A Glance at 2002

31 December 2001

Online gambling's most challenging year to date is in the books. What will the next 12 months bring? With several key developments carrying over to 2002, IGN takes a look at what to expect.

Prohibition 2002 - With the dust finally settling (somewhat) in Australia, will this be the year gray turns to black and white in the States as well? And if prohibition is the answer, which of the several proposed federal bills will gain the support needed for passage? Will the states have any say in such matters?

The Packer Picture - After lurking on the perimeter for three years, Australian media mogul Kerry Packer is looking to make his mark in the Internet gambling arena in early 2002 through the launch of his company's Crown Online virtual casino. Will dominance in the Australian media business translate to dominance in the interactive gambling business?

UK on the Brink - Already a hotbed for sports betting, the United Kingdom is poised to become the world's hub for online casino gambling, but will policy makers be able to move quickly enough to get it done before another region assumes that role? England appears to be interested in setting up the necessary regulations, but all signs indicate that the country will not be hosting online casinos in near future. That could change, however, if the country's eager heavyweight operators, along with its newly formed Internet gambling association, can convince the government to move quickly.

The Payment Crisis - It was the most crucial issue coming into the year and remains the most crucial issue coming out. Efforts by MasterCard and Visa to prevent merchant banks from facilitating online gambling transactions crippled the I-gaming industry in 2001. Several online gambling services fell; many more suffered. A number of operators reported that more than 80 percent of their transactions were being shot down. Most agree that the industry will overcome its most viable threat to date, but how remains a mystery. Will it be a non-credit card payment alternative? A method for disguising online gambling transactions? A compromise with the credit card networks resulting in the lifting of their bans? Is the end in sight or will the crisis persist through 2002?

The Business - For the first time since the inception of Internet gambling, the number of companies operating in the industry didn't grow in 2001. While new players continued to enter the business, several existing companies merged, sold out switched their focus to other industries or called it quits. The industry is still growing, but consolidation has arrived. Expect the trend to continue in 2002.

California - Interactive race wagering established itself as a presence in the United States in 2001. Services in Pennsylvania, Oregon, Louisiana and Ohio have launched with moderate success, but many predict the industry will explode when California enters the picture. Account wagering becomes legal in the state at the first of the year, but there's no system in place for interactive betting. Will competing operators come to terms on a system in the near future, and if and when they do, will California establish itself as America's leader in race wagering?

The Skill Alternative - The hottest new concept of 2001--games of skill--could become a huge money maker, especially with entertainment corporations like Walt Disney getting involved. Keep a close eye on developments within this genre, and don't be surprised if one or two of the industry's big-name operators switch to this model.

Denial on the Isle - Just when we thought the Isle of Man off the coast of Great Britain was about to become the hottest new jurisdiction for online casinos, rumors that all's not well began to surface. The jurisdiction has established a regulatory system and handed licenses to MGM Mirage, Littlewoods Leisure and Sun International with hopes of commencing real-money wagering in early 2002, but word has gotten out that an internal struggle over money laundering policy could derail the plans. Government officials insist, however, that there's no problem. Provided that the money laundering issue is overcome, operators based in the jurisdiction could make quite a splash in the coming year.

The Market - Amid the inevitable plunge of tech stocks throughout the world, it's been argued that online gambling companies stand a chance of thriving because it's one of the few Internet business with a solid revenue model. Some, CryptoLogic for example, have stood their ground. Others, such as Boss Media have suffered devastating drops in share prices. Clearly, the potential to make money in the business still exists, but will investors recognize this or will pending prohibition and tech-stock phobia scare them away?

Nevada - Despite passing a bill that lays the groundwork for regulated Internet gambling within the state, Nevada has yet to embrace Internet gambling. The picture cleared a bit in 2001 as the question of "if" shifted to "when" and "how," but many mysteries remain unsolved. How long will it take the Gaming Commission to draft acceptable regulations? Will efforts to regulate within the state by nullified by federal legislation? Will more Vegas operators follow the lead of MGM Mirage and seek licensing in other jurisdictions? What position will newly named Gaming Commission Chairman Peter Bernhard take? Will the mayor successfully sell the name and seal of the city to an online casino operator? Will remote intranet gambling systems such as that of Station Casinos be the next step?

Additional Developments to Watch:

  • Sports and race betting via interactive television.
  • The chance of legalization in New Jersey with control of the Assembly switching to the Democrats.
  • The legalization movement in South Africa.
  • Another appeal for Jay Cohen.
  • The legal status of advertising gambling services in England.
  • The possibility of interactive betting through the Hong Kong Jockey Club.
  • The arrival of more big-name, big-money corporations.
  • A push for Australia to loosen its stance on virtual casino gambling.
  • The establishment of online gambling services in the U.S. Virgin Islands
  • RICO, the Wire Act and gambling debt enforcement in U.S. courts.
  • Holland's welcoming of online casinos.
  • The new presence of interactive betting in South America

And finally, a few predictions for the coming year:

  • A U.S. House Committee will use $10 million allotted for the development of homeland security initiatives to conduct a multi-front investigation into Internet gambling's ties to everything in the world that is bad. With the notion that Internet gambling funds terrorism already widely accepted, new evidence collected will reveal that, had online gambling been banned, several other devastating developments and events could have been prevented, including the collapse of Argentina's economy, the AIDs crisis in Africa, the neo nazi movement, the Middle East crisis, SIDS, world hunger, the overall failure of airport security, the Bush/Gore election debacle, the Ramsy murder, the fires in New South Wales, the seven feet of snow in Buffalo, poor dental hygiene and the re-surging popularity of "I Love Lucy."

  • Following a major announcement by President Bush on new developments in the war on terrorism, White House press secretary Ari Fleischer will boldly address the media dawning a "Golden Palace" tattoo on his head. Amazingly no one notices and the multi-million-dollar promotion is deemed a failure. At first, marketing reps will blame it on a glare that made the wording very difficult to read, but it will eventually be determined that people simply weren't paying attention. Golden Palace will later redeem itself by paying pop mega-star Brittany Spears to have a similar tattoo drawn across her chest.

  • Las Vegas Mayor Oscar Goodman will successfully sell the rights to the name and city seal of Las Vegas to an online sports book based in Vanuatu. The bookmaker will shortly thereafter discover that dozens of competitors have already been using the Vegas name and image for years and that none of them paid a cent for their use. In the process of preparing to take the city to court, an attorney for the company will realize that language used in the contract doesn't clarify that it's only the rights to the name and seal of city being sold. Eventually a Nevada judge will rule that the contract actually makes the Vanuatu-based bookmaker the sole owner of the entire city. Fortunately, very little will change in Las Vegas under its new ownership. The only notable difference will be the company chairman renaming the city "Steve," after his dog.

  • IGN's Anne Lindner predicts the online gambling industry will turn to philanthropy in 2002. Millions of dollars from online gambling proceeds will go to educational programs, among them several breakthrough courses designed to increase awareness of problem gambling. Ironically the programs will be so effective that enlightened societies throughout the world will abandon gambling for safer forms of entertainment and by 2006 gambling will cease to exist. On a side note Las Vegas will experience a mild recession until Walt Disney saves the city's economy by converting the entire Strip to "Epcot West."

  • Mark Balestra

    Mark Balestra is the Managing Director at BolaVerde Media Group. He previously worked at Clarion Gaming and the River City Group where he was the publisher of iGamingNews. He lives in St. Louis, Missouri.