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Online Gambling In The US: Ladbrokes, William Hill Likely To Lose Out

Written by:
C Costigan
Published on:
Sep/02/2010
online gambling

 

With the very real possibility that Congressman Barney Frank could lose his chairmanship position should the Republicans take over the House come November, online poker federal legislation must pass prior to Election Day or else there will likely be no “start over” time come 2011.  Ladbrokes, William Hill and other European sports betting ventures itching to get into the U.S. market still may be blocked since Frank’s legislation pertains only to online poker.

Enter the individual states.

At the forefront is New Jersey, which is looking to legalize online gambling across the board, with sports betting the key priority.  This is Ladbrokes and William Hill’s primary business.

California is another state looking to legalize both online poker and sports betting.  The push to make that happen comes from lobbyists and opposed to a specific industry trade organization such as The Interactive Media Entertainment & Gaming Association, which is currently the lead plaintiff in a suit against the U.S. Government filed by New Jersey that it hopes will ultimately make online sports betting and other forms of gambling legal in the state and bring billions of dollars to the local economy. 

What makes New Jersey so pivotal in the fight to legalize Internet gambling?

“New Jersey sits in the center of the most populous region in the US,” explains Joe Brennan, Jr., Founder of the Interactive Media Entertainment & Gaming Association, whose organization was responsible in preventing the Commonwealth of Kentucky from seizing some 141 online gambling-related domain names.  “It would represent the largest potential market those firms could have access to within the US, greater even than that which supplies Las Vegas, of which California is the greatest part.”

Compare the two markets:

 

The Las Vegas feeder market: 40.8 million

The New Jersey feeder market: 55.5 million

 

“It is also the most active in sports, with a greater density in franchises than elsewhere in the US,” Brennan, Jr. adds.

“If New Jersey were to add sports betting, it would likely have a cascade effect through Pennsylvania and New York. Existing operators should know what kind of opportunity that would create. It would be a quantum leap beyond their current revenue base. New Jersey is ‘the ball game’.

“We certainly appreciate Sen. Roderick Wright's efforts in California, but we have to be realistic. Unfortunately, it is not legally binding. What people should take from the activity in California - especially operators in Europe that may be interested in the US - is that there is a steady, sustained growth in support from state governments in the potential for regulated sports betting. There is no other gaming activity in the US with as much pent-up demand as sports betting. But at this point, the front in this battle is New Jersey. Everything else is a side show.”

European and other Internationally-based Web gambling firms could potentially join forces with the troubled Atlantic City casinos, all of which are currently looking for a competitive edge.

They would want in on the action, but it’s doubtful the Atlantic City casinos understand the complexities involved.

“They should recognize that you don't just cobble together some software, get a server and some processing and BANG you're in the Internet gambling business,” Brennan, Jr. points out.  “Just look at how poorly things went for British Columbia.”

Brennan made reference to the British Columbia government run online gambling website, PlayNow.com, which encountered a security breach affecting thousands of account holders. 

“Atlantic City can't afford to make that big of a mistake. So yes, they would likely partner with existing companies that can provide all of what's needed to succeed, including capital to invest, one thing that's in short supply in Atlantic City. What companies will get the opportunity? That remains to be seen. But everyone is going to want in if it happens.”

To date, Betfair.com appears to be the only European-based online gambling firm treading into New Jersey territory.  They have been meeting with state officials, Gambling911.com revealed this week.  That company has already gotten a foothold in the U.S. via horse racing (which is legal on the Web under the Unlawful Internet Gaming Enforcement Act of 2006). 

Betfair, along with all other Internet-based wagering businesses outside the United States, will have no other choice but to deal with iMEGA.org when it comes to New Jersey being that the trade organization is lead plaintiff.

So why the resistance?

Brennan Jr. surmises that a number of these companies are not yet ready to give up on federal efforts.

“(These) firms that have invested so much in lobbying for a Federal solution are reluctant to divert support from that effort to anything at the state level. Also, most European operators don't really understand what's going on in Washington DC. New Jersey must seem like a whole different planet. It's definitely a ‘full contact’ political environment, less collegial and tweedy than in DC.

“Anyway, I'm sure their representatives in DC are doing what lobbyists do: telling them ‘We're almost there. Just a little further. Just a bit more money.’ Because lobbying is a business, and i-gaming is a great customer.

“Let's put it this way. IMEGA has been working on this issue for more than four years now. I live 30 minutes from downtown Washington DC. If we thought it was going to happen with the Federal government, I wouldn't be commuting a couple hundred miles north to the state house in Trenton, New Jersey, to help with the effort there. I'd stay home and spend more time with my family. We're not cheer-leading against Federal legislation, far from it. I'd pay cash-money to see John Pappas taking a victory lap around Capitol Hill. We just don't think it's as likely as it may be on a state level. That's why we've placed our bet on New Jersey.”

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Christopher Costigan, Gambling911.com Publisher

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