American Gaming Association thaws on Internet Casinos

The question of whether to ban or regulate online gambling is one that has been hotly debated in America’s corridors of power for most of the last decade.

Now I’m not going to pretend to have any insight into US political process or the machinations of Washington’s power brokers…but at the risk of making uniformed generalizations, it seems to me that lobby groups seem to play a crucial role in the legislature.

And the bigger and more powerful the lobby group, the more likely their voice will be heard by lawmakers.

In the area of gambling, the American Gaming Association is about as big and powerful as you get, and a voice that must have considerable influence over laws with respect to gambling across the US.  So I imagine their opinion in the big online gambling debate is a very important one.

Getting warmer on the idea of regulated markets

For a good part of the last decade (up to at least 2008), it’s fair to say they weren’t too hot on the idea of a regulated online gambling market in the US.  And you can understand why. The AGA is basically the collective voice of US corporate terrestrial gambling giants.  It’s current board consists of the CEO’s of a who’s who of casino and gaming equipment producers – MGM Mirage, Harrahs, Aristocrat Technologies, Bally Technologies, International Game Technology, Boyd Gaming, Ameristar Casinos, Penn National Gaming etc.  These are the companies that have the most to lose if American gamblers stop traveling to Atlantic City, Vegas or other gambling venues and play online instead.

The AGA’s understandable fear of their market being cannibalized by internet casinos has seen their lobby efforts for most of the last decade fall on the side of ‘ban’ rather than ‘regulate’.  And with the passing of George Bush’s UIGEA in 2006 they got their wish.   Trouble is, fast forward 2010 and it is patently clear that the Unlawful Internet Gambling Enforcement Act has been far less effective in preventing Americans from gambling online than was originally hoped. According to the AGA, $5.9 billion was bet online by US residents in 2008 – a very healthy 25% of the estimated world market of $21 billion.

So it looks like the cannibalization’s happening anyway…which is no doubt one of the reasons the AGA is thawing on the idea of a regulated market instead.

The AGA’s CEO Frank Fahrenkopf Jr last week said of their changing attitude:

[Until 2008] “This is a topic our board has discussed many times…The board has been split three ways: those who were opposed, those who were in favor and those who were unsure…that left us pretty neutered.”

[Now] “The majority of our board now has a favorable stance on Internet gaming, as long as there is strong regulatory control…this stance allows the organization to be a player in what is ultimately decided.  But also, we’re not endorsing any of the bills now in the loop.”

If you can’t stop ’em, join’em

It’s interesting that the about face in AGA policy has coincided with a bunch of its members declaring their hands on clear and aggressive online ambitions.  In December last year Harrah’s launched its first online casino – Caesarscasino.com, and they are also leveraging the WSOP brand online throughout Europe.  International Game Technology have been making inroads into the online slots market under their WagerWorks brand, and Bally Technologies VP of Marketing, Dan Savage has told an online gambling publication they too are looking at going online.

Currently of course, Caesars online, Wagerworks and anything Bally come up with will not be available to American players.  Whether they ever will is still anyone’s guess.  Interestingly the AGA, while now pro-regulation, is still not throwing its weight behind the UIGEA-repealing bills of Barney Frank and Robert Menendez.  So the legislative solution that finally sees US players able to gamble with quality operators online may still be a long way off.

To read more about the present online gambling legal situation, visit our legal issues page.