Bright Outlook For US Online GamblingBy: Adam Baker, Tuesday June 30th 2009
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The outlook for online gambling in the United States has taken a roller coaster ride of sorts in 2009. It began on a bad note with the UIGEA rules coming in force and the delay in the introduction of Barney Frank's bill to legalize online gambling. Then early in May the bill was introduced and the outlook changed. The bill began to receive bipartisan support and till recently Frank was sure of pushing the bill for a hearing as soon as possible. Then last week came the news that the hearing on the bill could be had only in September because of a more pressing economic agenda and things began to look bleak again. Now Goldman Sachs has released a report stating that the legalization and regulation of online gambling in the United States is inevitable.
A news item in Examiner.com states that business analysts at Goldman Sachs have issued a note to investors predicting that the United States will legalize and regulate its online gambling industry. Though Goldman Sachs sees merits in Frank's bill, they say, "We believe it is logical to assume that the US market will eventually regulate, given the potential implications for US tax take, if nothing else."
Goldman Sachs has made some estimates of the online poker market, which excludes the online casino market and also other forms of online gambling. According to their estimates the US poker market was worth $1.5 billion in 2008. Goldman Sachs opine that once the market is legalized it would grow substantially because potential players who are currently staying away would enter. Assuming a 30 percent penetration of offline poker players and $300 gross gaming revenue (GGR) per player their estimate of a legal poker market is $3 billion a year. These are conservative estimates. On the more liberal side the offline penetration could be 45 percent and GGR per player could be $400. This would double the poker market to $6 billion. Goldman Sachs has also made estimates for the online casino market and found it to be of a similar scale.
However the question of when this would happen remains unanswered. In any event discussion on Frank's bill has been deferred till at least September. According to the predictions made by Goldman Sachs, some of the states will in the mean time legalize online gambling. Florida and California have already moved ahead. This could compel other states to follow suit and thus put pressure on the federal legislators.
Mitch Garber also expressed similar sentiments. Garber is currently managing the new online gambling division of Harrah's Entertainment. He was earlier with PartyGaming. He said in an interview to EGR, "I'm very confident that legislators will see that this is an industry that can be properly regulated, and that the technology exists to alleviate concerns about money laundering or age verification."
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