With the passage of the American government’s Unlawful Internet Gambling Enforcement Act at the close of September 2006, the whole Internet gambling industry including poker rooms, online casinos, sports betting groups and the like, experienced a seismic change.
Before September 30th, experts believed U.S. residents were responsible for an estimated 50% of all bets placed over the net to what was said to be a yearly 12 billion dollar – and rising – industry. In literally a few hours afterwards, the industry lost some $5 billion in share values.
Deja Vu All Over Again
Online gaming proponents were quick to liken the U.S.’s anti-gambling campaign with that of prohibition on alcohol enacted in the 1920s and 30s, saying the attempt to forbid online betting in the USA, instead of regulating it, will lead, like prohibition did, to an underground industry operated by gangsters.
Where & How in the Here & Now
While the new laws do not target individual U.S.-based gamblers per se, it does control where and how they choose to spend their cash. And ‘where & how’ are exactly what online poker rooms, casinos and other gaming operators instantly turned their attentions to, and in turn, their basic business models.
Before the UIGEA was swiftly sneaked in and passed with the Safe Ports Act, numerous high-ranking execs were arrested in a number of airports throughout the States, in addition to France. BetonSports CEO David Carruthers was the first to be nabbed on Sunday July 16, 2006 in Dallas, Texas while switching flights on route to Costa Rica where he lives. Carruthers, a British subject, was held on a number of various racketeering-related charges.
At Kennedy Airport on September 7, 2006, less than two months after Carruthers’ arrest, New York and New Jersey Port Authority officials arrested Peter Dicks, chairman of leading sportsbook Sportingbet. Trading on the London market, Sportingbet was – until that time – among the biggest online gaming players around the globe. After Carruthers’ and Dicks’ arrests, the message being delivered by the feds was indeed very loud and very clear; the crackdown on the online gambling industry was well underway.
News of these and additional arrests sent other online casino and poker companies’ shares nose-diving in London. On October 2nd, 2006, only three days after Congress passed its anti-gaming legislation, shares of leading gambling companies PartyGaming, Sportingbet, and 888 Holdings went into a tailspin, knocking out seven billion dollars of market value. This clearly marked the beginning of the demise of the U.S. online gaming biz, as we knew it.
Ciao America, Buenos Dias Vietnam
Since that time, gambling firms of all types have been in a state of volatility. The publicly traded companies instantly packed up their American hopes and scurried for cover, as did many privately held gambling concerns of which operated out of offshore tax havens, such as Costa Rica, Antigua and Barbuda, Gibraltar, and Cyprus. As is the very nature of the gaming industry, many online casinos, poker rooms and sports betting businesses are more than willing to assume the risks inherent in filling this extremely lucrative vacuum by continuing to accept bets from U.S.-based players, as long as they can get away with it.
In large part, the industry has withdrawn from the American market and is redirecting its efforts towards Europe and Asia. And as such, to successfully compete in these new, multilingual markets, Internet gambling firms everywhere are translating their websites to accommodate their new patrons in languages other than American. And while the array of languages may be as assorted as Italian, Spanish, German, French, Chinese, Japanese, and Korean, one language every gambling enthusiast will certainly continue to understand is CA$H.