Editorial: A Collective Deep Breath is in Order

19 September 2006

If you're involved with the Internet gambling industry, please sit down, close your eyes and take a deep breath. The industry has been in for a wild ride since mid July when a series of actions on both the policy and law enforcement fronts in the United States rocked our world. With the recent actions in France, the chaos seems to be spreading.

But, having monitored and reported on this industry for the past 11 years, there is one truth that is constant: The industry has always been a battlefield, and today is no different. And as we approach the adolescence of this young industry, I don't expect that to change. The I-gaming industry is not for the faint of heart.

There is a company in our business that puts forward the concept that the Internet has created an "eighth continent" . . . obviously not in the terrestrial sense, but in the sense of a community. There's some merit to using that idea as a framework for looking at what we do and how we're evolving. It also means that there will be an inherent conflict between what happens in the cyberworld and terrestrial governments. Until that sorts out, it will continue to be a rocky ride.

Some say it's simply protectionism on the part of the governments in Europe, North America and Australasia that have made policy and taken law enforcement actions against the industry over the years. That's true in many cases, but it's also the fact that governments are attempting to control a medium that was designed to be decentralized.

We at IGN think that it is clear that, as a commercial endeavor, interactive gambling through the Internet is now entrenched. It will be very hard, if not impossible, to stop the market forces that have created the industry. And it will continue to offer opportunities for creative entrepreneurs who offer these services. With any luck, those entrepreneurs will continue to be scrupulous in their endeavors as they have overwhelmingly been to date.

The new wrinkle in the past two to three years is that the capital markets have embraced the industry. You saw well run and cash-flow rich companies serving consumers via this medium. You're gamblers yourselves. But, perhaps you aren't as aware of the ongoing inherent battles and the risks they pose as you should be. Perhaps some of you don't have the stomach for the battles that will surely play out as we work through the upcoming decade.

The bottom line is that the I-gaming industry has a history of steady growth in spite of the volatility, and we don't expect either of those factors to change despite the rocks in the road. Hopefully, you personally will make the decision if you can handle it and step aside if you don't think you can. But, please don't let the panic that has ensued in the past two months color what should be rational business decisions for your company. It's just not good business!

Mrs. Schneider is the founder of IGamingNews and former chief executive of River City Group. She now consults for Clarion Gaming and contributes regularly to IGamingNews.