Regulation Could Help Break Stigma of Gaming Industry

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Thursday, March 31st, 2016 | Written by Shane Larson

Online gambling is viewed negatively by many segments of society, with those against the industry imagining people going online, visiting illegal websites, and gambling away their hard earned income with the money they spend then going towards funding criminal activities through offshore accounts. Those familiar with the industry, however, know those perceptions are completely inaccurate.

In fact, the past 10 years has seen many countries, as well as some states in the US, regulate online gaming leading to it now being viewed as a legitimate industry. Today, the global market is estimated to be worth around $35 billion, meaning there are plenty of lucrative opportunities available for those investors willing to take a chance on iGaming.

Regulation Changing the Climate

In many industries, regulation is a ‘dirty’ word, as it is synonymous with government oversight, suggestingincreased costs for companies. In the world of iGaming, things are very different, as many operators welcome regulation from government agencies despite the fact that it means paying taxes, and often having to comply with complex rules.

Regulation allows online gaming operators to have a clear understanding of what their tax rate is and to know which games are legal in a certain area and worth investing in developing. This makes online gambling businesses seem like a more secure investment, as their costs are more fixed and predictable.

In addition, regulation makes it legal for online gambling businesses to advertise their services online and through other channels. This makes it easier to attract new players and further increases the appeal of online gambling as an investment.

Perhaps the most important benefit of regulation, though, is legitimacy. When online gambling becomes regulated by a government agency, operators become established, reputable businesses both in the eyes of investors and the general public. As more countries and states begin legalizing online gaming and regulating it, the myth that online gambling is somehow bad or dangerous is more and more dispelled. Now, operators can be viewed as legitimate businesses, making real profits and paying their fair share of taxes on their revenues.

Other Positive Influences

While regulation is having a powerfully positive force on the online gaming industry, there are other factors that are contributing to the growth of the industry and making online gambling businesses more appealing to investors.

One such change is the popularity of smartphones and the advancements in technology that now make it easier for people to place wagers and to play poker and other casino games online. These days, people don’t have to sit in front of a computer for hours; they can enjoy online gaming on the go, which has led to higher player engagement. Experts estimate that 50 to as much as 70 percent of revenues made by online gambling sites come in the form of small wagers that are made on mobile devices.

As regulation expands and technology continues to advance, the future of online gaming is only bound to get brighter, and as more investors begin to view operators as legitimate tech businesses, companies will likely have more funds available to invest in lobbying and research and development.

iGaming Varies Between Countries

Each country has its own different approach to online gambling. The USA, for instance, takes a strict approach to the issue, and while it is now up to the individual states to decide whether to adopt regulation, up until now just three out of 50 states have embraced their own online gambling industries. Initially, these states were keen to keep their markets separate from those of other US states, but a lack of liquidity has since forced Nevada and Delaware to combine their poker player pools.

Similarly, many of the European main markets that have adopted regulation have also ring-fenced their markets from those of other countries, including France, Italy, and Spain. While this has lead to woeful online poker industries, the poker vertical is seen as less important than online casino gambling, for instance, and so the situation seems unlikely to change in the near future.

The UK and Denmark, on the other hand, present examples of more progressive countries with open regulatory rules in place. In these countries, foreign operators are judged less strictly when iGaming licenses are issued, while their respective online poker markets also enjoy ‘open liquidity’, meaning domestic players are allowed to compete against other poker players from all around the world.