BUSINESS

Coming to America (quietly)

TAGs: Las Vegas, Mike O’Donnell, us legalized gaming, William Hill

gambling-companies-coming-to-america-william-hill-bwin-party-888-casinoUIGEA sent shockwaves through the North American iGaming industry. While this infamous piece of legislation turned many operators away from the US, some continued to offer bets in the country in some cases to their detriment.

Black Friday served as a hefty follow up to UIGEA some five years later and finally showed that the US Department of Justice were serious about what they were doing and prepared to take action. This swoop and the resulting repercussions for those involved have meant that even more operators upped sticks and left the States.

In light of these two events, iGaming companies have been well advised to steer well clear. However, with the size of the US iGaming market and the belief that online gambling will eventually be regulated in the states, almost everyone is looking for their way in.

This is much easier said than done though as US officials are arguably as hot as ever regarding online gaming. But this hasn’t deterred those who are aware of the potential of the US market. The said industry is believed to be worth? According to this week’s report from PriceWaterhouseCoopers.

In light of this, many iGaming operators have understandably concluded that despite currently being off limits, the US online gaming market is well worth investing time in. While this conclusion is common, opinion on how to go about getting a foothold in the US market is divided, below are a few tactics currently being used.

Make Your Own Takeover

This is an option that has been popular with the larger UK operators, particularly bookmakers with retail sections. One of the most significant moves across the Atlantic this year has come from William Hill.

The bookmaker bought American Wagering Inc, a Nevada gaming company with 72 sportsbooks on their hands, in April for $18 million as well as paying off the company’s debts.

At the time, Hills CEO Ralph Topping made no bones about the fact that this was their way of keeping tabs on the US iGaming market.

He said: “Sitting in London is no substitute for going to Vegas and getting the lowdown from the likes of MGM. There’s nothing like hearing it from the horse’s mouth.

Nick Batram, an analyst at Peel Hunt confirmed: “Being out there with a licence puts them in a better position if the US gaming market opens up.”

Pay Uncle Sam Some Big Bucks

Not necessary for all operators but could prove crucial for some – this was the approach taken by PartyGaming who completed the payment of a $105 million settlement in September.

Their deal was reached with the US Attorney’s Office for the Southern District of New York and meant that authorities had promised “not to prosecute PartyGaming or any of its subsidiaries for providing internet gambling services”.

This was after PartyGaming told us all what we already knew, that they had accepted wagers which were “contrary to certain US laws”. This was even after Anurag Dikshit, co-founder of the company had already agreed to pay a $300 million fine in December 2008.

Despite the short term financial impingement, this tactic has left PartyGaming, now bwin.party, on good terms with the law in the US.

At the time Richard Carter, an analyst at Numis Securities told The Telegraph that this move “removes a key risk and materially increases the group’s chances of gaining a licence or business-to-business deal when the US online gaming market opens up.”

Find a Friend

One way of instantly finding yourself well placed in the US market is to partner up with a brand well recognised in the States. This has been a popular choice for pureplay operators so far who have listened to the musings of congressman and the AGA by teaming up with land based casinos.

After having cleared everything with their friends in the US Attorney’s Office, bwin.party have been able to create a partnership with MGM. One company who have pursued US deals regardless of their previous stance is 888. The Gibraltar-based company was one of the first to attempt to make a deal when they did so in the first few months of this year with Caesars.

At the time, CEO of Caesars Interactive branded the deal a “historic moment” and even went as far to say that it “confirms internet gaming is a reality. It should allow us to look more and more at a federally regulated environemnt in the United States.”

The benefits of this approach are obvious. Not only do you have a powerful brand to work behind but you also have a wealth of resources to call upon. For the US companies, they benefit from expertise in an area they know very little, if anything, about.

Give it Away for Free

If you don’t have the resources or brand to be able to acquire or partner with large US companies then you may be at a loss as to how you can legally get a foothold in the US market before it opens. Despite being a bit radical, the best option is probably to offer games for free.

A number of sites offering free slots have sprung up in recent times and can be an excellent way of familiarising US players with your brand or games. The top sites such as www.freeslots.com regularly pull in more than 1 million unique visitors per month while others such as www.freeslotsonline.com and www.emmas-free-slots.com also show promise.
This is something that some software providers such as NetEntertainment are already taking advantage of. It will most likely be the route many more software providers and operators look to land in America.

Go it Alone

Potentially the simplest way of doing things as long as you’re not already wanted by US law enforcement. Paddy Power were the first European iGaming company to attempt apply for a US gaming licence.

Theirs was from the Nevada Gaming Control Board but despite the fact that the licence was applied for in August 2010, the Irish bookmakers are still yet to receive it. Having never offered wagers to US players they will be confident of a successful outcome.

888 on the other hand did accept bets from US players but this hasn’t stopped them from being just one of the companies to apply for a prospective Nevada online poker licence.

Of course operators don’t need to do anything right now. However, if they do choose to stand still they’re likely to find themselves way behind when the US market does open up, in whatever capacity that may be.

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