The following article is a guest contributed piece from Brett Chatz a writer from InterTrader.com.
The USA put in place a series of laws that made it illegal to gamble online or to transfer funds from American banking institutions to online casino/gambling companies. First, the Wire Act of 1961 prohibited specific betting operations within the United States. Then in 2006, the UIGEA (Unlawful Internet Gambling Enforcement Act) expressly forbade online gambling within American cyberspace.
This was an addition to the SAFE Port Act. Combined, the landscape was not conducive to online gambling activity. This was made apparent when Black Friday hit, when PokerStars and other ranking online gambling companies were shut down and seized by the Department of Justice in 2011.
New Legislation Paves the Way for Online Gambling Regulation
The about turn in the regulations surrounding online gambling has been met with a great deal of optimism by 3 states. These include Delaware, Nevada and New Jersey. The first state to legalize online poker was Nevada, with New Jersey following hot on the heels. The legislation that has been enacted will become effective on November 26, 2013 at 9 AM. It essentially allows residents of New Jersey to enjoy online gambling from any of the 12 regulated, registered and officially sanctioned casinos in the state. It’s important to point out that residents of New Jersey, and only residents, will be allowed to gamble from the aforementioned date. A soft play session will open up to select New Jersey residents on 21 November 2013. During this time the casinos will evaluate the effectiveness of the geographic IP gambling mechanisms as well as iron out any gremlins in the system. New Jersey is the third such state in the USA to offer legalized online gambling within its geographic borders.
Massive Economic Incentive
The online gambling industry is estimated to be worth billions of dollars in annual revenue, and land-based casinos in the Garden State are looking to partner up with leading online casinos to roll out their games to a massive local audience. New Jersey has been particularly hard-hit by the economic crisis, which began for Atlantic City way before the 2008 economic downturn. The reported revenue for the casinos in Atlantic City reflected a drop from $5.2 billion in 2006 to just over $3 billion in 2012. The plummeting revenues have had a dramatic effect on calls for the easing of online gambling legislation to help boost much-needed state revenue. Atlantic City has been enjoying a resurgence in popularity owing to a national campaign to promote Atlantic City to American tourists. Governor Christie has been on an all-out charm offensive to promote New Jersey over Nevada. Atlantic City is widely touted to be a better option than Las Vegas for tourists on the East Coast.
Partnerships with Online Gaming Giants in Place
To date, 9 of Atlantic City’s 12 casinos have set up partnerships with Internet gambling companies. The Golden Nugget will be using Bally Technology to roll out a unique online gaming service. The Tropicana Casino/Resort has teamed up with Gamesys Ltd, Resorts Casino Hotel is going with PokerStars, and the Borgata Hotel Casino has partnered up with bwin.party, Harrah’s Resorts A.C., Bally’s Atlantic City, Caesars Atlantic City and the Showboat Casino have teamed up with 888 Holdings plc. The Trump Plaza is going with Betfair and the TajMahal Resort is going with Ultimate Gaming. Revel Casino Hotel and The Atlantic Club Casino Hotel have yet to the reveal their plans.
New Jersey sees online gambling as an effective means of generating much-needed revenue. It is estimated that Americans gambled some $2.6 billion with foreign online casinos. The problem with this is that none of it taxable. New Jersey Governor Chris Christie believes that during the first year of legalized online gambling within the state, revenues in excess of $180 million can be generated. However, this figure may be somewhat inflated, with other analysts pegging the figure at $35 million during 2013/2014. Christie and his administration truly believe that the state is on the cusp of a massive breakthrough. Further, the gambling law in the state of Nevada is very restrictive and only allows for poker gambling, which will see just $3 million in additional tax revenues. Delaware has its own challenges, and its small population size means that state revenues will be limited to between $3 million and $4 million. New Jersey is the big one in terms of sheer population, and massive potential tax revenues from online gambling.
Investors Seek to Diversify their Portfolios
From the time that Black Friday hit in 2011, many online gambling companies with US operations took a big hit. Share prices plummeted and investors lost hundreds of millions of dollars. As liberalization of online gambling legislation continues to take place, so these investors and their backers are flooding back into the US online gaming market. But this time they’re doing it under a cloak of immunity – that of legalized online gambling. Share prices of the major online software gaming companies such as 888 Holdings, Betfair, bwin and other operators with partnerships in place are set to soar as November 26 approaches. New partnerships mean greater employment prospects, with many more deals in place to further develop regulated online gambling. New Jersey is the biggest of the three regulated online gambling markets. Investors seeking a diversified portfolio are now considering online gambling stocks as a viable alternative, given the huge potential in store.
About The Author:
Brett Chatz attended the internationally accredited University of South Africa, where he completed the prestigious Bachelor of Commerce degree. He is currently writing for InterTrader.com – Leading Spreadbetting and CFD trading provider.