American Gaming Association President and CEO Frank Fahrenkopf addressed the prickly question of legalised and taxed U.S. Internet gambling when he spoke to the Global Gaming Expo in Las Vegas Tuesday this week. On the heels of the last minute stampede by the Bush administration to rush supporting regulations for the UIGEA through, Fahrenkopf told delegates that the online industry could provide taxes for state governments feeling the pinch of declining casino revenues which lowered tax income.
"Looking at our industry in hard times, it is a way to provide some revenue for state government," he said. Fahrenkopf gave an overview of the declining US economy and its impact on the land gambling business and state taxes, revealing that Nevada alone faced a $1 billion deficit this year.
Gaming revenues in the 12 states with commercial casinos have dropped 2.5 percent through the first nine months of 2008 and the trend worsened as the year went on, with a 4.6 percent average decline during the third quarter, he said, going on to detail the impact this has had in a business sense. Nevada gaming revenues were down 6.6 percent this September alone when compared with the same period in 2007, he added.
Fahrenkopf did not hold up much hope for an early recovery: "Let's not kid ourselves, this is not going to clear up tomorrow," he said. "Most of the experts are saying this will last well into next year."
Legalised online gambling could be a welcome source of additional income for his AGA members – the online gambling industry in the United States, even under currently restrictive legislative and enforcement conditions, has been conservatively valued at around $8 to $10 billion a year, and there is considerable potential for that to be built on in a legalised and taxed environment.
And most of the significant online competition for US gambling companies has already exited the US market, scared off by the Unlawful Internet Gambling Enforcement Act of 2006.
On the possibilities for regulated and taxed online gambling, and especially online poker, Fahrenkopf predicted that this contentious subject will become an important issue in the next, Democrat controlled, Congress. His members had differing views both for and against Internet gambling, and a study is being undertaken by the AGA in order that it may formulate a cohesive view, he revealed.
"This is the issue that will keep us the busiest next year," he said, commenting that parallel efforts could well take shape in Congress during 2009, perhaps a hint that the Unlawful Internet Gambling Enforcement Act and its confusing regulations may come under fire.
Tim Stanley the executive in charge of innovation, gaming, and technology at Harrah's Entertainment, concurred with Fahrenkopf's view, saying that his company was a supporter of properly regulated Internet gambling in the United States: "Each time that there is some sort of shift or change in economies, whether they be state, local, or federal, I think these things get back on the table as far as a rational discussion is concerned," he said. "I think that by and large under appropriately regulated and licensed operators that this can be a fun and fulfilling activity and I think that it could be a win-win," he said.
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