Legal online gambling in the US? No, thanks!

Or why the casinos, affiliates and everyone else would not like to see online gambling legalized in the United States.

Many folks in the casino affiliate industry want to see online gambling legalized in the United States. But did anyone stop and think about what would happen, in reality, if online gambling became legal today?

The online casinos

The online casinos, despite what they might say or think, would not want to see USA giving licenses to online gambling websites. Why? Because we know how US operates when it comes to laws - it always gives the advantage to the local business and already established companies, with big money in the pockets. If a law was to be passed, allowing online gambling companies to be licensed by the US, you can bet that it will have the following condition: only casinos with land-based presence will be granted the license to run online gambling websites. Which will mean that Harrah's would have the opportunity to run an US-licensed online casino, but Bodog wont. (At this point, some people may say that it will go against the WTO rules of free trade, but lets not forget that there is already legal horse race betting, i.e. US could care less what WTO thinks).

And then - the taxes. If a casino gets a license - it should pay taxes in the jurisdiction which issued the license. On average, land based casinos in the United States pay about 10% in state taxes (excluding Indian casinos, of course), so it is safe to assume that the imposed tax on any future gambling venues will be at least 20%. The online casinos don't want to pay that. There are many casinos which could have gotten a license from the UK, for example, but they chose not to do it - why pay taxes when you don't have to?

The online casino affiliates

Many casino affiliates think that legalizing online gambling in the States will be the best thing ever to happen to them. On the contrary - it will be the worst thing to happen. The business for the affiliates was built because of the "gray" situation. Because of the uncertainty of the legal boundaries many affiliates enjoy big commission checks for referring players to online casinos. Do you think that Harrah's would pay 40% commission on the players you refer? Not likely, you'd be happy if they'd pay you $10 a player. If online gambling was legal - they could channel the affiliate cut to legal advertisement - such as TV commercials, newspaper ads, ads in your Yahoo mailbox etc. A few big gambling portals may see some revenue from ads, but most of the affiliates will be in a worse situation than they are now.

The people

Well, if the above situation would ever occur - players at the online casinos should forget about the bonuses all online casinos offer today. The land based casinos will not offer any free money, despite the competition among them. There are 100s of casinos in Las Vegas, one next to the other - but they don't give you free money and reload bonuses just for stopping by. And even if all online casinos were to become legal - there still will be no bonuses - for example, Bodog has recently announced that due to the extra charges from the few payment processors they have left, they stop all reload bonuses for their players. And this is just from a few percent increase on payment processing. Think about if they had to pay taxes... Bonuses will disappear, odds will get worse, jackpots will shrink, comp points will get smaller, just so the casino will be able to pull the profits they are after.

And besides the bonuses disappearing - players would have to pay gambling tax on their winnings...

So the best scenario for everyone (including the USDoJ) is for online gambling to stay on the grey side of the law. If online gambling was to be outlawed completely - it would create a whole bunch of criminals - from the college student spending $100 at the online poker rooms, to the soccer mom, playing 50 cent slots online. If it was legalized - well, the above was one of the possible outcomes.