Does Britain Hold All the Cards in the Battle For Online Gaming?

by Lou on May 18, 2006

Is Britain becoming the new Las Vegas? New legislation enacted by Parliament will permit online poker and table games — games now offered by companies based primarily in developing nations or tax havens. Britain will be the first developed nation to legalize online gambling. They hope to lure online gaming providers to British soil along with the jobs and tax revenue they bring with them.

It’s a different story here in the States. Although Americans bet $145 billion over the Internet in 2005 — nearly half the total wagered worldwide — there is no online gaming business presence or tax revenue in the United States.
As Congress debates two new bills designed to close the door on American online gaming, firms located elsewhere and knocking on the door, hoping to gain entrance. Britain’s Sportingbet even ran ads in major U.S. newspapers asking the question, “Please, sir, can we pay tax?” Nigel Payne, Sportingbet’s CEO, estimates that online gaming in the U.S. would generate more than $1 billion in tax revenues. “If the U.S. regulates this industry,” Payne said, “we will set up there and gladly pay tax.”

Voluntary regulation is attractive to many online gaming providers, even when they can set up shop elsewhere with less regulation and substantially lower taxation simply because British regulation provides more credibility for investors and customers.

Currently valued at $12 billion, the Internet gaming industry will double in five years, according to Christiansen Capital Advisors. And Britain has lapped the field when it comes to regulating online gambling. Rather than burying their heads in the sand and pretending it can be banned as Congress seems bent on doing here in the States, the British government decided to regulate the industry, protect its citizens, and reap the rewards.

Business analysts and market experts believe that the U.S. will lose any chance of capitalizing on what is becoming one of the world’s fastest growing businesses if currently proposed legislation passes.

If this were a poker game, the United States appears to be holding a very weak hand with one card to come, while the Brits have the current nuts!

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