US gambling states want global market

Nevada also passed a law legalising online gambling: casino companies in the state are pushing for a provision allowing for “international compacts” to be added to the law in the current legislative session, according to people familiar with the situation.

Agreements between US states and countries such as the UK – which has a regulated online gaming market – would be the first step towards a regulated global gaming industry which could transform the fortunes of operators on both sides of the Atlantic.

European online gaming operators have effectively been locked out of the US for the last seven years following a ban on electronic gambling transactions and a Department of Justice-led crackdown on internet poker companies. But “compacts” with individual states could be a way back in, given the absence of a new national law. The states want to raise new tax revenues at a time when many of them are struggling with vast deficits.

New Jersey, Nevada and Delaware have legalised online gaming, limiting play to residents of their individual states. Pennsylvania, California and Illinois are also exploring legalisation: the Illinois bill allows for the state, which has a population of 13 million, “to enter into agreements with other gaming entities, including foreign entities”.

Compacts between states and other countries would greatly expand the number of potential players and solve “the liquidity problem” caused by limiting play to residents of a particular state. “Liquidity in a state like Nevada is irrelevant unless you have compact capability,” said one Las Vegas-based casino operator, which is pushing for legalisation.

However, William Horne, the Nevada state representative who authored its gaming bill which was signed into law last month, sounded a cautionary note, saying the state had to recognise current US laws that limit online gaming. “We have to do it right,” he said.

The Nevada law currently allows for agreements between states, which will boost existing US operators and companies that are successful in applying for licences: 888 Holdings, a Gibraltar-based online gambling group, last week became the first international company to succeed in its application for a licence to operate in Nevada.

The group has a joint venture with Caesars Entertainment which has four casinos in Atlantic City, as well as several properties in Las Vegas.