How to Fix Internet Gaming in North America

All over the globe, internet gaming at digital casinos and poker rooms has progressed into a multi-billion dollar industry. In some countries, it’s thriving. In North America, however, a flawed regulatory design is holding the industry back from reaching its true, monumentally lucrative potential.

Canada and the United States have tread oh-so-slowly into internet gaming. In their own way, they’ve each dejected international operators.

Canada’s laws frown upon offshore operators, but do not effectively prohibit them from accepting Canadian player, resulting in a ‘grey market‘ for international operators. The United States has stiffer laws, with online gambling considered illegal in most states, classifying them as ‘black markets‘.

But for those Canadian provinces and US states where internet gaming has been embraced, their own laws are limiting the success of their endeavors. It’s no secret that legalization was achieved for the primary purpose of generating much needed government revenue. And as a secondary means (although they may claim otherwise), to protect consumers from the potential woes of unregulated iGaming.

Internet Gaming Success and Failure

If we compare the markets in North America to a more successful regime, such as the UK, the difference is astounding. There are dozens of highly successful, licensed operators in the UK, earning the government hundreds of millions of dollars (or rather, pounds) each year.

In Canada, there’s only one government-run operation per province, and just three provinces regulating the activity. The BCLC runs PlayNow in British Columbia and Manitoba, the OLG runs PlayOLG in Ontario, and Loto-Quebec has EspaceJeux. They are fairly lucrative, but have the potential to be so much more.

In the US, three states, Delaware, Nevada and New Jersey regulate internet gaming. Their set-ups vary. Only the three casinos in Delaware are allowed to run online casino and poker sites. In Nevada, there’s room for many operators, but only online poker is legal, and there are so few players (despite pooling with Delaware) that only WSOP.com has survived.

New Jersey is the only state to generate a fair amount of revenue from its iGaming industry. The state offers online casino and poker games, with five land-based casinos operating near two dozen websites. Still, the revenue is largely hindered. On the bright side, officials in New Jersey know what’s wrong, and are working to fix it.

Sharing the Market with International Operators

The biggest difference—besides revenue—between UK and North American internet gaming regulations is player sharing with international operators.

The UK allows international operators to apply for a license, and share their player base among other regions of the world where they are licensed. This creates a larger market with boundless player pools, and generates extra revenue through license fees. But the acceptance of international operators and player pooling has yet to take hold in North America.

In Canada, they want nothing to do with international gaming sites. They want Canadians to visit their own sites, from their own provinces, and nothing more. But it’s been proven time and again that it doesn’t work. Players want options. They want promotions. They want poker sites with a large enough player base that tables are active at all hours, not just peak times. And they’re perfectly willing to access offshore operators – not Canadian ones – to get these things.

In the US, New Jersey is working hard to expand its iGaming regime by partnering with international operators. NJ is the only place in North America where PokerStars operates, but under current ring-fencing laws, they cannot link up to their massive international player base. A simple alteration to the regulatory design would open the flood gates for a bigger, better online casino and poker market.

Perhaps if New Jersey succeeds, other US states will follow suit. And if that’s the case, it may just be enough to convince Canadian provinces that the time has come to leave old, ring-fenced ways behind and start accepting international operators – who would be perfectly willing to pay high-priced licensing fees, as they do in the UK – into the fold.