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Why New Gambling Legislation is Driving Investment in the US

Why New Gambling Legislation is Driving Investment in the US

Here in the UK, it’s safe to say that online betting is big business. While the exact figures will vary depending on where you look, typically you’ll find that the online gambling industry generates billions in profit every single year.

Because we spend so much time online, and because our smart devices and computers now store so much sensitive and personal information about us, this coupled with the dangers of gambling a addiction has resulted in new gambling legislation coming into the fold. While some people in the UK feel this is a negative, others are more optimistic, as it is driving investment in the US.

Back in 2017, a betting website named Royal Panda, was purchased by Leo Vegas, who were one of the biggest online betting companies in the world. The website generated close to 10 Million Euros in the UK alone, yet suddenly, with no warning, it ceased operation. Because of the changes in legislation, the website struggled, as did a few others.

As a result, more and more people began looking for investment opportunities overseas in the USA.

UK Online Betting Markets

These days, you can guarantee that during every sporting event, you’ll be bombarded with adverts for various online bookmakers, and for good reason. The sports and online betting markets in the UK are very lucrative, albeit competitive. Not too long ago, the UK gambling industry was subjected to regulations from the 2014 Gambling and Licensing Bill, which introduced things such as POCT (Point of Consumption Tax). As a result, to stay afloat, many online betting companies relocated to Gibraltar, the Isle of Man, or Malta.

Basically, this was a 15% tax and it meant that any company accepting British gamblers would pay the tax. Online sports betting taxes shot through the roof, going from 6.75% to 15%. This steep increase naturally hurt the betting companies, despite the fact that they pump 6 Billion Euros into the economy. In terms of revenue alone, they generate an average of £4.9 Billion.

The US however, is far more stoical when it comes to online betting, so why are UK sports betting companies once again looking to crack the US market?

US Online Betting Markets

In the US, in many states, online betting is actually banned. Despite this, more and more states are now legalizing online betting, albeit slowly. This is largely due to the poker boom, as professional poker, especially televised poker, began getting more and more people into online gambling.

Despite Congress’ best efforts to shut online gambling down (and after being briefly successful in 2006 thanks to the Unlawful Internet Gambling Enforcement Act) everything changed in 2011. Thanks to a technical loophole, online slots as well as other casino favourites were not banned.

As a result, more States slowly started to legalize online betting, although most still wanted to uphold the ban. Despite this, the vast majority of online betting in the US is carried out on the black market, which begs the question of why UK companies would attempt to crack such a difficult market?

So, Why Do UK Companies Want to Crack the States?

As you can see, the US is far more liberal in their stances on online betting and other similar vices, and to be blunt, online betting in America is nowhere near as mainstream or lucrative as it is in the UK. Yet.

It isn’t just a case of UK based online betting companies being forced to relocate to the States because of new legislation. After all, with safe havens such as Malta, the Isle of Man, and Gibraltar, why would they put themselves through unnecessary stress? There are other underlying reasons for this attempt at change.

To begin with, as well as rising costs thanks to new legislation, there are also business expenses. Yes, the industry generates billions, but their overheads are through the roof. Advertising and marketing for example, costs an incredible amount of money, especially when you consider that sponsoring topflight football clubs and leagues costs an unholy amount of money. There is also the fact that the UK is cracking down on tackling gambling addiction, and rightly so, but that is obviously having a negative effect on the gambling industry.

The simple fact is that the tides appear to be turning. In the UK, people are cracking down on online betting  and making it tougher for new online gambling sites to operate, whereas the US is gradually loosening their stance.

Sports betting is showing enormous promise in the US, which is highlighted year after year during the Superbowl. As the saying goes “Money Talks” and UK based betting sites are realizing that and can see the potential in the US.

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by Brian Perry // Brian Perry is a contributor to Businessing Magazine.

Opinions expressed by contributors are their own.