Interactive Gambling: 2003 and Beyond

2 January 2004
See Also:

A Look Back at 2003

Top Stories of 2003

The Best and Worst of 2003

A Glance at 2004

Top Stories of 2003

  1. Operators and governments battle over cross-border gambling.
  2. Authorities deter online gambling by going after advertisers.
  3. Betfair targets the world; the world targets Betfair.
  4. Major operators close up shop in Isle of Man.
  5. Big-brand operators get out of the I-gaming space.
  6. The industry continues to grapple with payment issues.
  7. Russian hackers extort money from I-gaming operators.
  8. British, American and Australian legislators put forth new I-gaming policies.
  9. iTV Betting takes England by storm.
  10. The popularity of online table poker soars.


The Best and Worst of 2003
The good, the bad and the ugly from the perspective of IGN's editorial department.

Hangovers, parades, football, and retrospect... Yes, the New Year is upon us, and that means it is once again time to reflect on what the previous year brought and speculate on what the next year will bring.

As the I-gaming industry matures, each passing year is harder to define, but what sticks out most in my mind is the underlying theme of survival.

If your glass is half empty, then you're well aware that this industry is constantly under attack from all directions. If it's half full, then you recognize that I-gaming once again proved its staying power in 2003.

A Year of Gains

Yes, amid prohibition movements, cross-border squabbles and hack attacks, it was a year of many positives. First and foremost, the industry continued to grow and shows signs of further growth. Christiansen Capital Advisors predicts I-gaming will be a $7.4 billion business by the end of 2004, and much of the growth can be attributed to emerging industry sectors. Leading the way, of course, is P2P betting, which exploded in 2002 and continues to thrive. The biggest splash in 2003 was made by online table poker, which grew in leaps and bounds. Meanwhile, thousands of gamblers hopped on the iTV betting bandwagon, as BSkyB added several new betting channels.

It was also a year of expansion in terms of jurisdictions opening up to new I-gaming services. A pair of tax friendly jurisdictions, the Cagayan Economic Zone and Free Port in the Philippines and the Six Nations Reserve in Ontario, began licensing online gambling operations. Hong Kong legalized soccer betting and its popularity has already exploded. Romania's first licensed online casino opened its doors. New Zealand and Ireland authorized Internet lotteries. The United Kingdom, meanwhile, is inching toward passing a gambling law that would pave the way for the expansion of online gambling there, including the arrival of online casinos.

And then there's the United States. Believe it or not, there were positive developments for I-gaming in the country that has been a leader in the prohibition movement for the past seven years. California's advance deposit wagering system brought legalized Internet race betting to new levels in the States in 2002 and showed more promise in 2003. Federal and state policymakers are pushing for the exploration of legalized I-gaming. There's even a silver lining in the foreboding cloud of prohibition in D.C. If a prohibition bill is passed, it will likely include a states rights provision, which would potentially enable intrastate Internet gambling--maybe even multi-state model comprised of states with legalized I-gaming.

A Year of Losses

It was a year of human losses for I-gaming, with a few of its closest friends passing away. The year began on a very sad note with the loss of Stephen Fein, one of the industry's top experts on payment solutions, on Jan. 3. Steve worked tirelessly toward finding solutions to the industry's payment processing woes and spearheaded grass-roots efforts against prohibition.

The industry lost one of its true marketing pioneers and a very close friend to many in the business with the passing of David Herschman in April. David was among a small group of people who have been in the business from the beginning. His Web site, Virtual Vegas, was ahead of its time as a hub of "free-play" and one of the Internet's first truly successful gaming portals.

The year closed on a sad note as well, with the death of eCOGRA's Julie Sidwell. Julie will be remembered as one of the hardest working people in the business. She made a name for herself while at Gambling Grumblings as the industry's top expert on dispute resolution between consumers and operators. A few months before passing away, she joined eCOGRA as a fair gaming advocate. You won't find anyone who was more dedicated to improving the image of Internet gambling. Those who knew her truly appreciated her contributions.

Naturally, there were losses directly related to the business as well. Australia backed further away from being the world's top I-gaming jurisdiction with a review of the 2001 Interactive Gambling Act that is almost certain to result in further restrictions upon its updating in 2004. PayPal, formerly the industry's most widely used third-party payment processor lost US$10 million in a settlement with the U.S. District court for Eastern Missouri.

Operators lost the ability to market themselves freely in the United States when that same court came down on media outlets carrying advertising for I-gaming services.

The industry also lost a few of its biggest brands, as Kerzner, MGM Mirage and PBL all shut down their online casinos because regulatory restrictions made it impossible to succeed in the Internet space. None of them could effectively leverage their brands online.

Meanwhile, policymakers in Greece lost their minds and adopted a law banning the playing of computerized games in public places.


The maturing of an industry, of course, means stiffer competition, which in turn leads to all sorts of battles. At the center of many of these battles in 2003 was Betfair, the P2P giant. The company is fighting to get a license in Australia, while Australian bookmakers are fighting to keep them out. In England, British bookmakers are fighting for a levy scheme that's less friendly to Betfair and other betting exchanges. One of those bookmakers, Ladbrokes, is battling with Europe's gambling monopolies, which want their respective member states to block their residents from using Ladbrokes. Antigua is fighting a similar battle against the United States. The Caribbean country has filed a complaint with the WTO regarding the United States preventing its citizens from accessing Antigua-licensed gambling sites.


Naturally, where there are battles to be fought, there are alliances to be made. This is most evident in the border wars, in which race and sports betting providers face a common enemy in the offshore bookmaker. Asian jurisdictions responded in 2003 by signing a good-neighbor agreement that basically says, "We won't target players in your country if you don't target players in ours." Offshore operators, meanwhile, are faced with establishing standards for fairness and a big step toward doing so was made with the formation of eCOGRA, an association tasked with coming up with universally accepted standard practices for the industry. And then there are the many alliances necessary to fight the prohibition movement in the United States. It wasn't any easy year for I-gaming, but lobbying efforts against the Kyl bill were successful again. A little closer to home for publisher River City Group, the fifth annual Global Interactive Gaming Summit and Expo saw an impressive turnout despite a last-minute switch from Toronto to Montreal due to the SARS scare. Hundreds turned out to make it once again the most attractive terrestrial marketplace in the business.

That's 2003 in a (rather large) nutshell. See the links below for a more in-depth look at 2003 and a peek at what's in store for 2004.

A Look Back at 2003
Top Stories of 2003
The Best and Worst of 2003
A Glance at 2004

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.