Online Gambling and the Economy: The Media Stimulus

Throughout these trying times, Gambling911.com will be highlighting ways in which a fully legalized online gambling industry can help to stimulate the U.S. economy.  The impact would be felt worldwide.  Most of today's European betting firms would love more than anything to crack the U.S. market.  Those that decided to leave following passage of the Unlawful Internet Gaming Enforcement Act (UIGEA) in October 2006 soon discovered much of their share value completely wiped out.  Companies the likes of PartyGaming, once the largest online poker room, lost more than 80 percent of their customer base and are yet to fully recover. 

To recap:  The UIGEA makes some forms of online gambling illegal, including poker, but only in regard to operating such enterprises.  It is NOT illegal to place bets online as part of the UIGEA.  In fact, long awaited policies pertaining to UIGEA only pertain to banks "knowingly allowing transactions to an online gambling establishment".  There is no stipulation related to actual payouts from such companies.  The Unlawful Internet Gaming Enforcement Act aims to place the onus of policing Internet gambling on the banks.  Because these financial institutions claimed the UIGEA was ineffective as an "unfunded mandate", the final draft of these regulations were severely watered down.  In the end, banks said there would be no way of differentiating between the so-called "good" online gambling activity and the "bad".

The UIGEA has essentially created more of a grey area than existed prior to this legislation passing as part of an unrelated Port Security Act, tacked on by the great Republican Senator out of Arizona Jon Kyl, who you might have recognized this past week complaining about President Obama's stimulus package and all its "pork". 

Gambling911.com believes that legalized online gambling, including sports betting and poker, can help greatly towards relieving the economy of some financial stress. 

We're far from alone.

Chairman of the House Financial Services Committee, Barney Frank, has included a repeal of the UIGEA as part of his agenda to fix the economy over the next six months. The Interactive Media Entertainment & Gaming Association (iMEGA.org), an industry trade organization that is challenging the Constitutionality of the UIGEA in a U.S. Appeals Court, is already looking into ways of managing what they believe will be a "regulated" online gambling industry.  A hearing in that matter is scheduled for April though iMEGA representatives think there is still a chance the U.S. Government will take the matter to a higher court with a loss.  Congressman Frank is not so sure.

In an interview with Senior International Correspondent, Jenny Woo, Mr. Frank suggested the new administration may want to move in a separate direction.

"I ...think with the Obama administration you wouldn't see these bad regulations," he said.

But the problem is these "bad regulations" are already in place and it is up to Mr. Frank, the members of iMEGA and others to help get this legislation repealed.

Among the industries hurt by the UIGEA, advertising firms and public relations agencies.

The months leading up to the UIGEA's passage, PR firms the likes of New York's 5W Public Relations handled press for a handful of the big names in online gambling.  PR icons the likes of Jamie Ashe once planned the biggest parties for the sector including Sportsbook.com's celebrity Super Bowl party three years ago in Los Angeles. 

"The (online gambling) industry at that time was spending millions of dollars on celebrity parties," explained Payton O'Brien, Senior Editor of Gambling911.com. 

In fact, some of the biggest parties had as their sponsors online sportsbooks and poker websites.

Who could forget the NBA All Star Weekend in Houston three years ago when the biggest bash in town was none other than the Alonzo Mourning Charity Pool Party?  That event, and a next day brunch was sponsored by BetUS.com.   Several of the MTV Video Music Awards parties - when the show was hosted in Miami - were co-sponsored by Bodog.com.

"PR firms and the media love Internet gambling at the time," says O'Brien.

They should...it was and still is a multi billion dollar industry with plenty of resources to throw around once the U.S. market opens up. 

"Right now the sector is pretty much in limbo where marketing is concerned," O'Brien says.  "You have a few of the big name online poker sites that still take U.S. customers advertising their .net sites and that's about it."

Certainly 5W Public Relations would welcome more online gambling firms into his stable.  After all, as Gambling911.com first reported last Monday, Super Bowl betting results were better than ever.  The sector is one of the few that has yet to be hit by the recession. 

For 5W founder and CEO, Ronn Torossian, the economy has forced him to work that much harder in order to maintain clients.   He writes in his blog:

"I am working harder than I have in quite a while.  I vowed a month or so ago not to leave my desk until 10PM at least twice every week.  Sacrifices have to be made; there's simply too much to be done and extra work is necessary. It's tiring, and there is no foreseeable end to this need for instant results.  Right now, it seems there's an inability for brands to look long term.  I think it's a year to grin and bear it.

"Today, a longtime client wrote to me describing a major, very unexpected business shift: "These are not normal times...when I pick up the paper to find out that Macy's is now cutting 7000 jobs and consolidating 4 divisions into one...In normal times I would be amazed...in these times I am not surprised."

"While the cream will rise to the top, certain people must be prepared to make less money during times such as these.  I know I will this year, and anyone with a sizeable agency who says otherwise is someone I'd call Pinocchio."

Or someone called "Lucky" perhaps.  Should the online poker and sports betting market open up in the U.S. (it won't be a ‘one or the other' scenario as some like the Poker Players Alliance would have people wrongly believing) Torossian and others like him will probably see an influx of business coming their way.

For now, Lotus Public Relations is one of the few PR firms still getting some business from the online gambling sector and that is only because they handle much of the press for PokerStars.

"There was a time when our email box would be flooded with PR from these companies," said O'Brien.  "Now it's just Lotus and a handful of others.  The companies Gambling911.com deals with have to make good with internally generated PR for the most part."