Tech Companies Poised to Move as Online Gambling Makes Inroads

By From And Wire Reports | St Louis Post-Dispatch (MO), March 17, 2013 | Go to article overview

Tech Companies Poised to Move as Online Gambling Makes Inroads


From And Wire Reports, St Louis Post-Dispatch (MO)


It used to be you had to go all the way to Las Vegas to play the slots. But soon, you may be able to gamble on your smartphone.

Thanks to improvements in technology, a change in federal rules and shifting political calculations, a push to legalize online and mobile gambling is picking up steam. Three states already have moved to allow it, and tech companies, including San Francisco-based social gaming giant Zynga, are rushing to cash in.

"It's inevitable that this spreads pretty quickly," said Doug Walker, who studies casino gambling as a professor of economics at the College of Charleston in South Carolina.

Yet, online gambling may be a tough sell for Missouri, Illinois and other states in the Midwest, where gambling and technology are approached more cautiously.

Iowa just dropped a proposal for Internet gambling, said Joseph Kelly, a business professor at the Buffalo State, State University of New York, who specializes in legal aspects of online gambling.

And although it is under consideration in Illinois, adoption is a long shot, he added.

"I haven't come across anyone who said Missouri is going to do anything but continue with their riverboat casinos," Kelly said.

In fact, change to state gaming law would require a voter- approved constitutional amendment, said Roger Stottlemyre, executive director of the Missouri Gaming Commission.

Last month, the governors of New Jersey and Nevada signed laws to legalize online gambling in their states. And earlier this year, Delaware, which legalized online gambling last summer, solicited bids from companies to run the service that will oversee online gambling there.

The Star-Ledger reported earlier this month that New Jersey could have online gambling up and running by Dec. 25, if not sooner.

Similar legalization proposals are being promoted in numerous other states, many of which are searching for new revenue to replace tax dollars wiped out by the Great Recession.

It's not just cash-strapped state governments that see a potential jackpot in online gambling. Casino operators and Silicon Valley tech firms are also pushing for legalization. Zynga, for example, is already moving to offer online gambling in the United Kingdom and Nevada.

Legalization proponents argue that many consumers already gamble online through offshore sites. By legalizing the activity, they say, states can tax and regulate it and U.S. companies can benefit.

But gambling opponents, consumer advocates and addiction researchers warn of potentially dire consequences. They say the gaming industry will use techniques perfected in online advertising and marketing to target vulnerable consumers, leading to a spike in problem gambling and, more broadly, a rise in income inequality.

"This is the most predatory business in the country," said Les Bernal, national director of Stop Predatory Gambling, a nonprofit group opposed to commercial and state-sponsored gambling. "They're about creating new players and getting them to be out of control."

Until little more than a year ago, much of the discussion about online gambling in the political realm was about banning it. But in late 2011, the U.S. Department of Justice revised its interpretation of the Federal Wire Act, a law designed to combat organized crime. …

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