown an interest in purchasing such properties as Atlantic Club Casino for as much as $50 million. The numbers are incredible as for the potential revenue making dollars online gaming could bring in to the US. Morgan Stanley predicts that by 2024, online gambling in the US will produce the same amount of revenue as Las Vegas and Atlantic City markets combined bring in today: US$9.3 billion.

It's time for the land-based casinos to take full advantage of online gaming and many already have been planning to do it for years now. The technology is there and the smart ones will use it to get going quickly and seamlessly. The next step will be to convince the federal government to come up with a national online gaming bill so that they can be united once again.