Over a decade ago, the Department of Justice (DOJ) decriminalized online gambling and paved the way for legal sports betting and casino games on the Internet.
However, it still took nearly nine years and a Supreme Court decision for states to pass new bills and hand out licenses to online gambling operators.
Today, several states allow their citizens to legally engage in online gambling, including New Jersey, Pennsylvania, Michigan, and West Virginia. It’s early days, though, and the United States would be well advised to look at other regulated gambling markets to learn what to do and avoid.
Several Unique Casino Brands Under One License
Back in the day, it was the norm for gambling firms to run their online casinos through various companies. It was a way to diversify risk, and tax reasons surely also played a role.
When you look at regulated markets like the UK, it becomes apparent that this has changed to the contrary. Large gambling firms now operate several, often a dozen, brands under the same license. Since they are all related, those different websites are referred to as sister sites.
As for why companies do the opposite today than in the past, it’s quite simple. Operators need to meet very strict guidelines to obtain a license in a regulated market, and breaking only one of the rules can result in losing said permit. Applying for several licenses and maintaining a good standing becomes an administrative nightmare that most operating firms prefer to avoid.
For legalized market governments, such development is desired and should be encouraged. It keeps the market safe and easier to manage, and they will have to allocate fewer compliance resources.
Overregulation Favors the Black Market
But if there is one thing that the US should really pay attention to, it’s what happens when governments and commissions overregulate a market.
We all agree that legalizing online gambling is the right thing to do. Ultimately, when people want to play, they will find a way, and it’s preferable to do so in a safe and regulated environment than at Wild West casinos. When rules and restrictions become too tight, however, a market quickly finds itself in a position worse than before.
Over the past four years, the Gambling Commission in the United Kingdom introduced various restrictions to online betting and casino games, including a complete credit card ban, high barriers to free spin offers, the removal of the auto-play feature, maximum betting amounts, and so forth. As a result, the black market is again rising sharply across the European island.
For instance, a report by the consulting firm PwC stated that last year, about 200,000 people spent over £1.4bn on black market casino sites, and stricter regulations – which are expected later this year – will drive that number further up.
Although MPs and the Gambling Commission’s chief executive quickly denied those numbers and referred to it as a “dodgy dossier”, it’s clear that what happens here is a clash of interests.
The GC wants stricter rules, but gambling operators don’t. Giving the Commission the benefit of the doubt and admitting that the report is exaggerated by 30%, we would still be looking at nearly £1bn that is wagered outside the regulated casino and betting websites.
In the UK, there might be no easy fix for two stubborn parties – gambling firms and the government – but the US should follow the development closely and ensure not to repeat the same mistake.
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