2014: Rough debut year for U.S. online gambling By Aaron Stanley December 18, 2014 at 9:12 am By any measure, 2014 has been a humbling year for the online gaming business in the U.S. After starting with a bang in late 2013, all sorts of problems have completely halted its momentum. A quick recap: banks and payment processors have been reluctant to honor payments made to online casinos, Sheldon Adelson’s militant opposition to online play has created a massive schism in the industry, several vendors are already withdrawing products from the market after just a year, and one of the main companies behind the igaming push has defaulted on a bond payment and is on the verge of bankruptcy. And I almost forgot to include this: Quebec authorities raided the offices of Amaya Gaming, the new owner of PokerStars and the potential savior of the New Jersey online gaming market, because of what appears to be insider trading allegations. All that doesn’t make a captivating story for selling online gaming to legislators and the public. It’s certainly not what most folks expected around this time last year, when a nervously-approached Congressional hearing in Washington appeared to be a possible catalyst that could kickstart the business onto the national scene. Indeed, the hearing couldn’t have gone any better for online proponents. AGA president Geoff Freeman handily convinced the room that legalized and regulated internet gambling was the greatest development in history since the invention of the wheel. Proponents also had the pleasure of watching Andy Abboud, Adelson’s right-hand man, be ripped to shreds over Las Vegas Sands’ use of online gaming inside its properties. “That wasn’t just painful to watch, it was malpractice,” said one attorney who attended the hearing. But Adelson clearly has had the upper hand since then. As the 800-pound gorilla on the AGA board, he was able to force the organization to back away from the issue and revert to a more innocuous “gaming creates jobs” rhetoric, while outsourcing the intra-industry fight over igaming to outside coalitions. Adelson also helped scupper efforts to pass online gaming bills in the California and Pennsylvania legislatures, and fought vigorously for a rider that would have restored the Wire Act in the so-called “cromnibus” spending package that worked its way through Congress last week. Considering that body’s dysfunctionality, this was likely Adelson’s best shot ever at getting his Wire Act restoration bill through Congress. When the legislative branch returns in January, Harry Reid, the Nevada senator and Adelson ally, will have been dethroned from his perch atop the Senate, no longer wielding the same power and control. Despite these federal-level fireworks, internet gaming is still a state issue, and convincing local lawmakers that online casinos and poker rooms are the answer does appear to be an uphill battle at the moment. Online revenues in New Jersey, Nevada, and Delaware have fallen wildly short of the inflated estimates initially floated by giddy politicians and analysts, removing any hopes that this might be an immediate panacea for fiscal stability without tax increases. State legislators tend to be more pragmatic about revenues than igaming zealots, so it’s not surprising that many have now decided to look elsewhere for ways to plug their leaky budgets. As the battle for internet gaming rolls into 2015, perhaps the greatest hope of proponents lies in what did not happen in 2014. None of the nefarious things that opponents had warned about – underage play, money laundering, college students gambling away their tuition money, etc. – have transpired. This indicates that the regulatory system is, in fact, working. Proponents simply misjudged the market (by a long shot); there’s just not sufficient demand from consumers to bring in the types of revenues once promised. But a shortsighted push to advance online poker as a foot in the door to full-scale igaming means these arguments still make powerful bumper sticker scare tactics for opponents. They will surely continue to carry weight among those more concerned with law enforcement and national security than the health of the casino gambling business. To the casual observer, online poker might seem like small beer. But for those worried about online casinos being used by bad guys to transfer money, poker poses a much greater threat than sports wagering or house-backed games. As New Jersey weighs whether to grant a license to PokerStars, and California Indian tribes resume their quest to find some consensus on ipoker, law enforcement and national security are the thorny issues that must be continually addressed, as the promise of economic benefit and easy tax revenues is now easily debunked. More importantly, even one major instance of inappropriate usage or significant negative consequences of online casinos could easily sap the little momentum that remains after a rough 2014.