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Rumblings in the Internet Gambling Industry

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In the light of Italys recent reaction against Maltas gaming authority website, one must question what looms ahead for European trade and world trade in general. Some people are against online gambling because they want to keep their own gaming operations safe.

The World Trade Organization, in a lawsuit pitting Antigua and Barbuda against the United States, has concluded that U.S. policy toward Internet gambling is inconsistent with international trade norms, because some American horse-racing operators are permitted to accept bets online. Despite the fact that the possibility of retaliatory sanctions from small Antigua has not affected U.S. policy making, analysts say the stakes may be larger in any eventual confrontation with major trading partners.

Britain’s liberal stance on gambling in Europe has already irritated some of its neighbors who take a stricter stance. Italy, earlier this year tried to prevent international internet gambling firms, such British sports-betting sites, from operating in that country. With recent judicial judgments going against national monopoly operators, the European market is set to liberalize.

The American Gaming Association, a lobbying group whose members include the major Las Vegas casinos, has recently proposed a study to look at how online gambling could be authorized and regulated in the United States.

Conservative Republican leaders in the House want to make Washington’s opposition more explicit, and they released a “American Values Agenda” last week that prioritizes a statutory ban on Internet gambling among proposals like a constitutional ban on gay marriage.

These factors cast doubt on the long-term viability of online gambling. The result has been a drop in the value of shares issued by gambling enterprises. Online gambling’s popularity keeps rising. Many experts have recently stated that they see no end in sight for the popularity of online gaming. From $15 billion this year and $3 billion in 2001, Christiansen Capital Advisors, a U.S. consulting firm, predicts that global internet gambling income would climb to more than $24 billion by 2010. Growth in Internet versions of casino games like roulette may have calmed slightly, but poker is soaring, and the World Cup soccer competition is providing as a stimulus for online sports betting.

To broaden their customer base and win over customers from countries other than the United States, offshore companies are beginning to provide a wider variety of services. Backgammon is a popular game in Europe, Asia, and other parts of the world, thus PartyGaming launched a new site for it last week. John Shepherd, the company’s representative, claimed that they were also thinking about expanding into the booming sports betting market in the internet gaming industry. One of the biggest issues for online providers is a relatively high rate of customer turnover; this can be mitigated by giving a wide variety of gaming alternatives, or “cross-selling,” to customers.

There is currently no country that has presented a valid cause for prohibiting online gambling. Since the free market usually wins out in the end, any ban is likely to be temporary. Despite the fact that investors have been fretting over a potential legislative restriction in the United States, it is probable that legalization will be detrimental to the already established online betting industry. Since it has been so difficult to prevent Americans from visiting such sites, these businesses have benefited from the current hazy regulatory status quo in the United States, where online gambling gets roughly 80% of its business.

We should begin to anticipate more competition and firm mergers in the gambling industry in anticipation of the failure of current measures to ban gambling in congress. If the US were to legalize online gambling, land-based casinos in the US would be free to compete with their foreign counterparts. They may eventually be able to corner a sizable market share thanks to the prominence of their brands and their expertise in advertising.

Although laws and rules are essential for the safety of everyone, it is the free market that ultimately determines what is best for society. In the case of online gambling, the same thing is bound to occur. It is inevitable that governments will come to see that protecting a community is best accomplished not by curtailing individual liberties but by fostering an equitable setting in which human inventiveness and market competition are free to determine the course of action.

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