2006 From Online Gambling Perspective

2006 was a year of big changes, and while not all of them were all necessary, it will certainly be remembered as one of the most important years in the history of online gambling due to the sheer far-going influence of its events.

The first half of the year proceeded quite predictably; a lot of new online casinos and poker rooms were launched, in large cashing in on the unprecedented TV celebrity status of poker and other popular casino game shows (heavily sponsored by major online gambling outfits, such as Bodog.com, PokerStars.com, and PartyPoker.com).

The online gambling audience grew rapidly, with an estimated 50 million online poker players in USA alone. The multimillion prizes that WSOP winner Jamie Gold (as well as the controversy surrounding his prize) and other poker tournament winners have received, helped further fuel the public's interest, as well as celebrities joining in on the fun with the likes of HollywoodPoker.com that enlisted Hollywood celebrities to play in their online poker room... Even Pamela Anderson put her considerable poker talent to use by launching a self-branded poker room.

Nothing predicted any trouble when Playtech, the popular online gambling platform provider that powers some of the biggest online gambling outfits, placed a bit less than half of the company's shares in IPO for a staggering US $460 million. If anything, other leading online gambling software providers were even more eager to upgrade features and add new games to their software packages. The results were rather satisfying for the end-user: a large amount of new games were released this year on different software platforms, Slotland.com launched the first-ever mobile slots game, and a large number of features was introduced (Among others, Playtech itself added multiple-window feature that allows to have multiple game windows open, while Microgaming introduced new, clearer, bonus system).

However the newfound fame and glory of online gambling brought some unnecessary attention to the whole industry in the second part of 2006... With the whole online gambling industry worth an estimated US $12 billion a year, and with an estimated 70% of online gambling audience being Americans, American government decided to crack down on their self-imposed old anti-gambling laws, which don't allow online gambling sites to operate from USA, therefore facilitating the flow of American funds abroad, to such gambling-friendly jurisdictions as South and Central America, EU, Canada, UK, Australia, and others, at a time when the American dollar is already dangerously weak...

Following the old truth that states “breaking's easier than fixing” the Bush administration, driven by the same Republican party that lost quite a few votes this summer after being implicated in the Jack Abramoff scandal, decided to crack down on online gambling in USA. For those unfamiliar with the story, Mr. Abramoff was lobbying the interests of certain land-based casinos in the USA, often while putting them against each other. At least 15 senators, mostly Republican, were implicated in the ongoing FBI investigation into the matter. Abramoff was subsequently convicted at the end of 2006, while some senators were forced to quit their positions.

The crackdown, however, was imminent. July through September of 2006 will be remembered for arrests of high-ranked online gambling company CEOs, including executives from such companies as SportingBet and BetOnSports, while they were on a visit in the USA. They were charged with such charges as multimillion dollar tax evasion, breaking the USA Telephone Betting act, racketeering, fraud, conspiracy, and various other offences. As a result both of the charged CEOs quit the positions they held in their respective companies, sending their stock shares into a deep dive. As another direct result of these events, most online gambling conventions, expos, and other similar events due to be held in the USA were canceled or moved to Europe or the Caribbean, as online gambling execs were unwilling to try their luck by landing in a USA airport.

The assault on online gambling in USA did not stop there though, as the Republican senate majority attached a proposition to ban online gambling in the USA to a vital to American security Safe Ports Act (which as the name implies, was originally only supposed to secure American sea ports from possible terrorist attacks). While this new act, dubbed "Unlawful Internet Gambling Enforcement Act of 2006", does not outlaw online gambling on the part of the player, it does impose steep fines and penalties on financial institutions and gambling operators that facilitate online gambling. The senate passed the bill on September 30, 2006, and American president George W. Bush (Jr.) signed the Safe Ports Act on October 13, 2006.

The results of Unlawful Internet Gambling Enforcement Act were devastating: within hours of it going into effect the stocks of biggest online gambling companies, including 888.com, SportingBet and PartyGaming, lost up to 75% of their value. Many more, including BetOnSports (and sadly, PamelaPoker.com -- the aforementioned Pamela Anderson's poker room), had to close their doors.

Due to the new legal environment in the USA, around 50% of remaining online casinos, sportsbooks, and poker rooms (mostly powered by Microgaming and Playtech, and/or owned by publicly traded companies) had to close their doors to players from United States of America, thus eliminating at least 70% of their potential and active player base. Nevertheless, some others (mostly RealTime Gaming based and independent software casino operators) decided to continue their internet operations as regular, accepting USA players while disregarding the Safe Ports Act. Furthermore, some popular e-wallets that were commonly used for funding online gambling activities, including FirePay.com, stopped offering services to their American customers in order to avoid US government sanctions.

At the same time, the British government decided to also get a grip on online gambling, which we here at Top Casino News see as a positive thing (keeping in mind the number of “rogue” casinos out there – the dishonest online casinos that take your deposit but don't like to pay your winnings), if done reasonably. The British knew what to do too – instead of banning online gambling altogether like Americans did, they've decided to regulate the industry more, while creating a special regulating body for online gambling in the UK, due to start working in Q2 2007.

The last quarter of 2006 continued on a down note, with more and more casinos banning USA players, diversifying towards other-than-US traffic and languages, or shutting down altogether. Larger companies consumed smaller ones (for a fraction of what they were worth at the beginning of the year). Among others, a notable deal was the December 2006 purchase of Empire Online and IOG assets for a total of US $66 million by the giant PartyGaming.com, which was looking to diversify its activities from the traditional poker revenues.

Overall, 2006 was a very mixed year. Facilitating online gambling is now illegal in USA, but online gambling itself (as a player) is not illegal just yet. While USA is prohibiting online gambling, other countries, including the UK, are taking concrete steps to regulate online gambling and protect the players. Republicans are the ones that pushed through the online gambling ban in USA, but now they've lost their majority in both the House of Representatives and the Senate to the Democrats, who largely were against the ban.

Last but not least, somewhere out there, there's 50 million pissed off American online gamblers (which is a lot, if we keep in mind that American population just surpassed 300 million this year), that can no longer play in their favorite online casino or poker room (which means that 1/6 of the population still means nothing when the government wants to prohibit something). Now, we'll just have to see what 2007 brings. One thing is for certain -- no matter how the dice will fall, 2007 will be an interesting year.