How Google Could Change the US Online Gambling Market

John Mehaffey September 13, 2013
How Google Could Change the US Online Gambling Market

This editorial was inspired by an article published by the Daily Mail citing rumors reported by UK traders that Google may be interested in acquiring bwin.party.  There is no evidence that such an acquisition may take place, or that the two companies have entered into any negotiations.  In fact, industry sources have widely dismissed these rumorsThis editorial is only meant to give an opinion about how important a company like Google could be to the US regulated online gambling industry. 

Struggles of bwin.party

The recent struggles of bwin.party are well documented.  The company anticipated that its latest online poker product would reverse declining revenue.  The new poker platform has been plagued with issues, which were described as a “minor disaster” by Pokernewsdaily.com. 

Bwin.party applied for a license in New Jersey to provide online gambling software to Borgata.  Should bwin.party receive approval from the New Jersey Division of Gaming Enforcement to offer these services, it could go live as soon as November 23, 2013.  Bwin.party’s approval and performance in New Jersey could define the company’s future.  If approved for an interactive gaming license, it would be partnered with the highest grossing casino in Atlantic City.

Why Google is Important to US Online Gambling

Google is more than just a search engine.  It is the world’s second largest tech company in terms of market capitalization.  Apple is the only tech company in the world worth more money based on stock price.

Google owns the Android mobile platform, which is used by over 750 million devices worldwide.  Android is the most popular mobile platform in the world, according to the same report.  Google acquiring an online gambling company would give a substantial number of these users easy access to apps to play their favorite casino games, including online poker, depending on the local regulatory environment.

Not only does Google control the search engine industry, it also owns YouTube.  This gives Google a media avenue that is certain to take off in the coming years.  Smart TVs are currently manufactured with a YouTube app.  While the videos available through this app are minimal today, this may all change as media moves away from traditional television. 

While it is less relevant to online gambling, Google also maintains sophisticated technology products that are used in everyday life.  Google Maps is an app used one billion times each month.  Google also offers Gmail, Chrome, high speed internet, music services and Google Glass.  These products are just a sample of what Google offers now and what will become mainstream in the future.  All of these products could become heavily advertised venues for Google in the future.  Adding online poker to this mix could be a positive for the industry’s reputation.

Google Lobbying Efforts

Google funded over $18 million in lobbying efforts during 2012, the most spent in the company’s entire history.  According to DailyTech, that placed the company in eighth place in terms of lobbying money invested by US companies.  Google spent more in 1Q 2012 than Amazon, Apple, Facebook and Microsoft combined, according to the same report. 

A massive online gambling lobby led by Google could prove to be more successful than the entire effort currently taking place among poker lobbyists and individual players. 

Should Google acquire an online gambling company, it would be the largest company to ever own such a business.  Its current market cap is 32 times that of MGM Resorts, and 560 times the current market value of Caesars Entertainment, based on stock prices at the time of this editorial.

State Legislative Efforts

It may be too late for online gambling to be legislated at a federal level.  If that is the case, Google could be the perfect company to handle a state-by-state lobbying effort.

Google’s headquarters are based in California, which is considered to be a key state for online gambling regulation.  Online poker bills have failed to reach the legislature’s floor in the state for years.  Some sources have stated that the reason for this is a lack of common ground among the state’s gaming interests.  This may change if one the state’s most influential companies had a reason to lobby lawmakers on behalf of the industry.  This might encourage California gaming interests that have yet to agree on terms to reach a compromise. 

Considering the poker is a skill game argument appears to be a losing effort, a company with a history of supporting internet freedom might be what the industry needs to turn the corner.  

Rumor is Unsubstantiated

It is important to note that there is no evidence that Google has seriously considered acquiring any online gaming company at this time.  This editorial was not written to predict any potential takeover target by Google and is not meant to be construed in any way to be investment advice. 

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