Changes at the top

So we have another huge change in the egaming landscape as the US prepares to allow online casino and poker. But, as ever, all that glitters is unlikely to be gold. Firstly, we must not now assume it’s a foregone conclusion. There is a long way to go which, at best, will take a year and, should it take longer, could literally get timed out. However, for the purposes of this article, let’s assume the optimists are right and the bill goes through as it stands.

Right off the bat the small print makes very interesting reading and it would appear that some of the conditions have been designed to deliberately exclude some of the biggest players in the market. From an industry perspective, inevitably, at this stage the new guidelines throw up more questions than answers but the US-facing sites appear to have been targeted for exclusion. Most obviously the line that states: Those who knew they were working at an illegally-run Internet site will be banned from obtaining a license.

Another big question is about software and where the powers that be will draw the line. If an approved operator wants to use software for their poker room that has been previously deemed illegal, does that legalise the software? There are also some special regulations that operators will find hard to adhere to, namely, 'internet sites are forbidden from allowing people who are delinquent on child support from gambling on their site. Sites who don't obey this rule lose their license'.

How will sites realistically be able to monitor and manage such parameters? There is also the more obvious hurdle of not allowing credit cards which are far more prevalent than debit cards in the US as well as the age lift to 21. Finally, 'no unsolicited marketing is allowed'; quite what that means is unclear but, in essence, you could argue that most advertising is unsolicited in that you didn't ask for the advert to be in your vision!

Aside from all that, assuming you have one of Willy Wonka's Golden Tickets and are licensed will you then be automatically an industry winner? The biggest players are currently operating without any significant corporate taxes (typically 30%) and without the wage bills of a US-based company. Added to which there will be consequences for the players that could make the sites unappealing from the other side of the fence. The player facing ramifications are very interesting also.

Firstly it without question sends out a clear message that gambling online is more acceptable and this endorsement is hugely positive for the perception of the industry as a whole. In the minds of US citizens also it will give all types of gambling a legitimacy that they have never enjoyed previously. This endorsement could well see a surge in online gambling activity in general, beyond poker and casino. In the same way the introduction of the lottery in the UK sanitized the concept of gambling this law could well do the same in the US.

Equally, there are tax implications to be considered which will affect different types of players in very different ways. On the face of it the pro players look, once again to be better than the all-important leisure player who make-up the lion's share of deposits. It appears there will be some sort of tax on deposits (thought to be between 8-10%) which will damage the entertainment value of the leisure player.

Pro players will quickly build their bankrolls and therefore have no need to deposit so will be unaffected by this tax. As I have said many times in the past and most now agree that it is the depositors who are crucial to the survival and growth of the online poker industry as a whole. However, all players could face some sort of income tax on winnings too (currently at 33%) which throws up an obvious raft of other questions.

If, for example, Zynga were to take the route of taking real-money, they are well placed to take the market by storm as they have contravened no previous laws, are likely to be granted a licence and already have a huge amount of players. It would certainly challenge the assumption that the next market leader in the egaming industry will be one of the existing players.

Certainly in poker, history shows us that we have had 4 different market leaders since 1998 (namely Planet Poker, Paradise Poker, Party Poker and PokerStars) and the last of those changes happened purely due to legal changes rather than any great innovations. Should this change in the legal landscape actually happen I think it is fair to say there will be another change in the pecking order. And in a federally regulated US I would rather have stock in Zynga than any of the existing players.