I had a recent long conversation with Zuga on his thoughts regarding the US legalization of online gambling and also the implications. Of course no one can know for sure the actual outcome. But Zuga’s theories on the future of US players was an enlightening one. I asked him if it would be ok to share that conversation with LCB and he agreed. Here is how that interview went…..
Me: Why would some online casinos be opposed to US legalization?
Zuga: The land based casinos have the larger concerns because they would lose money. Online gambling has more potential. Players gamble from the comfort of their homes.
Me: And what reasoning would the online casinos have?
Zuga: I have not personally heard such. There is no logic in it. However, they can choose not to accept the US. Even if the US were to impose strict regulations (which I am sure they will) the expected profits would compensate any taxes and license fees that they would have to pay to Uncle Sam. If there would be any opposing online casinos it would be smaller casinos that wouldn’t be able to compete with serious casinos. Serious legalization WILL weed out the small casinos, at least in the US market. Not all online casinos will be able to fulfill what's imposed by such a law.
Me: What effect, if any do you think the US will have on protecting the players from shady operators?
Zuga: It is likely they will not license these casinos or allow them to operate and accept US players. In a way that will protect their pockets and the US players once they introduce the new law.
Me: The US will have controls and regulations on the US market, but do you feel they will have any influence on other governing nations?
Zuga: The US legalization is ONLY for US markets. They have no jurisdiction else where. However, say a French casino wants to operate outside the EU and wants to be present in the US. They would have to apply for a US license, and once approved they would be allowed to accept wagers from US.
Me: Ok, so another words any online casino that did not have a license in the US would be blocked from accepting wagers from US players?
Zuga: Yes, that is what I expect. The US Gov wants to control the money flow. At the moment the US has NO control what so ever.
Me: What will determine the approval for licenses? Will they look at rogue casinos and not license them?
Zuga: They will first look at their stability, cash flow and how much funds they have.
Me: Well they do rank high in that!
Zuga: They will also look into their history. If for example they determine they have been accepting wagers from the US during the UIGEA, which is illegal, I doubt they will approve them. Unless they pay hefty fines for breach of the US law.
Me: So US popular sites now like RTG and Rival may not get licensing from US?
Zuga: I believe they may find some compromise considering the money at stake. However, what I think is the US is preparing the ground for US based casinos, meaning founded in the US by the US.
Me: Do you think the regulations will extend in protecting the US player against not getting paid legitimate wins?
Zuga: I think there will be a regulatory body who will supervise the gambling in the US. Where complaints can be submitted etc.
Me: And casinos outside the US?
Zuga: Let me go back to previous questions. If they get the license from the US then they are regulated and operating in the US market. Therefore they are obliged to follow US law. They would have to conduct their business and operations in compliance with the legislation.
Me: You see a probability of online sites in the US?
Zuga: Yes, they will probably create a monopoly and if any outside US casinos want a license they will have to pay a hefty price for it.
Me: How will US make money other than taxes?
Zuga: US will make money on taxes from players, taxes on casinos from their profits and licensing fees.
Me: Let’s put aside the anger the American people have on the ban for a moment. In reality the US is the largest online gambling market by region, don’t they have the right to get their cut?
Zuga: It does make sense in a way. However, they did it for other reasons. If they wanted to collect tax money and licensing fees they would of done it 6 years ago. So the bottom line is, its deeper than that.
Me: Why would the US let this slip through their fingers and not put regulations instead of banning online gambling. Didn’t they in essence shoot themselves in the foot?
Zuga: Well, they didn’t expect the outcome. US Prohibition is not new and each time they failed. And what we have now is gambling prohibition. Now realizing they have failed they decided to do the only thing left, seize domains and prepare the ground for legalization.
Me: At this point who do you think has the highest revenue. Software like Microgaming that are non US but solid or software like RTG that allow US players?
Zuga: Microgaming by far is the strongest group. Even with the UIGEA they kept a strong US base with existing accounts and great player retention. But now some casinos have pulled the plug on existing players because of the recent seizure.
Me: Do you think that US based online casinos would use existing software or would it behoove them to create their own?
Zuga: I would not be surprised if a new software emerges for two reasons. One they will sell the US license and two they will sell the software so it’s a win win situation.
Me: How long do you suspect it will take for online gambling to be legalized in the US in your opinion?
Zuga: No one can predict. But I suspect early to mid next year.
Thanks Zuga for your reflections.
Please feel free to add your comments or thoughts and share your opinions on this subject.
Zuga - Regarding the US Legalization of Online Gambling and the Implications
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