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Online Poker Report

The Landscape For US Online Gambling Is Looking Good For 2019

Online gambling landscape

It wasn’t very long ago that the thought of legal online gambling in the United States was the stuff of legend. But in 2018, it isn’t just a reality, it’s spreading across the United States in many forms.

With momentum growing, states with legal online gambling could be the norm and not the exception in the not too distant future.

The current online gambling landscape in the US

To date, four states have legalized online casino and/or online poker.

  1. Nevada (poker-only)
  2. Delaware
  3. New Jersey
  4. Pennsylvania

Six states have authorized online lottery.

  1. Illinois
  2. Michigan
  3. Georgia
  4. Kentucky
  5. New Hampshire
  6. Pennsylvania

Online sports betting is in the works in at least two states.

  1. New Jersey
  2. Delaware

Setting aside the “is it gambling” debate, daily fantasy sports has been legalized in no less than 19 states.

Furthermore, all manner of gaming legislation is on the table in a countless number of states.

Here’s how we got to this point.

Black Friday puts an end to the status quo

Without doubt, 2011 was the most tumultuous years in US online gambling history.

On April 15, the Department of Justice seized the domains of the prominent US-facing online poker operators and indicted key executives. That ended the long-running game of cat and mouse the two sides had been engaged in since the passage of UIGEA in 2006.

The DOJ action removed all doubt, operating an online poker site was not allowed in the United States and would no longer be tolerated.

The seizures also sent the house of cards tumbling down at Absolute Poker, Ultimate Bet and Full Tilt Poker.

Full Tilt was unable to cover the $150 million in player accounts, with Absolute and UB owing their customers tens of millions more.

Only PokerStars emerged relatively unscathed, and were it nor the settlement it reached with the US, online poker players would likely have never seen their Full Tilt, AP and UB money again — money that has taken years to return.

Following the momentous (dubbed Black Friday within the poker community) online poker, once widely available in the US, was virtually nonexistent.

For proponents of legal online gambling, the despair caused by Black Friday turned out to be relatively short-lived.

Thanks to a 2009 online lottery query made by New York and Illinois, their prayers were about to be answered.

2011 OLC Opinion: The spark that started the fire

In September 2011, New York and Illinois received their answer from the Department of Justice Office of Legal Counsel. The opinion issued by Assistant Attorney General Virginia Seitz determined that the 1961 Wire Act only applied to sports betting, and states were free to legalize online lottery, and by extension other forms of online gambling within their borders.

Seitz concluded:

“Given that the Wire Act does not reach interstate transmissions of wire communications that do not relate to a “sporting event or contest,” and that the state-run lotteries proposed by New York and Illinois do not involve sporting events or contests, we conclude that the Wire Act does not prohibit the lotteries described in these proposals. In light of that conclusion, we need not consider how to reconcile the Wire Act with UIGEA, because the Wire Act does not apply in this situation. Accordingly, we express no view about the proper interpretation or scope of UIGEA.”

Rather than going down in the history books as the year online gambling died in the US, 2011 lit the runway to legalization.

First mover states came out of the gate at a full sprint

Several states jumped at the opportunity presented by the OLC opinion, and by 2014 online poker, casino and lottery had gained a foothold in the US.

Unfortunately, the frenetic pace quickly subsided.

Overblown revenue estimates, some early technical issues and enthusiastic opposition were all contributing factors.

After three years without a legislative victory,  online gambling was at a standstill. Until DFS forced legislatures into action.

DFS helps normalize online wagering

In 2015 daily fantasy sports became a mainstream product. DFS ads were everywhere, so the mini-scandal in the fall of 2015 all but forced legislatures into action.

DFS legislation breezed through legislatures that are normally resistant to gaming expansions. Less than three years after the scandal, no less than 18 states have legalized DFS.

The bad news was DFS pushed online gaming bills to the backburner. The good news is the proliferation of legal DFS has had a profound impact on the perception of online gambling.

No longer spoken of as a hypothetical scenario, states can now point naysayers to existing examples of an online lottery, an online casino and DFS. Placing wagers online is happening across the country.

As outgoing American Gaming Association CEO Geoff Freeman said in a recent interview, “DFS certainly helps to normalize all types of gambling – they can say it’s not gambling all they like, but I think most people would lump it into that category.”

Sports betting is the new flavor of the month

Online gaming may have lost another year as state legislatures attention was drawn to sports betting, the new shiny object that fell in their lap. But like DFS, sports betting will further normalize all forms of gambling.

That includes online gambling.

Make no mistake about it, multiple states will be offering online sports betting in 2018 and 2019. And every additional state that offers mobile sports betting is yet another state tearing down the myth that online gambling is like putting a casino in everyone’s pocket.

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What’s next?

Online gambling expansion is unlikely to really pick up until 2019, when the second wave of states consider legalizing sports betting.

With 2018 legislative sessions are coming to an end, and with a mid-term election in November, I wouldn’t expect more than a few stragglers to push a sports betting or gaming bill across the finish line.

When legislatures reconvene in 2019, expect a flurry of activity.

Over the course of 2019-2020. some states will use sports betting, particularly online sports betting, as a foundation for a comprehensive gaming expansion package.

Here’s why:

  • The second wave will be less rushed than the states that rushed into legislation in 2018.
  • There’s no logical reason to legalize online sports betting and not online casino, particularly where there is crossover among stakeholders.
  • States looking for revenue will have a comprehensive suite of products to package together – sports, casino, poker, lottery and DFS.
  • States will begin to covet the revenue generated in other states.
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Steve Ruddock
- Steve covers nearly every angle of online poker in his job as a full-time freelance poker writer. His primary focus for OPR is the developing legal and legislative picture for regulated US online poker and gambling.