The US online gambling licensing process is slow and complicated, leading to many operators not even trying. We take a look at why this is and what may need to change in the future.
The US was one of the last countries to join the legal online gambling band wagon, with all forms of online gambling having been illegal until just a few years ago. Various federal laws such as PASPA made it impossible for gambling licences to get issued in any of the States, much to the dismay of international online gaming operators, many of which operated US facing sites in the past.
While this is all changing now and online gambling is becoming a reality in America, there are many obstacles for the operators and players alike. The cost of an online sports betting license in Pennsylvania for instance stands at $10,000,000 with additional renewal fees also applying. With both operators and players paying well over 30 per cent and 20 per cent of their winnings to the State, the costs of operating and playing both go up extremely fast.
Each State on its own
As you can see if you list the various legal online gambling sites in the US on AmericaGambles.com, gambling licences in the US are issued on a State-by-State basis. This means that the same gaming operator would have to apply for dozens of licences in order to operate across the entire country, with no federal licensing option possible.
This overly complicated licensing system is also extremely costly for the operators, who have to pay the high licensing fees in each State and must compete with others for an often limited number of licences. To add to the complexity, operators must look for live casino partners in each State. This has led to giant operators such as DraftKings, PointsBet and FanDuel to monopolise the market in some States while casino conglomerates such as Caesars and MGM are reaping the rewards for simply sharing their licence with them.
Online poker suffering greatly
One of the parts of the online gambling industry that is truly suffering from the State separation model in the US is online poker. Unlike casino or sports betting, online poker depends on the number of players online at the same time and on the same site, especially when it comes to tournament play.
For this reason, a nationwide concept would be ideal as it would allow big poker sites to organise massive tournaments with thousands of players and millions in the prize pools. Unfortunately, no federal online gambling law is available or in the works so each State is issuing its own licenses. The one good side of this is that US gambling sites are some of the safest in the world, with data protection a high priority, similar to casinos licensed by the Malta-based MGA.
One State that has already made online poker legal is New Jersey, but it is suffering from a relatively small player pool. With an overall population of fewer than nine million people, NJ is hardly the kind of market that could cater to multi-million dollar online poker tournaments from local population alone. This is why some major poker sites in the State such as PokerStars are reportedly losing money on these early endeavors.
What about the future?
Just some years ago, online poker, casino and sports betting were illegal in much of the US. Today, a growing number of States have made these activities legal and are issuing licences to various operators. The speed at which the entire process is happening is certainly praise worthy, but there is a long way to go for online gambling in the US.
The end goal that operators, affiliates and players alike are hoping for is a federal gambling law that would allow operators to offer services throughout the country with a single licence. Whether and when this will become a reality remains to be seen, although there is no clear plan for such regulation at this point in time.
Disclaimer: Play responsibly. Players must be over 18. For help visit https://www.gamcare.org.uk/