Listen to this article
The game was just getting interesting when UK-listed PartyGaming was forced to fold its hand and exit what was the world’s biggest online gaming market in 2006. But the US ban is now showing cracks after the European Union last month declared it violated trade rules. So perhaps it was not just fears of future prosecution but also hopes of one day re-entering the US market that spurred PartyGaming to agree a $105m fine this week.
Legalised gambling in the US has been a tale of stops and starts, with the influence of America’s puritanical founders counterbalanced by the frontier spirit of risk-taking. Lotteries raised funds for the founding colonies and the revolutionary war but were largely banned for a century. Returning in 1964, lotteries exist in nearly every state. Multi-state lottery Powerball generates annual revenues of $750m for member states and had a record prize of $365m in 2006.
Legal gambling was on the rise before the recession, with total revenues rising to $92bn in 2007 from $51bn a decade earlier, according to the American Gaming Association. But casino gaming fell nearly 5 per cent last year to $33bn with destinations such as Las Vegas suffering most. More accessible forms of gambling such as lotteries are having a mixed time, with Powerball doing well, though other lotteries have slipped. Quasi-illegal online gambling had $5.3bn in revenue in 2008, down from over $20bn before the ban, says H2 Gambling Capital.
The mainly European-based online industry would benefit hugely from a successful reversal of the US ban. Opposing them are the religious right, professional sports leagues and, until recently, casino operators. Mired in an awful downturn, the casinos’ position might be more flexible if they could get in on the high-margin act. After all, they know more than anyone when to hold and when to fold.
The Lex column is now on Twitter. To receive our daily line-up and links to Lex notes via Twitter, click here
Lex is the FT’s agenda-setting column, giving an authoritative view on corporate and financial matters. It is also one of the few parts of FT.com available only to Premium subscribers. This article is provided for free as an example. A Premium subscription gives you unlimited access to all FT content, including all Lex articles and the FT mobile Newsreader.
If you have questions or comments, please e-mail firstname.lastname@example.org or call:
US and Canada: +1 800 628 8088
Asia: +852 2905 5555
UK, Europe and rest of the world: +44 (0)20 7775 6248