AGA’s stance against online gaming softened in light of internet gaming’s rapid growth

by Lou on May 9, 2006

According to a recent study by the American Gaming Association (AGA), an organization that represents casino companies and suppliers, the number of Americans who gamble online doubled to about four percent of the population last year.

Gambling revenue at U.S. casinos also rose five percent last year to a record $30.3 billion. Strong growth among brick and mortar casinos led AGA’s executive director Frank Fahrenkopf to state, “This is proof there is still room for growth.”

AGA, which had been opposed to online gaming, recently softened its stance, calling for a U.S. congressional study to evaluate gaming online.

“There are some in our industry who think the technology is there now to provide regulators the comfort that they want,” Fahrenkopf said, adding that, “The group has opposed legalization of Internet gambling in the past because regulators were opposed to it, and we’re the strongest supporters of tough regulation.

“But the technology has changed greatly, and now Great Britain is legalizing online gambling — and,” according to Fahrenkopf, “we’re saying that Congress ought to take a look at it.”

“A lot of the opponents have been saying that the people who gamble on the Internet are the ones who can least afford it,” he added. “But look at this survey. It shows they tend to be more educated and have more money than other people.”

The survey, conducted by Peter D. Hart Research Associates Inc., showed 41 percent had incomes of more than $75,000 a year, while only 12 percent had incomes of less than $35,000.

The fact that the AGA has softened its stance against online gaming is significant, especially when viewed in light of opposition to Rep Bob Goodlatte’s (R-VA) proposed legislation by the banking industry, which is wary of an unfunded mandate that would require bankers to provide close scrutiny over customer financial transactions.

It suggests to me that the armies lining up to oppose Rep. Goodlatte’s bill are daunting, and given the constraints of a relatively short legislative session, I believe his bill will fail. Moreover, now that the UK has legalized and is regulating online gaming — while reaping all the benefits that accrue through increased tax revenues, job creation, and capital formation — I think it likely that we’ll see online gaming legalized and regulated in the United States in the future.

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