Online Gambling Stalls, Social Gaming Growing

While online poker legislation remains tied up by red tape in congress several states are already licensing online gaming operators. The federal poker bill would make online poker legal but other forms of gambling like online bingo would remain illegal. Fortunately several states have said they will allow casino games and online bingo for residents. International Games Technology (IGT) does not expect much congressional action on the poker bill but IGT’s CEO said that a recently acquired social gaming firm could help the company jump start online betting operations is growing faster than expected.

So far Nevada and Delaware are the only states that have legalized online gambling. Nevada has already issued several online gaming licenses. Patti Hart, CEO of IGT stated “We don’t expect legislation in the U.S. to move significantly in the next 12 months.” Officials polled in an American Gaming Association survey believe the US online gaming market will grow to $10 billion or more during the next few years, up from $4 billion in unauthorized online gaming in 2011. Last January IGT acquired Double Down for $500 million. Double Down is one of the largest game providers on Facebook. Currently Double Down offers free online games and the company makes money by selling virtual gambling chips. Hart told reporters “(DoubleDown is) way ahead of plan, meaningfully contributing to revenue, EBITDA (earnings before interest, tax, depreciation and amortization), and cash flow in the company.”

Double Down generated revenue of $35.8 million during the fourth quarter that ended September 30, a 20% increase from third quarter revenues. Currently IGT does not believe that player numbers are significant. Hart stated “(IGT’s gaming license is) for people who reside in Nevada, so the pool of potential players is not significant enough.” The federal poker bill has been criticized for limiting the ability of states to regulate online gaming within their borders. MGM Resorts International Ltd CEO Jim Murren told the Reuters news agency that at least a dozen states were considering the creation of an intrastate gaming market. Hart told reporters “We’ve been slowed down by the legislative process, there’s no question about it. Our reaction was to find a way to extend a gaming experience to the public that is not really encumbered by the legislative process and that’s what we’ve done (with DoubleDown). The online gaming environment looks social for an extended period of time in the United States,”

Others in the gaming industry have expressed concerns that they will be dealing with several sets of regulations and licensing requirements. Some Native American tribes feel threatened by online gaming. Many hope the Obama administration will be sympathetic to the online gaming industry and will propose broader legislation that would legalize most forms of online gaming.


By Jeff Davis

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