When the prospect of legal, US online gambling showed up under the Christmas tree back in 2011, operators and affiliates rejoiced. After all, the newly liberated American igaming market was supposed to mean piles of new players for everyone involved.
Well, that was then and this is now.
Since the DOJ unlocked the doors to America’s online poker rooms, state governments have been slow to open the new markets that would open those new revenue streams.
Even worse, players in states that did legalize (Nevada, New Jersey and Delaware) haven’t exactly been flocking to legal online poker rooms. In Nevada, the first licensed online poker site has already closed down due to lack of business.
So what’s going on? Why hasn’t US online gambling delivered on those sky-high expectations?
Even more important, will Americans ever embrace legal igaming the same way they’ve obviously embraced illegal online gambling?
Political Gridlock
The biggest hangup in the growth of US igaming is squarely in the hands of politicians and the established gaming interests they seem to favor. State governments are always looking for new revenue streams, and all but two states already have legal gambling.
Given the circumstances, you’d think state governments would piling on regulated igaming. But. as of this writing, only three states have made the move online.
While there’s little doubt that the rest of the states will jump on board someday, most states seem to be taking a wait-and-see approach actually making it happen.
Remember, the spread of legal, land-based casino gambling didn’t take off until legislators saw how much tax revenue gambling prohibition was costing them.
Unfortunately, the miniscule size of the current American online gambling market isn’t likely to reach that sort of critical mass anytime soon.
Between them, Nevada, New Jersey and Delaware have a combined population of just over 12 million. That’s just about 4% of the entire US population and that’s not enough to tip the scales in online gambling’s favor.
The Native Casino Question
In California, one of the largest and potentially disruptive American market (population 38.8 million) politicians are ready for regulated igaming, but the special interest groups they serve aren’t.
Native American gaming interests – especially the big tribes who already own successful land-based casinos – haven’t been keen on sharing the wealth. They’ve successfully shot down several internet gambling bills that would have allowed smaller tribes to compete in the online space.
Indian gaming issues wouldn’t be issues at all if the Federal government passed a comprehensive online gambling bill that governed the industry nationwide, but that’s another factor that’s not likely to happen any time soon.
The last U.S. Congress was the least productive in American history and the current Congress doesn’t seem primed to do much better. And without Federal intervention, Indian gaming issues are likely to hold up the spread of US online gambling.
Fool Me Once, Shame on You…
Before Black Friday, the American online poker business was booming and plenty of poker players made a respectable living on the virtual felt. All that changed in a heartbeat when the Feds shut down the industry.
Despite efforts to pay players back, most of them never saw the cash they lost on Black Friday ever again. Given these circumstances, it’s not surprising to see the new, regulated, online poker industry struggling.
PayPal’s late arrival to the market was another factor that’s slowed online gambling growth in the good old USA. Their absence left less experienced players choosing between established, but not particularly familiar, online payment processors like NetTeller. That’s definitely held back the market, especially when it comes to older players.
Finally
So what’s it going to take for US online gambling to reach critical mass?
Having a heavily populated state like California in the mix would definitely be a move in the right direction.
Not only would a high profile state like this be good publicity for the industry, it would increase the player pool and make interstate gaming compacts a much more attractive option for smaller states.
A comprehensive Federal online gambling bill would also break the logjam. After all, operators aren’t exactly thrilled at the prospect of navigating 50 different sets of gaming standards. (Again, given the current Congress’ total lack of competence, that prospect seems highly unlikely.)
Until something big happens, it seems like that the US online gambling industry will continue struggling.
Legal US online gambling has been anything but the big hit the gambling world (including CAP) thought it would be