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Online Gambling, The Current State of Affairs

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Powerpoint presentation given spring 2012 during USC's graduate studies program, Online Communities and Social Networking

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Online Gambling, The Current State of Affairs

  1. 1. Agenda• 6 Disciplines• Global Market• Regulatory Confusion/Legislation (U.S.)• Black Friday• Pro’s & Con’s To Legalization• The Future• Factors For Success
  2. 2. Online Gambling: CategoriesSix Disciplines:1. Poker2. Casino Gaming3. Betting on Horse Races4. Betting on Other Sports, Such As Soccer and Baseball5. Online Bingo; and, Online LotteriesSource: http://www.pwc.com/gx/en/entertainment-media/publications/global-gaming-outlook.jhtml
  3. 3. Online Gambling: Global Market Jurisdictions
  4. 4. Online Gambling: Categories
  5. 5. Online Gambling: U.S. Regulatory Confusion• Regulation varies: at the federal and state levels. – Uncertainty exists because rules and regulations were created pre-Internet.Source: http://www.pwc.com/gx/en/entertainment-media/publications/global-gaming-outlook.jhtml
  6. 6. Interstate Wire Act: 1961 Outlaws the placing of sports bets over the telephone.Source: http://www.pwc.com/en_GX/gx/entertainment-media/publications/assets/pdf/global-gaming-outlook.pdf
  7. 7. Interpretations: Wire Act• Department of Justice: all forms of online gambling are illegal.• US Fifth Circuit Court of Appeals: applies only to sports betting and not other types of online gambling.• Supreme Court: has yet to rule as it relates to online gaming.Source: http://www.pwc.com/en_GX/gx/entertainment-media/publications/assets/pdf/global-gaming-outlook.pdf
  8. 8. Legislation: (UIGEA) of 2006Unlawful Internet Gambling Enforcement ActCame Fully Into Force In 2010 Illegal for banks and other institutions to transfer funds to offshore gaming sites in support of illegal online gamingDoes not:define illegal online gaming, does not apply toonline gaming that is conducted within theboundaries of a state or a tribe.Source:http://www.pwc.com/en_GX/gx/entertainment-media/publications/assets/pdf/global-gaming-outlook.pdf
  9. 9. Legislation: Senator Harry Reid2010:drafted a proposal into a tax bill to allowcasino companies to set up their own onlinepoker sites, exempt from UIGEA, for theircustomers to use.January 2011:Senate Republicans John Kyl and SpencerBachus blocked the bill.Source: http://www.pwc.com/en_GX/gx/entertainment-media/publications/assets/pdf/global-gaming-outlook.pdf
  10. 10. Online Gambling: Black FridayApril 15, 2011:US Department of Justice seized domains/bankaccounts of PokerStars, Full Tilt, Absolute Poker.However:U.S. consumers continued to comprise half ormore of world’s poker market—with privateoffshore operators.Source:http://www.pwc.com/en_GX/gx/entertainment-media/publications/assets/pdf/global-gaming-outlook.pdf
  11. 11. AGA: American Gaming AssociationSource: www.aga.com
  12. 12. Legalizing Online Gambling: Pro’s• Economy: stimulation through taxation. – A congressional report from November 2009 stated if regulated could generate $42 billion over 10 years.• New Job Creation: not only in gambling sector but other verticals too.• Safety: Americans who play can play safely with responsible, law-abiding operators.Source: http://www.businessinsider.com , http://www.wallstreetjournal.com
  13. 13. Legalizing Online Gambling: Con’s• Easy Access: – to computers will lead to gambling addiction and ease of minors to place bets.• Regulation: – legislation will be too heavily influenced by lobbyists.• Increase in Illegal Activity: – Cyber criminals target consumers and companies.Source:http://www.pwc.com/en_GX/gx/entertainment-media/publications/assets/pdf/global-gaming-outlook.pdf
  14. 14. 2012: Where Do We Stand?• June 10, 2011: – Nevada, Assembly Bill 258 passed the legislature and was signed by the governor and made effective. – Assembly Bill 258: prepares Nevada for the federal legalization of online gambling in the near future.Source:http://www.pwc.com/en_GX/gx/entertainment-media/publications/assets/pdf/global-gaming-outlook.pdf
  15. 15. 2012: Where Do We Stand?• Other States Following: – Massachusetts, California, Iowa and Florida are considering similar legislation.• 2012 PWC Global Gaming Report: – Overall, the message on the regulation of online gaming—especially poker— in the US is “watch this space.”Source:http://www.pwc.com/en_GX/gx/entertainment-media/publications/assets/pdf/global-gaming-outlook.pdf
