WOW…now there’s a bold statement: Las Vegas and Macau potentially suffering because of online casinos? Maybe we should walk that one back a bit: don’t forget, Las Vegas is still open for business, even in this tough economy, and they’re doing almost anything to get players through the door. Macau is in better shape compared to Vegas. The recent opening of the Venetian in Macau was the climax of a huge undertaking of construction and planning, and gamblers from China and other regional nations are flocking to this casino in high numbers. For what it’s worth, even Steve Wynn has planted his foot firmly in the East’s capital of gaming, opening a slightly scaled down version of “The Wynn” Las Vegas hotel and casino.

In reality, it’s hard to actually measure how much business is lost or gained by Vegas against online casinos. For one, online casinos don’t really operate in a physical location: yes, they do have offices setup in major online gaming jurisdictions like Costa Rica, Cyprus, Malta, and England; but their presence is essentially in cyberspace. That means they’re highly accessible and much less expensive compared to a Las Vegas gambling junket. As a result, some online casinos are reporting growth during this spotty economy, but most likely because people can’t afford to buy airline tickets and take lavish vacations to major international gaming centers.

Does this mean online casinos are the future of gambling? Not quite. While it’s true that online casinos offer as many games as any brick and mortar operation, it’s the amenities and side shows that keep Vegas far ahead of the online casino crowd. Unlike an online casino, Vegas has shows, entertainment, hotel rooms, conference centers, and great shopping destinations. What’s more, Vegas can hand out some of these items on a complimentary basis, therefore attracting people to the city who will most likely lose a few bucks at the tables and slot machines while they take in a concert or conference event. Meanwhile, perks for online casinos have remained relatively unchanged in recent years: small cash prize promotions, bonus offers, and drawings for Caribbean Vacations are still the normal offerings for players interested in more than just spinning the one armed bandits on their computers.

For what it’s worth, there have been some rumors that Harrah’s, one of the world’s largest casino operators, is poised at the gate to jump into the online casino industry. The only thing holding them back are legal issues in the United States (ie Unlawful Internet Gambling Enforcement Act), and a somewhat inexperienced view of how online casinos work. If Harrah’s, Steve Wynn, or the MGM ever got involved with online gaming, however, many offshore casinos would go out of business. These giants have tons of advertising money at their disposal, and the profit margin for online casinos is much higher than their brick and mortar counterparts. Think about it: online casinos need a license, internet servers, marketing, and customer service staff; while land based casinos need all of these components PLUS huge hotels, vast gaming floors, theaters, and large budgets for the employees that keep Vegas running 24/7.

Today is an interesting day in gambling: December 1, 2009 was the deadline imposed by the UIGEA for banks to comply with the new legislation. As far as we know, last ditch efforts by Barney Frank D-Massachusetts, a proponent of legalized online gaming, bore no fruit. For what it’s worth, banks aren’t too happy about this law either. Now, for the first time in history, they have to act not only as creditors, but also police officers (in essence) of where their funds go. UIEGA clearly makes it illegal for banks to process transactions that go to offshore gaming websites, but the banks are in an impossible position when it comes to actually making sure people don’t sneak through the cracks.

In the end, the long arm of the law can only curtail gambling by so much. If legislators want to get rid of online gaming (or even casino and horse racing betting, for that matter), they’re going to have to work on the demand side of the equation, not the supply side.

America’s thirst for gaming is huge: billions are spent each year at land based casinos and sportsbooks PLUS their offshore counterparts. So what is the future of online gaming? If you ask us, the future is setting up coherent law that regulates and taxes the industry, and also protects customers against fraud operations. If these measures can be imposed, many opponents to online gaming will see they light: it’s no different than land based casinos, and if anything, more profitable and taxable. Money talks and BS walks. Right now, the UIGEA’s Dec 1, 2009 deadline for bank compliance with this law is Bull Sh*t indeed. Time will only tell what comes of this, but we think the UIEGA will be history soon enough.


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