Inside Asian Gaming

he size of the online gambling indus- try worldwide is expected to fall by more than US$4 billion in the near term to US$14.2 billion as a result of the US government’s 2006 ban. UK-based Global Betting and Gaming Consultants, which recently released the projections, had anticipated the market to grow to US$18.6 billion prior to the Unlawful Internet Gambling Enforcement Act, which was signed into law by President Bush last October. Online poker, which was expected to generate US$3.9 billion in revenue in 2007, will fall to US$2.7 billion, with the US market revised downward from US$1.82 billion to US$730 million. GBGC pointed to the arrests earlier this year of two prominent NETeller shareholders as a sign the US Justice Department will con- US Online Ban Fallout According to a recent study, the US ban on online gaming could shave US$4 billion from online revenues in 2007 tinue to crack down on operators who take bets from US players. “Operating conditions will become even more difficult in the short-term,” the firm said. Although this “should shift some of the power back to the [publicly] listed players,” GBGC said, the impact has been felt par- ticularly hard in the poker sector, where the United States largely fed the industry with liquidity and high-yield players. Since UI- GEA, PartyPoker’s average yield per player is estimated to have fallen by as much as 50% while its player numbers have declined, ac- cording to GBGC. “Operators have not found it as easy to boost average yield as they acquire new play- ers, calling into question the quality of the players operators are acquiring as they ramp up their marketing efforts,” the firm said. “One of the problems is that the listed companies are having to replace experi- enced players with novices,”explained GBGC partner Simon Holliday.“It is clear that follow- ing a short take-in of breath that the listed companies have repositioned themselves, but they still have some work to do if they are to develop lucrative markets outside of the US.” Holliday said, however, that he remains optimistic. “I firmly believe that the online gambling industry will continue to flourish, and that although the US legislation and the ongoing arrests will continue to place pres- sure on the market, as with alcohol in the past, prohibition will not work.” Reprinted with permission from International Gaming &Wagering Business magazine hileMacau is preparing regulations to open the Chinese casino enclave to Inter- net operators, the government in Beijing an- nounced it is stepping up its crackdown on remote gambling. Mainland China has launched a three- month drive to “purify the cyber environ- ment,” according to a joint statement of the ministries of Public Security, Culture and Information Industry, focusing on Bei- jing, Shanghai, Guangdong and Zhejiang and calling on local governments to more strictly monitor online activities in their ju- risdictions. “The prevalence of online gaming has ruined the online environment and harmed young people’s growth, which runs against the policy of building a harmonious society,” the ministries said. China implemented a law last year in an effort to combat Internet pornography,spam, viruses and gambling. Offenders face stiff China Crackdown While Macau weaves a red carpet for Web operators, China seeks to “purify” its cyber environment prison sentences. Among other provisions, the law also bans minors from Internet cafes. According to official sources, Chinese authorities last year investigated more than 340,000 gambling cases involving more than 1 million people. More than 3.56 billion yuan (US$425 million) was seized. Gambling has been illegal in China since the Communists seized power in 1949. This has been a boon to the Macau peninsula, the former Portuguese colony that was re- turned to Beijing in 1999 and is home to a flourishing land-based casino industry. Web gambling currently is illegal in Macau — al- though the Macau Jockey Club and some greyhound racing operators are allowed to take Internet and telephone bets — but the local government’s Gaming Commission announced at the Pacific Congress on I- gaming earlier this year that it was develop- ing a regulatory framework that will permit operators everywhere in the world to apply for licensing. “These are not features that have yet been passed, but we intend to regulate ev- eryone, anyone who accepts bets, including betting exchanges, will be regulated, and the regime will be open to all,”said Commission- er for Gaming Jorge Oliveira. “We have everything set up,we are build- ing the framework and we take the view that that we should take one step forward,”Carlos Lobo, legal advisor to the Commission, told the conference. The regulations, however, might not take effect until 2008 or later,according to reports, and given Beijing’s hostility it is not certain whether licensees will be taking bets from the mainland. Oliveira suggested a tax rate possibly as high as 25%. Reprinted with permission from International Gaming &Wagering Business magazine 48 T W