Online Gambling Revenues Lower than Expected
During 2013, 3 US states moved swiftly to legalise online gaming. These include New Jersey, Delaware and Nevada. Legislators in the states were hoping for windfall returns in the form of tax revenues, licensing fees and other regulatory dues. The industry is still in its infancy stage, but already the New Jersey Treasurer has expressed his dismay at the available figures. In the Garden State, it was anticipated that online gambling would add $180 million in tax revenues to the state coffers by the end of fiscal year in 2014.
Slow Start but Hope is on the Horizon
When Governor Christie set the budget in June 2013, the figure had been downgraded to $160 million. The sad reality for New Jersey is that by the conclusion of the fiscal year in May 2014, just $9.3 million in tax revenues had been collected. The patterns in online gambling are trending downward. However, it’s not all doom and gloom for the Garden State and other states, since there have been many technical glitches, payments related problems, and geolocation issues plaguing the rollout of online gaming in the state of New Jersey.
The other two states – Delaware and Nevada – have far smaller populations. Surprisingly,
Delaware performed adequately given its population with $7.5 million in tax revenue collected during the fiscal year of 2014. Owing to delays and expensive start-up costs, online gaming made no net contribution to the state budget. Some of the software costs include things like data service for hosting online gaming, software design and the like. To the west of the country, Nevada state legislature officials declined to make revenue projections on online gambling. The state has only legalized online poker, and generated $700,000 in taxable revenues off $10.2 million in gambling wins between May 2013 and April 2014.
Online Gambling Legislation across the US
Morgan Stanley reduced its projections for online gambling growth from $5 billion to $3.5 billion over the next three years. It is widely expected that the online gambling industry in the US will take time to seed and mature. It is still in its nascent stage, and once it gains traction with US players, there is a massive upside potential. In 2011, the Justice Department ruled that the Federal Interstate Wire Act of 1961 was only applicable to sports betting. This year alone, New York, California and Mississippi have all introduced bills allowing for online gambling. Pennsylvania opted to introduce legislation banning online gambling. Interstate online poker legislation between Nevada and Delaware has been introduced, and this is seen to be a significant development for the industry.
The legal online gambling market has been plagued by the following issues:
- Payment Processing -some banks refuse to process payments to online casinos
- Geolocation – determining precisely where players are is imperative
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