Online Gambling Prohibition Results in Offshore Gambling Boom

30 March 2007

Information Week
By Alice LaPlante

March 29, 2007 04:00 AM

Far from slowing its growth, a government crackdown on online gambling has sent many sites offshore, and many others underground. But it’s a good bet that Internet poker will remain a booming industry.

“…But not everyone was so easily spooked. A large numbers of online gambling companies chose to keep their casinos open. Although now operating illegally according to U.S. Justice Department rules, they’re reporting that business is pretty much as usual. Although there are fewer dollars overall, there are less gambling houses vying for those dollars, and the ones who agreed to talk concur that after a dip in the second half of 2006, revenues are already on their way back up.

“We were growing 300 percent last year, and although we lost some ground last summer, things have since rebounded, and we expect to be back up to our summer 2006 levels within the next month or so,” said a senior executive at one of the top online gambling sites that has chosen to still accept U.S. customers, who declined to be identified for fear of prosecution.

Another executive who asked for anonymity said that revenues had already shot past mid-2006 levels and showed no sign of abating. “U.S. citizens still want to gamble, and we intend to keep allowing them to,” he said. Indeed, a host of new online gambling establishments are expected to quickly fill the void left by the ones that decided to bow out.

“Some sites have no downward loss of patrons at all. Even those that have lost customers are still making money–more than last year. It’s a major blip, but still just a blip, and people will find ways of getting around it,” said I. Nelson Rose, a professor of law at Whittier Law School in Costa Mesa, California, an expert on online gaming laws, Joseph Kelly, a professor of business law at State University of New York (SUNY) College in Buffalo, and co-editor of the Gaming Law Review agreed: “This is just a hiccup.”

Along with many others, Kelly believes that online gambling will eventually be legal in the United States. “The panic created by the DOJ’s actions will eventually subside, new legislation will be passed, and we’ll see a regulated industry emerge,” Kelly said. When that will happen is anyone’s guess. But “the notion that you can put a definitive stop to online gambling is a ludicrous one,” he said.”


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