By Reuters
Story last modified Tue May 23 06:02:07 PDT 2006
U.S. casinos wish they had access to the growing universe of gamblers that seem intent on placing bets online, but companies claim they are not losing customers to the foreign operators that offer Web wagering.
"It represents an enormous opportunity," said Alan Feldman, spokesman for U.S.-based MGM Mirage, the world's second-largest gaming operator. "And it is an opportunity that is being completely handed to foreign companies right now."
Standing in the way of this potential windfall is a 1961 federal law that forbids interstate telephone betting that the U.S. Justice Department has said also applies to the Internet, making it illegal for U.S. companies to offer online gambling.
But the law is difficult to enforce on operators based abroad, who are luring a growing number of American gamblers to their Web sites, even as some U.S. lawmakers renew attempts to snuff out the business.
Worldwide revenue from online gambling increased to about $12 billion last year from $3.1 billion in 2001 and is expected to hit $24.5 billion by 2010, according to estimates from Christiansen Capital Advisors, an industry consulting group. U.S. residents now make up about half of that market.
The number of Americans who placed bets on the Web doubled in 2005 to about 4 percent of the adult population, or about 8 million people, according to a survey by the American Gaming Association, an industry group that represents U.S. casinos and related companies.
"It is a new place for people to gamble," said Eugene Christiansen, a consultant with Christiansen Capital. "These are big businesses."
Several online gambling companies now rival traditional casinos in market value. The world's biggest online gaming group, PartyGaming, is valued at $10.6 billion and reported $978 million in sales in 2005. Harrah's Entertainment, the world's top gaming company, is valued at $14.6 billion, with revenue of $7.1 billion last year.
Missed opportunity
MGM Mirage launched PlayMGMMirage.com in 2001, but shut the Web site down in 2003, as it was not allowed to serve U.S. residents. "There is no business if you keep out everyone from the United States," Feldman said.
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"Some of our companies would think of it as a missed opportunity," AGA Chief Executive Frank Fahrenkopf said. "Most of our companies view Internet gambling as possibly another profit center."
Companies such as MGM Mirage and Harrah's Entertainment would almost certainly start Web sites if Internet gambling were legalized in the United States, Fahrenkopf said.
Still, he added that U.S. gaming companies did not see Internet gambling as a threat to their business, as more than half of their revenue now comes from nongaming activities that could not be replicated online.
Internet gambling may instead help expand the market in the United States. The AGA survey showed that people who wagered online were more likely to live far from casinos.
"Online gaming is probably ... finding a different customer base," Calyon Securities' analyst Smedes Rose said. "Longer-term implication could be that you develop more people who want to gamble."
But one expert said companies would feel the pinch in the long run if they were kept away from cyberspace.
The "long-term implication is that part of your consumer base is going to walk away from you," Christiansen said.
Regulation vs. prohibition
U.S. companies represented by the AGA, which until recently opposed the activity, are now calling for a Congressional study into its impact. Some foreign online gambling companies are kicking off their own campaigns, too, hoping to see online gambling legalized in the United States in the next few years.
But at the same time, bills recently introduced in the U.S. Congress propose a complete ban on Internet gambling as well as the use of credit cards and other electronic means to pay for online wagers.
Experts said they did not expect a definitive outcome either way in the near future, though the debate could ultimately lead to a compromise that limits access and increases regulation of online gaming.
"I would not be surprised if there were some compromise passed within the next two Congresses," said Harold Krent, dean of the Chicago-Kent College of Law.
Story Copyright © 2006 Reuters Limited. All rights reserved.
Copyright ©1995-2006 CNET Networks, Inc. All rights reserved.
Story last modified Tue May 23 06:02:07 PDT 2006
U.S. casinos wish they had access to the growing universe of gamblers that seem intent on placing bets online, but companies claim they are not losing customers to the foreign operators that offer Web wagering.
"It represents an enormous opportunity," said Alan Feldman, spokesman for U.S.-based MGM Mirage, the world's second-largest gaming operator. "And it is an opportunity that is being completely handed to foreign companies right now."
Standing in the way of this potential windfall is a 1961 federal law that forbids interstate telephone betting that the U.S. Justice Department has said also applies to the Internet, making it illegal for U.S. companies to offer online gambling.
But the law is difficult to enforce on operators based abroad, who are luring a growing number of American gamblers to their Web sites, even as some U.S. lawmakers renew attempts to snuff out the business.
Worldwide revenue from online gambling increased to about $12 billion last year from $3.1 billion in 2001 and is expected to hit $24.5 billion by 2010, according to estimates from Christiansen Capital Advisors, an industry consulting group. U.S. residents now make up about half of that market.
The number of Americans who placed bets on the Web doubled in 2005 to about 4 percent of the adult population, or about 8 million people, according to a survey by the American Gaming Association, an industry group that represents U.S. casinos and related companies.
"It is a new place for people to gamble," said Eugene Christiansen, a consultant with Christiansen Capital. "These are big businesses."
Several online gambling companies now rival traditional casinos in market value. The world's biggest online gaming group, PartyGaming, is valued at $10.6 billion and reported $978 million in sales in 2005. Harrah's Entertainment, the world's top gaming company, is valued at $14.6 billion, with revenue of $7.1 billion last year.
Missed opportunity
MGM Mirage launched PlayMGMMirage.com in 2001, but shut the Web site down in 2003, as it was not allowed to serve U.S. residents. "There is no business if you keep out everyone from the United States," Feldman said.
In other news:
TV advertising's DVR challenge
Clash of the Lego masters
Newsmaker: Superweeds, air caves and the future of energy
News.com Extra: Fill 'er up with hydrogen fuel balls
Video: Assessing the MacBook Pro
"Some of our companies would think of it as a missed opportunity," AGA Chief Executive Frank Fahrenkopf said. "Most of our companies view Internet gambling as possibly another profit center."
Companies such as MGM Mirage and Harrah's Entertainment would almost certainly start Web sites if Internet gambling were legalized in the United States, Fahrenkopf said.
Still, he added that U.S. gaming companies did not see Internet gambling as a threat to their business, as more than half of their revenue now comes from nongaming activities that could not be replicated online.
Internet gambling may instead help expand the market in the United States. The AGA survey showed that people who wagered online were more likely to live far from casinos.
"Online gaming is probably ... finding a different customer base," Calyon Securities' analyst Smedes Rose said. "Longer-term implication could be that you develop more people who want to gamble."
But one expert said companies would feel the pinch in the long run if they were kept away from cyberspace.
The "long-term implication is that part of your consumer base is going to walk away from you," Christiansen said.
Regulation vs. prohibition
U.S. companies represented by the AGA, which until recently opposed the activity, are now calling for a Congressional study into its impact. Some foreign online gambling companies are kicking off their own campaigns, too, hoping to see online gambling legalized in the United States in the next few years.
But at the same time, bills recently introduced in the U.S. Congress propose a complete ban on Internet gambling as well as the use of credit cards and other electronic means to pay for online wagers.
Experts said they did not expect a definitive outcome either way in the near future, though the debate could ultimately lead to a compromise that limits access and increases regulation of online gaming.
"I would not be surprised if there were some compromise passed within the next two Congresses," said Harold Krent, dean of the Chicago-Kent College of Law.
Story Copyright © 2006 Reuters Limited. All rights reserved.
Copyright ©1995-2006 CNET Networks, Inc. All rights reserved.