New report predicts return of US online gambling

April 15, 2011 - by admin · Filed Under Regulation Leave a Comment 

When it comes to the legalisation of online gambling in the US, there have been so many false dawns that it can become slightly difficult to get excited about yet more rumours.

However, Fitch Ratings (a highly regarded credit ratings organisation) seems to have stuck their neck out by suggesting that legalised online gambling in the United States is an “increasingly likely” proposition.

This news formed part of a report which was released yesterday and is based on a number of different factors that Fitch have been monitoring for some time. These factors include:

  • The seriousness of US states to consider intrastate gambling
  • Federal proposals and a new gambling bill which are currently being discussed in government
  • Offline gambling companies forming partnerships with online providers to give themselves an online presence (888 and Caesars being the latest example of this).
  • Perhaps most importantly, the current recession is making it harder to ignore the potential tax revenues which could come from online gambling. The report estimates that around $5bn in gambling revenues is currently heading out of the country every year.

Michael Paladino is Fitch’s expert when it comes to the online gambling industry and he admits that ,while there are still a few problems that need to be overcome, the prospect of online gambling making a re-appearance in the US is very real.

Before that happens though, a couple of major issues need to be agreed:

  • Will the term ‘online gambling’ only cover poker games? Or will it allow players to wager on sports and casino games too?
  • Should any future agreement be introduced at an intrastate or federal level? And if things are going to be done on an intrastate business, should online gambling only be available via state-owned lotteries (as it is in Canada at the moment), or will competition between the world’s largest gambling companies be encouraged to allow a competitive yet regulated industry?

What makes this latest report stand out from the numerous other rumours which have been circulating recently is that Fitch Ratings actually look at individual sectors of the gambling industry and predict how legalising online gambling would affect them.

The Boston Herald appears to have taken this one stage further by interviewing Steve Grossman who heads up the Massachusetts Lottery Commission.

Grossman was quite clear that while his product is currently the most successful state lottery in the US (last year it generated around $4.5bn), the arrival of legal gambling would be a huge threat to him.

As a result, he would be very much in favour of a intrastate structure whereby Massachusetts would be allowed to put together their own gambling products which would protect the current revenues generated by the lottery.

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