  16. 16. Online Gambling: Taxation Methods• A tax on stakes: – levied directly on consumers when placing bets, tends to discourage consumers from participating.• Gross profit tax (GPT): – levied on operators’ winnings. *Most countries favor GPT option.Source:http://www.pwc.com/en_GX/gx/entertainment-media/publications/assets/pdf/global-gaming-outlook.pdf
  17. 17. Online Gambling: Legalized Countries• UK: – remains the largest online gaming market globally, having legalized it in 2005.• Italy: – introduced a licensing system that says sites must be licensed within Italy—uses filters to block Italians from accessing sites not licensed within the country. – Expected to overtake the UK as the largest legal online market.Source:http://www.pwc.com/en_GX/gx/entertainment-media/publications/assets/pdf/global-gaming-outlook.pdf
  18. 18. Online Gambling: Pro-Countries• Other Countries Moving Towards Legalization: – Greece – Germany – Spain – Iceland – Norway – Switzerland – Denmark – Belgium – Finland – AustraliaSource:http://www.pwc.com/en_GX/gx/entertainment-media/publications/assets/pdf/global-gaming-outlook.pdf
  19. 19. Online Gambling: Asia Pacific & Latin America• Philippines: – only country where online and mobile gaming is permitted, legalized in 2000 with PAGCOR as the sole operator.• Argentina and Chile: – only countries in Latin America where online and mobile gaming is permitted.Source:http://www.pwc.com/en_GX/gx/entertainment-media/publications/assets/pdf/global-gaming-outlook.pdf
  20. 20. The Future: What Can We Expect?• U.S: – tensions between intrastate regulation and the inherently location- independent nature of Internet services. – Smaller states will find it hard to sustain the growth of regulated services due to small player numbers, and subsequently, frustrated providers.Source:http://www.pwc.com/en_GX/gx/entertainment-media/publications/assets/pdf/global-gaming-outlook.pdf
  21. 21. The Future: What Can We Expect?• U.S: Online Poker Will Likely Be First In: – Next few years poker providers will be allowed to operate on an interstate basis in the U.S. This will likely lead to a legitimization of the market. – This regulatory change will represent a watershed for legalized cross-border online gaming, marking the start of a new era.Source:http://www.pwc.com/en_GX/gx/entertainment-media/publications/assets/pdf/global-gaming-outlook.pdf
  22. 22. Social Networking & Online Gambling: What Can We Expect?• Second Life laid the groundwork: – Pre 2007 they played host to hundreds of virtual casinos, lottery games, and other forms of gambling, using in-game currency that could be exchanged for real money.• Emergence of “Chiliconnect-like” sites: – enables players to share the results of their online poker games on social networks.Source:http://www.pwc.com/en_GX/gx/entertainment-media/publications/assets/pdf/global-gaming-outlook.pdf
  23. 23. Social Networking & Online Gambling: What Can We Expect?• Social networking sites: – key distribution platform for online gaming services, resulting partnerships between gaming brands and social networks.• Social Networking & Online Gambling: – Skill-based games and “fantasy” sports leagues.Source:http://www.pwc.com/en_GX/gx/entertainment-media/publications/assets/pdf/global-gaming-outlook.pdf
  24. 24. Social Networking & Online Gambling: What Can We Expect?• Mobile Usage: – especially significant, can seamlessly host web-based content making online gambling available anywhere.• New Hybrids: – Skill-based games and “fantasy” sports leagues.• Lotteries: – Continue to expand and grow online.Source:http://www.pwc.com/en_GX/gx/entertainment-media/publications/assets/pdf/global-gaming-outlook.pdf
  25. 25. Online gaming: complementary — not cannibalistic• Physical Casino Experience: – will continue to differentiate itself by enhancing the experience, therefor making online gambling an economic complement to off-line.Source:http://www.pwc.com/en_GX/gx/entertainment-media/publications/assets/pdf/global-gaming-outlook.pdf
  26. 26. Online Gaming: Key Success Factors• Providing A Unique Experience.• Understand Changing Needs & Behaviors of Consumer.• Keep Pushing The Limits of Technological Innovation.• Stay Flexible.Source:http://www.pwc.com/en_GX/gx/entertainment-media/publications/assets/pdf/global-gaming-outlook.pdf
  27. 27. Online Gambling: Future Possibilities• Mobile Casinos: – Integration of live casino games or games where players can compete against each other.
  28. 28. Online Gambling: Future Possibilities• Interactive Gambling: via TV• Gamification Companies: Move In

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