Is the Internet gaming industry sinking a la Titanic?
By Donn Richard
May 2007
Singapore

A US crackdown is expected to take a big bite out of the global market for Internet gambling even as efforts to legalize and regulate online wagering in the US gather steam.

It is expected that the US market share of the worldwide online gaming industry to drop from around 45% in 2006 to around 25% in 2007 as a result of the latest US law and other actions. Worldwide revenues meanwhile, which have been on an upward trajectory since 1999, are likely to fall from $14.9 billion in 2006 to 13.8 billion in 2007. The online gaming industry is now concentrating on markets others than the US.

Arrests and prosecution of people involved in online gambling operations are not unique to the US - similar actions have taken place in other countries including France, China and Turkey. However the actions in the US has had a major impact.
In most countries it seems Internet gambling is illegal, but it's a question of how determined the authorities are to stamp it out.

The crackdown in the US has prompted many of the publicly traded and regulated gaming firms, many of which are registered in the UK, to halt US operations. UK online gambling website Sportingbet said it had sold its US operations. Yet people in the US are expected to continue to find ways to place bets online, through web sites based in places like Antigua, Costa Rica and elsewhere, analysts say.

"The Internet isn't going to go away, and its manifold reshaping of consumer behavior, including gambling behavior, isn't going to stop just because the American Congress passed a law" said Eugene Christiansen of Christiansen Capital Advisors. Christiansen estimated global online gaming revenues at $ 15.2 billion in 2006. For 2007, he sees a downward revision but has not yet come up with an estimate.

Some argue that US law is likely to drive the industry underground and has driven away the operators who followed the most socially responsible practices.

Backers of online gambling say the US would do well to follow the UK's example of regulating and taxing profits instead of prosecuting; they argue that technology is in place to prevent underage and compulsive gambling. They also argue that prohibiting people from gambling online is and uphill battle, and that just as prohibition failed to stop drinking, these drastic new measures against online gambling won't work. And that outside of paying taxes, governments shouldn't be telling people how to spend their money and... it is against individual freedom.