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And now, the latest on the online gaming front

Rochester Business Journal
January 2, 2014

October’14 officially marks a year of legal online gambling in New Jersey, one of only 3 states in the USA to officially authorize online gambling played with real money. Out of these, interestingly, Nevada, aka king of casinos and every other form of gambling out there, is still permitted to host only online poker games. NJ has recognized the multi-billion-dollar potential in online gambling very early on, projecting annual state revenues from casino gambling to double to $436 million in 2014.

The Wire Act and US online gambling

The turning point of the greatest significance for existing and waiting-in-the-wings online gambling service-providers would have to be the 2011 Department of Justice clarification on the Wire Act. As per new provisions, it criminalizes and prohibits only sports betting amongst various forms of online gambling. The biggest gainers of this change in stance have been online lottery service providers catering to both state lotteries and popular multi-state multi-million jackpot boasters like Powerball and Mega Millions. Lottos have always enjoyed better reputation and have been viewed as more ‘positive’ state revenue-generators, with lesser public liability and more visible social returns, given that a fraction of the ticket-sales always go to some public work or charity. Since 2011, about 16 states (including early adopters Illinois, Georgia and Minnesota) have expressed interest in offering online lottery services and are in various different stages of achieving the same.

While broader online gambling players in the US have to patiently wait for further legislations and have to battle out partnership and fledgling marketplace issues, the going has been much smoother for online lottos. The difference is not difficult to figure out. Apart from a general perception of online gambling being a bigger liability for individuals (versus the limited and lower ticket prices of lotteries even in subscription form), there is the matter of the online gambling business being monopolized or partnered by the same private large casino and betting chains that operate in notorious gambling meccas like Las Vegas and Atlantic City - who are not exactly known for reliability. In NJ last September, Ultimate Gaming, the market’s 6th largest internet gambling operator, reportedly pulled out of Trump Taj Mahal, a venture its holds jointly with Trump Entertainment, accusing the latter of contract breaches. Ultimate

has not announced dates of its NJ shut-down yet, and while they are working the Division of Gaming Enforcement to ensure transparency of account settlements with customers, such disruptions definitely damage the credibility of the online gambling business. Trump has already closed another online gambling venture, the Trump Plaza, also NJ’s 5th largest, held jointly with international internet gaming Goliath Betfair. Then again, despite everything, the outlook for online gambling remains positive if marred by instability. In NJ alone, market leader Borgata Hotel Casino & Spa (partnered with alone made $30 million in online revenues over the last one year (Nov’13-Oct’14).

Europe leads the way

The online lottery business has been luckier in comparison. Not only is it successfully operating with the blessings of the state, its growth has also been less mired in controversy. It will not be surprising to see the US online lottery market opening up to the extent of doing away with the state-boundaries, allowing residents of other states to play different lotteries from the ease and convenience of their own homes and on the go through mobile apps. Physical boundaries are already of no consequence to internationally sought-after biggies Mega Millions and Powerball – which are, for the record, played in 43 states in the USA, in the District of Columbia and in the US Virgin Islands. Indeed, international lotto service providers like Lottoland, for instance, already offer ticketing services to these US lotteries alongside other major ones like Euromillions and the Spanish El Gordo. Such off-shore multi-lottery operators are yet to crop up in the USA. Lottoland, being based in Europe, faces no restrictive issues pertaining to legality of its online lottery operations, and makes it possible for any player from anywhere in the world to play featured games - subject to only the lottery-playing legal status of the player’s location. Many of these websites offer free tools to help lottery players like the "EM™ checker" which have not yet been adopted by US websites.

In an interesting trend for online gambling in the US, tech start-ups like Zynga and Betable have started to shape the market towards a more social gaming ‘with money’ orientation. Things will probably be less innovative for the ‘safer’ online lotto side of the business, but with more third-party technology companies partnering up with state lotteries to offer more than just online ticket sales and subscriptions, there will be much to look forward to - by way

of mobile apps and user interface. Until that time, those privileged enough to enjoy a simple game of online lotto from home in the US can probably try out European providers like Lottoland for richer experience and greater choice of games.

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