Whilst online gambling continues to see its stock rise across the globe, the United States remains conspicuous by its absence from this flourishing industry. As large, internet-based gaming businesses from Great Britain and Europe continue to expand every year, the USA trails behind the rest of the world in exploiting this thriving market.?
Image courtesy of?jon smith., Flickr
The reasons for the lack of US-based competitors are difficult to explain, and become all the more puzzling as time passes and profit margins increase. The American economy prides itself on its freedom and entrepreneurial spirit. So it would seem intuitive that a combination of traditional gaming and modern technology would be a major component of the US economy. Why, then, is the gaming industry confounded by legal issues and regulations in the United States?
American Gaming: A Victim of its Own History
Gaming in America is a victim of its own history. Throughout the twentieth century, gambling enterprises were suppressed for reasons as diverse as taxation and crime. As authorities struggled to solve one immediate crisis, they regulated the industry and restricted its activities as part of a ?quick fix? strategy. What remains of this legislation today is a legal framework which makes all forms of internet gaming all but illegal under federal law.
The two most common explanations for this legislation have always been tax avoidance and crime. It is considered very difficult to calculate and collect taxes from online gaming businesses and, indeed, much of the UK industry would support this claim. William Hill, Ladbrokes and Paddy Power all direct online traffic to overseas territories to avoid taxation.
Secondly, the perceived connection with organized crime is another obstacle to overcome. From money laundering to the many famous cases of point shaving and match fixing associated with American sports betting, the industry in the USA has something of a tarnished reputation.
Image courtesy of?banspy, Flickr
Into the Present: Online Gaming in the USA
Online gaming, however, is by its nature a new industry. It is untroubled by any large scale scandals or legal matters, and its status as a legitimate enterprise is still being contested in the States. The world?s first online poker site was indeed an America company. Planet Poker was launched way back in the year 2000; its competitor Paradise Poker was valued at $340M when it was acquired by Sportingbet in 2004.
However, since October 13th 2006 it has been illegal for American banks to receive the proceeds of online casinos: essentially preventing any online casino from surviving as a viable enterprise. Whether this law was passed because politicians saw gambling as a form of regressive taxation, or because powerful lobbyists representing the existing gaming enterprises of Las Vegas and Atlantic City is unclear. But it should be noted that, in recent years, the federal government has shown signs of reversing this stance on internet betting.
As recently as December 23rd 2011, the Justice Department ruled that lottery tickets could be sold legally over the internet. This ruling clarified the legal interpretation of the 1961 Wire Act: the legislation which had until that point been used to prevent online gambling. This most recent development would offer the best indication yet that the United States government may relax its position on internet gaming. Many individual states ? including New York and Illinois ? have been instrumental in pressing for a relaxation, as they believe the gaming industry will provide a rich, new source of income for state budgets.
Image courtesy of?fdecomite, Flickr
Place Your Bets: What the Future May Bring
There is no such thing as a sure bet. However, online gaming seems likely to continue to grow worldwide for many years to come. The market leaders are already expanding into new territories, and they cultivate ever-higher returns. At the same time, internal pressures from individual states would appear to put the impetus within the USA on the side of the online games players. Internet gambling is an industry with an estimated value of more than $30bn annually. And, as interest grows, so too do the chances that laws will be relaxed, and that online gaming will return to the USA.
This article has been created on behalf of Feel Good Games, providers of online games including card games, Bejeweled and others.
Source: http://dangerouslee.biz/2012/08/20/why-is-online-gambling-illegal-in-the-us/
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