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US State and Federal Governments Racing For Online Gaming Revenue

The battle to legalize online gambling has turned into a race between state and Federal government to see who will act first. Which companies win out, or can even participate at all, depends a lot on who is writing the regulations, so the stakes are sky high for players, businesses and investors.

Revenue Trumps Morals

Gamblers and gaming industry insiders can be forgiven for chuckling a bit at the Federal Government’s new found tolerance for online gaming. It seems as though the tight fiscal situation in Washington has trumped long held fears of moral decay and organized crime.

But a massive deficit and, the thought the states may move first, have made the folks in Washington D.C. whistle a different tune. It’s been estimated legal online poker could prop up Federal coffers by billions of dollars.
A national set of gambling laws would also be a real advantage for big gaming companies like Caesar’s and International Gaming Technology (IGT). These massive companies have been gearing up for legalization for months and could grab a big share of the national market in a hurry.

There’s no question that any gaming company that could quickly jump in the online poker market could see greatly enhanced revenues and plenty of love from investors.

States’ Rights

If Washington doesn’t act quickly; the Feds may lose out on all that cash to the equally revenue-starved state governments.

Already there are a number of states that are moving along rapidly with plans for their own version of legalized online gambling. Nevada will likely go first with some kind of online poker scheme, but others will likely follow. Already every state but Hawaii and Utah offer some sort of legalized gambling.

Should the states move first, the potential for a patchwork of varying regulations is a real possibility. State would also be more likely to tie online gaming to land based gaming and that could shut out some of the big players who don’t operate in placed like Deadwood, South Dakota.  If you think gaming regulations in the Euro Zone are complicated, you’d feel right at home in this scenario.

And when you start adding American Indian gaming interests into the equation, you’re looking at something really complicated.

Recommended reading: Unlawful Internet Gambling Enforcement Act of 2006 Fact Sheet

More Than Poker

Whether the states will push for more than just online poker is anybody’s guess, but keep an eye on New Jersey in this fight. Last year voters in that state approved a measure legalizing sports betting should it become legalized at the Federal level. That move was the first step in knocking down the Federal ban on states acting as bookmakers.

What it Means for Affiliates

Not much has been said about whether or not big American gaming companies will be offering affiliate programs, though there’s no reason to think that they wouldn’t. Caesar’s has teamed up with 888 and who have long run affiliate programs. Affiliate partners would probably be better off if the Feds moved first with a single, nationwide set of gaming regulations (again, look at the European model.)


No matter if it’s the government or the casinos, whoever comes out on top in this race will be rewarded with a huge revenue uptick. And if everything goes well, affiliates could benefit from that boom as well.

What scenario for legal online gaming do you think is best for the affiliate world? Let us know on our Online Gambling Laws and Regulations Forum.