A Glance at 2004

2 January 2004
See Also:

A Look Back at 2003

Top Stories of 2003

The Best and Worst of 2003

Bingo on the Rise - Table poker made its splash in 2003, while 2002 was the first huge year for P2P betting. Will it be bingo in 2004? Online bingo has been around since the early days of online gambling, and the growth potential has always been there, but not until 2003 did we see bingo sites start to make a move. It's a niche that appears ready to break through in the very near future.

The Advertising Crisis - It has been argued that the First Amendment of the U.S. Constitution clearly gives media outlets the right to carry ads for online gambling services, but none of them have taken this argument to the courts. That's not to say there isn't anything happening "behind the scenes," and there's a good chance that parties affected by the crackdown in 2003 will seek a declaratory judgment on the matter. This has the potential to be the biggest victory to date for the industry in the battle against prohibition.

Prohibition 2004 - It really looked like 2003 could be the year for a federal prohibition bill to pass in the United States going into the year. The House version passed; the Senate version did not. The question for 2004: Has the prohibition movement lost momentum? Even if a prohibition bill passes, there's a good chance it will contain provisions enabling individual states to legalize I-gaming.

Australian Policy - Australia's Interactive Gambling Act of 2001 has been under review and is due to be updated in early 2004. All indications are that the federal government will move toward more restrictive policies rather than vice versa. They could even go as far as setting up enforcement mechanisms that entail blocking credit card transactions.

P2P - Betting exchanges will continue to grab headlines in 2004, but two particular questions come to mind. First, will England and/or Australia impose restrictions on P2P sites? Australia is almost certain to ban P2P, while bookmakers in the United Kingdom are asking the government to devise a fairer taxation scheme for betting exchanges. Second, will any exchanges step up to give Betfair, the market leader, a run for its money? Even Betfair admits that there's room for a handful of industry leaders. One or two competing companies will likely gain some market share, but expect Betfair to stay on top. The only opportunities for new entrants into the P2P space will be through partnerships with the three or four major P2P service providers.

The European Border Wars - Europe's gambling monopolies are being challenged by British and offshore bookmakers, with U.K.-based Ladbrokes leading the way (particularly in Scandinavia and the Netherlands). Holland has been the most proactive member state in efforts to block foreign operators, and the country's gambling monopolies have taken the issue to the courts. There will be continued activity in national courts, as well as the European court, but don't expect finality in 2004. Much hinges on the Gambelli ruling, the legal meaning of which is yet to be determined. What's certain is that a resolution isn't in the near future.

The Big Brands - MGM, Kerzner and PBL got out of the Internet space very soon after they got in, giving rise to the notion that perhaps land-based casino operators aren't as equipped to succeed online as once thought. The trend of major casino brands going online has been reversed, however, a second wave of heavyweights could be on the way. The company to watch is Harrah's Entertainment, which has secured an Internet gambling license and launched a subscription-based I-gaming service. Las Vegas Sands Inc., the operator of the The Venetian casino and hotel, also has an online gambling license in Alderney.

UK Policy - Don't expect British policymakers to pass an updated gambling bill in the near future. They have moved slowly on the issue from day one and will continue to take their time crossing T's and dotting I's. A clearer picture on the taxation scheme for P2P is more likely to come in 2004.

Additional developments to watch:

  • Further growth in the skill games space.
  • Progress initiating regulated Internet gambling in the U.S. Virgin Islands.
  • Further exploration of intrastate interactive gambling in the United States.
  • The industry's response to denial-of-service attacks.
  • The continued expansion of gambling via wireless devices and interactive television.
  • The consolidation of Australia's TABs.
  • The Antigua/United States WTO dispute.

And finally, some predictions for the coming year:

  • Stepping up their efforts in the war against betting exchanges, Australia's betting operators will hire former Iraqi Information Minister Muhammed Saeed al-Sahaf as their spokesman. The marriage will produce countless memorable quotes, such as, "Betfair is going to try to approach New South Wales, and I believe their grave will be there," and "Betting exchanges are retreating on all fronts; their marketing effort is a subject of laughter throughout the world," and "Don't believe anything! We will chase the rascals back to London!"

  • Following the results of a study suggesting that winning large amounts of money makes sadness go away, Warren Eugene (who means something to this industry, although exactly what we're not sure) will form a company that offers medicinal online gambling. After the product receives FDA approval, its price will be jacked up so high that many suffering Americans, unable to afford it, will order their I-gaming from foreign countries like Panama and Costa Rica.

  • A higher U.K. tax rate will force betting exchanges to raise their prices, and savvy bettors will react by taking their business elsewhere. They instead will sell propositions on eBay, thus, circumventing the 25 percent vig taken at P2P sites. Most of the transactions will be facilitated by eBay's payment subsidiary, PayPal, which will in turn be sued by U.S. attorneys for handling I-gaming transactions. PayPal will be asked to fork over $3 gazillion, but will throw in an extra $1 gazillion for good measure. The $4 gazillion hit will cut eBay's profits in half.

  • America's UPN network will make its mark by airing a reality TV show, titled "Online Casino." The show will be based in Antigua and will feature scenes with islanders answering telephones and entering data into computers; a pair of college dropouts sipping drinks on the beach; and sex with Paris Hilton.

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.