Online Casino Action Attract U.S. Land Casinos

Published: Wednesday, May 24, 2006 Online-Casinos.com

LURE OF ONLINE CASINO ACTION CONTINUES TO ATTRACT U.S. LAND CASINO INTEREST

AGA white paper and further land industry comment keeps the media interested

The intense mainstream press interest in U.S. land casino ambitions toward Internet gambling possibilities continued today with Reuters and other wire service reports examining the situation.

Earlier, comments by the AGA and by major U.S. land casino companies suggested a growing interest in gaining access to the growing universe of gamblers, although companies emphasised that they are not losing customers to 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, claiming that it is illegal for U.S. companies to offer online gambling.

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. 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."

MGM Mirage launched an Internet gambling site branded 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.

"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 non-gaming 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.

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 legalised in the United States in the next few years.

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.