California Or Bust: Online Gambling Industry Insiders Pin Hopes On Golden State

Steve Ruddock May 1, 2015 1526 Reads
US legal online gambling survey

A recent iGaming survey conducted by CAMS, a company that provides online gambling and lottery operators with payment connectivity, geolocation, and Know Your Customer (KYC) verification services, garnered some incredibly interesting results.

The survey, dubbed “The State of Online Gambling in 2015,” was posed to 113 industry insiders, asking them to offer up their thoughts and predictions on eight iGaming topics ranging from expansion efforts in different states to confidence levels in age and geolocation verification.

“As with most industries, ours regularly hears from many of the same voices saying the same things over and over again, which made us wonder what the rest of the industry is thinking about these hotly debated issues,” said Matthew Katz, founder and CEO of CAMS.

“In asking opinions of everyone, we heard some new things that were surprising and could shape the future direction of the industry.”

Here are the complete survey results and some of my own commentary about what they might mean for regulated online gambling in the U.S.

Will online poker be approved in CA in 2015?

  • Yes – 32%
  • No – 68%

Despite passing Assemblyman Adam Gray’s AB 431 through Committee on Monday, California still has to figure out a way to bring the state’s gaming interests together on the issues of bad actor and tainted asset clauses and the role the racing industry should play.

These are extremely complex issues, and either one has the capability to derail a bill. Frankly, I’m surprised 32% voted yes.

Will some form of online gambling be approved in additional states in 2015?

  • Yes – 76%
  • No – 24%

If we include online lotteries this is quite likely to occur.

In fact it sort of already has, as Michigan launched its online lottery in 2015, and several other states could follow suit.

Online poker and/or online casino games are a different story.

California and Pennsylvania are the frontrunners, but both states still have a long way to go before one of their proposed bills becomes a law.

Which state(s) will make progress toward licensed and regulated online gaming in 2015?

  • Pennsylvania – 60%
  • Massachusetts – 17%
  • New York – 43%
  • Other – 10%

This question produced compelling results.

Pennsylvania was a given, considering the state has already made significant progress on iGaming in 2015, but the number two and number three vote getters (New York and Massachusetts) would indicate expansion beyond California and Pennsylvania could be a long time in the making.

New York began flirting with online gaming expansion last year, but most lawmakers want to see the state’s brick and mortar casino expansion completed before further broadening gaming. This will likely be several years down the road.

Massachusetts is in a similar position, as the state is in the midst of constructing two and possibly three resort style casinos. Furthermore, Massachusetts lost its biggest iGaming champion in former State Treasurer Steve Grossman when he lost the Democratic Primary for Governor to Martha Coakley, who later lost to Republican Charlie Baker.

If NY and MA are two of the top three candidates, don’t expect much expansion in the next few years.

Which states will approve Internet lottery in 2015?

  • Florida – 41%
  • New Mexico – 9%
  • None – 48%
  • Other – 7%

This one is tough to gauge, as many officials have taken the position that expansion into online lottery sales doesn’t require a bill to pass through the legislature.

In addition to the states mentioned above I would add West Virginia and Kentucky as likely candidates.

Will the Adelson-backed Restoration of the Wire Act (RAWA) pass Congress this session?

  • Yes – 13%
  • No – 87%

In my opinion, 13% is still way too high, but it clearly demonstrates the RAWA push is losing some of its force, and fewer and fewer people are fretting over a federal ban.

About existing age and ID verification protocols, I feel:

  • Very confident – 52%
  • Somewhat confident – 34%
  • Not at all confident – 14%

The surprising result here is the 14% of industry insiders who are not at all confident with player verification methods – the same ID verification systems that are in place for online banking.

About existing geo-location protocols, I feel:

  • Very confident – 43%
  • Somewhat confident – 36%
  • Not at all confident – 21%

Again, to find 21% of industry insiders lacking confidence in geolocation surprises me. This figure is even more surprising when you consider the results of the eighth and final question – which, unlike geolocation, is a real issue the industry is trying to solve – received identical results.

About general acceptance of credit cards in the next 2-3 years, I feel:

  • Very confident – 43%
  • Somewhat confident – 36%
  • Not at all confident – 21%

With a two to three year window, this question is more about predicting how banks will view the regulated online gaming industry down the road than anything else.

If in two to three years the situation hasn’t dramatically improved, online gaming in the U.S. could be in significant trouble.

Takeaway 1: Confidence is relatively high

Overall the respondents seemed pretty satisfied with the technology and regulatory controls in place.

Takeaway 2: iGaming expansion is coming – we just don’t know where

While there wasn’t much of a consensus on who would legalize online lottery and/or online gaming in 2015, there was a lot of optimism that someone would.

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