Internet Gaming Poses New Challenges to Casinos

Congress passed the Unlawful Internet Gambling Enforcement Act (UIGEA) in 2006 which pretty much shut down internet bingo and gambling in the United States Several UK based internet bingo providers withdrew from the US markets leaving players at the mercy of unregulated offshore casinos. The ‘black Friday’ arrests in 2001 put a further damper on internet gaming activities in the United States. Last September the Department of Justice reversed its interpretation of the 1961 wire act. The decision has opened the door for states to enter the internet gaming business.

The restart of online gaming in the US will face many challenges and will not be immediate. Although many states are going ahead with plans to offer internet gaming no regulatory framework has been established. Many operators would prefer one set of federal regulations rather than a hodge podge of many different state regulations. Many of the regulations will require technological solutions to ensure compliance. At the present time most banks and credit card companies will decline any transaction related to internet bingo and gambling. There have even been a few cases of banks denying loans to people that gamble online. Visa and MasterCard have programs in place that allow legal gambling transactions such as horse racing and state lotteries.

State regulations could create more challenges for online gaming operators and players. For example Nevada current standards could make it difficult for players to withdraw their winnings. Nevada’s rules require that withdrawals from player’s gaming accounts to their bank accounts require the bank to verify that the name on both accounts match. Currently this can only be done by manual means such as phone calls and faxes before any funds may be deposited in the player’s account. Currently it is not possible to transfer funds electronically in Nevada and other states are sure to run into similar challenges.

Competing for players will be challenging for land based casinos that want to enter the internet gambling market. The average age of most internet gamblers is about 30 as opposed to the casino average of 50. The players are different at internet bingo sites and casinos and gaming companies must tailor their games to appeal to their player base. To be a winner in the internet gaming sector new marketing skills will be required. Once internet gaming is legalized it will be months before the sites are online.