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A Look Inside Worldwide Online Gambling Hurdles

7 June 2014 by Devon Chappell

There have certainly been more than a handful of legal issues related to online gambling popping up all over the map in the US. But what are the real reasons for such a continued uphill battle, especially considering that the US Government has opened the door for states to regulate their own online gambling activities?

It shouldn’t be a surprise that most heavily regulated businesses – the land-based gambling industry included – are shaped by politically motivated regulatory results. Nor should it be surprising that there have been a number of obstacles to overcome when designing the legalities of online casinos.

Sometimes, the hurdles are structural. Investigators from state regulatory agencies have been taken aback when finding out that even though they have police-like status as agents, this means little when trying to seek out private information from officials in places like China and even Japan. It’s hard to regulate globally, let alone domestically. So how does a country ensure proper regulation when it’s hard to find an ally to compare notes with?



Cultural differences are certainly a part of this struggle. In the US, casino operators go through certain vetting processes – some of which are deemed offensive to other countries. Also, there is a lack of camaraderie within many companies due to competitiveness. In other words, why share market secrets of success if it could encroach upon ones own success?

Beyond the latest struggles we’ve seen domestically, it is not just US casino gaming companies looking to expand their land-based properties into the online gambling industry. The struggle is worldwide.

The primary consideration is the integration of different cultures. For example, when online poker room operator, PokerStars, stated its intentions to purchase the Atlantic Club (formerly Atlantic City Hilton Casino), there were a myriad of issues brought to the table. Some were domestic, but the bulk of the problem was that the online operator’s track record in the US was marred.

Another example is Caesars Entertainment, which created a subsidiary, Caesars Interactive Entertainment, headed by the former CEO of PartyGaming. This Montreal-based division is responsible for the World Series of Poker and all Caesars Palace and Harrah’s online gambling sites. Needless to say, it took some strategic maneuvering to combine all of this.



It’s not just brick and mortar casinos diversifying into the online realm, either. A little over three years ago, Caesars paid tooth and nail to acquire Playtika. This Israel-based gaming company was bleeding money, and yet is was responsible for turning out some of the most popular social-based online casino games used in top social media platforms, such as Facebook. Even Bwin-PartyGaming announced its desire to enter the social gaming domain. However, Zynga, largely known as the biggest name in social gaming, has witnessed its stock rise and fall with every beat of rumor to and fro.

Thinking inside the US, Utah and Nevada share a common state line, yet they are seen completely different when it comes to policies toward gambling. What is interesting is that such a close physical location can yield such varying law. The issue at hand domestically is whether the state restrictions violate a higher law, like that of the United States Constitution.



Cultural differences arise at all levels of the law. In China, for example, gifts are a basic part of the social fabric. Family ties are strong as well. Even something as standard as giving a gift (in Asia) might be a federal felony under U.S. laws.



And how should an American gaming regulator react to a Chinese father giving his daughter $80 million to buy a share of a casino?

 Well, New Jersey regulators said no one gives a gift like that without strings attached. Since they didn’t like the father, Stanley Ho, they found his daughter Pansy unsuitable to be partners with MGM. Nevada regulators, on the other hand, had the same information, but decided that they would let MGM stay in business with Pansy, unless and until they saw some undue influence by Stanley.



Nevada was criticized for being too weak. But few Americans are aware that many people in China were offended by New Jersey’s decision.

The American regulatory system over casinos is a unique system, and many foreign territories consider the US gambling industry to be the most intrusive.

Nevada created its regulatory system in the 50’s, and for a very good cause. But soon thereafter, the Kefauver hearings associated Las Vegas casinos with the Mob. State lawmakers in Nevada were thus concerned that the US government could pose the opportunity to take over the running of casinos.



While Mafia involvement has been removed for quite some time, the tradition of complete control was accepted. Even casinos in Atlantic City were held to the same regulation standards.

In conclusion, should the US desire to stay the leader in legal gaming, online or not, it must take cultural differences into consideration. It is vital that this country consider the future of technology without prejudice, just as it must global values. Online gambling fans are not the enemy, but politics and cultural differences might just be.

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