Online Gaming Pressure Mounting on Feds

Pressure is mounting on Congress to legalize and regulate online gaming in the very near future. But the pressure isn't coming from gaming companies or poker players. If Congress does act soon, it will be pressure from states that are working to regulate and tax online gaming themselves that forces it to act.

States vs. Feds
Right now states like Nevada, New Jersey, Iowa, and others are getting ready to pass legislation to legalize and regulate online poker and lotteries. With 51 (including Washington, DC) potential sets of rules and tax structures, the pressure is on Congress to pass a bill that would regulate gaming on a federal level.

This isn't the forum for a state versus federal jurisdiction debate, but I will take time to point out whom each side will benefit.

A Washington money grab
If the Feds end up regulating online gaming in some way nationwide, there's no question that the advantage goes to large gaming companies with the brand recognition and infrastructure to expand quickly into the new market. I have said that Caesars Entertainment and the partnership between MGM (NYSE: MGM  ) , Bwin.Party, and Boyd Gaming (NYSE: BYD  ) will take a lion's share of the play. The two gaming sites would be able to offer the best-known names in poker like the World Series of Poker, the Bellagio, and Caesar's Palace. They would also have the ability to quickly build a critical mass of players from a massive database of previous visitors.

Las Vegas giants Wynn Resorts (Nasdaq: WYNN  ) and Las Vegas Sands (NYSE: LVS  ) would be players as well but the impact won't be as big as companies with more casino offerings.

A free-for-all across the country
If the states win out the landscape becomes much more convoluted. It also opens the door for local casinos to capture a piece of the action. Ameristar Casinos (Nasdaq: ASCA  ) , Penn National, and Boyd Gaming all have casinos around the country and would stand a better chance against MGM and Caesars if states controlled licenses.

State regulation would also open up the business to new companies that could compete on a local level but not on the national level. The question then becomes: Who can build enough critical mass to build a strong business?

Online gaming is coming
No matter what happens, it appears the online gaming push is going to come to a head in the next few months. If Congress acts and passes regulation, the impact is fairly predictable, with major companies winning the race. But if states begin rolling out regulations the business may become a Wild West of operators.

Poll: Who will end up regulating online gaming?

  • A1: The Feds
  • A2: States
  • A3: I'm not getting my hopes up either way.

Fool contributor Travis Hoium does not have a position in any company mentioned. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw.

Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


Read/Post Comments (1) | Recommend This Article (5)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On January 20, 2012, at 9:53 PM, pokergiy wrote:

    Carbon poker Would be your best bet right now. It's the biggest U.S Friendly site and will probably be getting bigger in the near future. They also offer a good rakeback deal, so you can get a good amount of your rake returned. If your interested in signing up to Carbon Poker sign up trough this link to gain access to exclusive promotions and freerolls.

    Here is the link: http://tinyurl.com/6r94mww

Add your comment.

DocumentId: 1760336, ~/Articles/ArticleHandler.aspx, 4/17/2014 3:23:19 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 6 hours ago Sponsored by:
DOW 16,424.85 162.29 1.00%
S&P 500 1,862.31 19.33 1.05%
NASD 4,086.23 0.00 0.00%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

4/16/2014 4:01 PM
BYD $11.68 Up +0.01 +0.09%
Boyd Gaming Corp CAPS Rating: **
MGM $24.22 Up +0.76 +3.24%
MGM Resorts Intern… CAPS Rating: ***
ASCA $0.00 Down +0.00 +0.00%
Ameristar Casinos,… CAPS Rating: *
LVS $76.39 Up +3.21 +4.39%
Las Vegas Sands Co… CAPS Rating: ***
WYNN $205.00 Up +2.18 +1.07%
Wynn Resorts, Limi… CAPS Rating: **

Advertisement