US re-entry just got a whole lot harder28th May 2012 10:18 am GMT
Two very significant news stories came out of the US last week. Firstly, the Obama administration seemed to hammer the final nail into the coffin of anyone’s hopes for a federal bill to regulate online gaming. The news of amendments to Illinois’ HB4148 bill looks less significant when taken in isolation but dig a little deeper and it reveals the full extent of politicians’ protectionist attitudes. This could be devastating for any i-gaming suppliers West of the Atlantic who are hoping to make a buck from the US. The Illinois legislation calls for the creation of a single internet gaming platform which, Senate President John Cullerton says would - get this - avoid “the pitfalls and inefficiencies of multiple vendors and platforms competing for known gamblers”. That is just about the best explanation for introducing a monopoly that this observer has heard yet. Illinois has been wrestling with the thorny topic of whether to introduce regular casinos for some time and has made little progress. So, the only form of legitimate gambling in the state is the Illinois Lottery. It has been rewarded with the sole franchise for internet gambling in the proposed legislation. And the amendment and accompanying words from Cullerton will be music to the ears of its key technology provider - GTECH. While GTECH has its critics, it also has a couple of things in its favour. Firstly, it is already licensed across the US. It has about 20 people whose sole job is getting these licences. Secondly, it has got out to the states and shown its face.That counts for a lot in the US and it’s something that many European suppliers have failed to do. Because, as a prominent lobbyist tells me: “Gambling is not a commercial proposition in the US (as it is in Europe), it is a political proposition.” I was speaking to an experienced regulator the other day who put it like this: “In the US, gambling is considered a privilege.” It is not an open market. You do not have a commercial right to offer gambling products. The government hands out licences for the privilege of offering gambling products. Because of the legacy of organised crime in the industry you must prove yourself squeaky clean to be worthy of that privilege. “The casino industry in the US is like a government-sponsored entity,” says our lobbyist. And as such, you need to be speaking to the most politically powerful gambling entities in each state. That might be the Lottery, it might be the Indian gaming interests, it might be land-based casinos. This should not be a shock to potential suppliers but for far too long there seems to have been this hope that Washington DC will come through and that a federal law will mean you don’t have to bother with all these state entities. Well, you will. Because you can bet your bottom dollar that Intralot and Sci Games will be knocking on the same doors as GTECH. And you can also bet that most powerful gambling interests will already know the likes of Aristocrat, Bally, IGT, ShuffleMaster and WMS, which finally got serious this week with the acquisition of Jadestone. What’s more, they’re already licensed almost everywhere that matters. The promised land is not looking very promising for anyone else right now.