Is the USA About to Become the Biggest Online Gambling Nation Again?

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Rolling the dice. Photo: www.taxrebate.org.uk

All eyes of those interested in the global online gambling industry are currently on the USA. After electing a president who is clearly in favour of gambling (think Trump casinos) and the recent repeal of the 1992 PAPSA legislation which allows the States to decide whether to offer legal sports betting, the nation could well be on track to become one of the largest markets once again.

The Figures: Before we start looking at some figures, it’s first important to state that it’s very difficult to determine the size of the USA’s online gambling market. We have figures from the few legal states, such as New Jersey’s $245 million generated through the pastime. However, since there are only three states that allow legal online gambling on casino style games, more accurate figures which include the entire booming black market are much harder to come by. However, we can determine that the USA is hungry for more relaxed gambling legislation. In terms of profits taken by all US gambling operators (land-based casinos and lotteries included), the nation was just behind China with the second largest share of the over $50 billion market in 2015. This bodes well for the industry, as well as the states who are willing to take a chance on it. These figures are particularly impressive given that all but three of the states have not regulated online gambling whatsoever. Evidently, there is a hunger for games of chance in the US that is not currently reflected in the legislation.

The Good: One of the most important developments in recent times to the USA online gambling market is the decision to overturn the 1992 PASPA legislation. In May this year, the Supreme Court found the earlier ruling requiring regulations over sports betting be handled at the Federal level was found to be unconstitutional. This has allowed State legislatures to create their own rules and regulations governing the pastime. Unsurprisingly, those states that have jumped first on the opportunity presented by legalised sports betting markets are those that have already been offering games of chance online. The likes of New Jersey and Delaware were quick movers in this regard. However, many more States are thought to be preparing their own regulations to govern the potential market that was previously driven underground. Of course, with most bets being made in unregulated venues, the States themselves stood to benefit very little from the market. However, with new legislation and a more gambling-friendly president in the Whitehouse, this could all be set to change. Of the 50 states, a whopping 32 are thought to be preparing some form of online sports betting regulation during the next few years. This potentially colossal market could well see the USA emerge back into the position of prominence enjoyed prior to the UIGEA of 2006.

The Bad: That said, there are still some regulatory hurdles for operators in the USA and those from further afield hoping to fully capitalise on the newly liberalised market. The UIGEA law itself is chief amongst them. The legislation stops operators from accepting deposits from those using the funds to gamble. Since 2006, an amendment has been passed to allow for the States themselves to offer online gambling. However, since operators can only accept deposits from those living in legal states, the change to the existing law has not really helped the industry grow in the way it might have done. On top of this, grey areas in the laws continue to incentivise many to try their luck at various unlicensed casinos whose operators are prepared to flout the law from offshore locations. These unlicensed offerings pay literally zero in taxation to the US or State governments. The likes of Bovada, one such illegally operating website, does surprisingly well even in legal online gambling New Jersey. So well in fact, that regulators there want to oust companies that undermine the legal, highly profitable online gambling market.

Another important factor is that although Trump himself might be in favour of legalised gambling, there are several important Republican party donors and lobbyists who remain vehemently opposed to the pastime. Rather than try to benefit from the obvious desire the US has to gamble, they’d prefer to make it as difficult as possible for Americans to gamble at above board, taxed venues and instead force them to try their luck at the likes of Bovada.

Billion-dollar business in the cross-hairs: Can Regulatory Changes Make the USA the Number One Online Gambling Nation Again? As mentioned, it’s difficult to assess whether the USA already is the number one nation for gambling online. If they are, the lion’s share of it is done illegally. However, with States able to offer sports betting services for the first time this summer, the market is sure to get some sort of boost. Some estimates state that the betting market alone could be worth as much as $20 billion. That said, the spectre of the UIGEA still looms over the industry.

As seen in New Jersey, legal options don’t automatically eliminate the threat to the market from outside competition. If the gamblers of America find a better deal at an offshore casino, they’ll likely continue to take it. The fact is, no deposit sites continue to get thousands of visitors per day from Google searches whether they’re from legal states or not. For the USA to truly be crowned king of the online gambling industry, further revision or repeal of the 2006 UIGEA legislation will be required.

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