The US, if you think about it, has had most of the work already done for them when it comes to preparing the country for online gaming legislation. That’s why US states and even federal regulators are now watching what Europe goes through and how they are handling the development of online gaming in their market. It’s like having a canary in the coalmine to see how things are going to turn out, learn from their mistakes and even emulate all the success stories. The US can certainly learn a lot from Europe, as they have been going full steam ahead at the online gaming development with each and every country defining their own laws in the European Union.
There have even been some countries that have become the legislative leaders in the sector like Malta, Gibraltar, Isle of Man and a few other countries that have become major players in the development of licenses for companies that want to reach out to consumers in Europe. Even officials in Belgium have been overseeing how officials handle the development of online gaming markets country by country. And, though Europe and the US have their differences, they also have a lot of similarities in how they approach the emerging online gaming industry.
One common denominator and obviously one of the most important factors is how to effectively tax online gaming between the two. Even though the European has been at this for years, they still do not have a common framework throughout all the countries that maintains consistency in each and every market. To this day, all the countries are still developing their own laws and regulation requirements and are finding out the slow way, what is working and what isn’t working. The consequences of this model is that there is no pan European internet gambling model and European based companies are getting frustrated with a different story and tax situation in each and every country they go to. And, now it looks like even the UK wants to apply a different tax structure to offshore companies that are run out of Gibraltar and selling gaming to their citizens. Just because a company is operating out of another European country and targeting bigger markets no longer means they can avoid the steep taxes from the countries they spend their efforts targeting.
Ever since the great recession in Europe, each government has been trying to find ways to allow online gaming, but also tax it and make decent revenue along the way. But, for some companies, like Betfair and Bwin, they have had to pull out of markets like Germany and France due to the strict regulations and high taxes imposed on them. They in turn have gone back to the European Gaming Commission and filed complaints hoping that some will see the light and come to the table with some consistent regulatory requirements in each and every country for the online gambling community. There needs to be a “Legal” Internet gaming framework for all the European countries that they must all follow. This is something that the US can learn from moving forward. At this time Nevada wants to become the “gold standard” for online gaming legislation in the US, and New Jersey wants to become the “Silicon Valley” of online gaming in the US.
So, the fundamental question still exists is that what is the best way to go for the US? Is it slowly state by state, or is it sit-out and wait for the federal government to come up with a national Internet gaming regulator body that defines how the country will allow the industry to be established legally.
One of the things we learned about Europe is that each country decided they would develop their own regulations as opposed to federal legislation as they felt countries would develop more tax opportunities within their own individual framework. This is one way that the US seems to be going, even after the clarification from the Department of Justice in 2011 that essentially paved the way for states move without a federal bill.
Another option for the US is to watch what is going on up in Canada. The provincial government's lottery corporations are moving forward and developing their own web sites like Playnow.com; meanwhile, not allowing other private companies in the market. But this will lead to monopolies and extremely limits gambling content for consumers. The states could very well adopt this road map with or without a federal bill and surely the state lotteries would prefer this.
At this point in time European countries have not developed compacts with each other in order to increase critical mass for their operators and expand the player base with other countries. Nevada in the meantime has signed legislation that allows the state to make compacts with other states when they become legal markets. With a state that has a small population, this is a smart move. But Nevada has other plans for the US and that is to show the federal government that if and when it decides to have a regulatory body for the federal bill, they will step up and take that role.