Do Online Casinos Have a Future in the US?

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Since the very beginning of online casino businesses, such enterprises have been a hot topic of discussion. Many people predicted that the vogue for online “casino-going” would soon pass — even if they still appreciated the beauty of the very idea of online gambling themselves. Others insisted that this kind of gambling would soon seriously damage, if not kill, traditional casino business. And some other people quite reasonably admitted that such kind of innovation is much easier to introduce, in purely technical terms, than to actually protect and sustain legally.

However, the passage of time helps us get some real perspective. And a lot of time has most certainly passed since the first real money wager was made in an online casino in 1996. So, have people’s expectations been fulfilled? And what is going to happen in the future?

Niche Effect

The appeal of traditional casinos is not limited to all kinds of gambling and the usual wide variety of games to play. It also includes many other things that casino goers thoroughly enjoy: the atmosphere, the ambiance, the company, and the audience. And not only that: you also have all the security, trained personnel, and nice features of some of the really exclusive locations out there! Online casinos cannot and never will be able to offer all that! Nevertheless, online casinos have gained a dedicated clientele, and they are still recruiting new fans all the time. And this will probably be the case in the future, too!

Why? Because of the niche. The advantages are different, and they are many. You stay at home, playing anytime you wish, and enjoying the fantastic range of online games on offer. Many games are free, welcome bonuses are nice, players gain points quickly, and so on. And on top of that, online casinos tend to develop really fast, as new design features appear and new gambling software comes on the scene. All this creates a specific market niche – niche online casinos have actually caught on, and have successfully widened their scope over time. But inside this niche, online casinos can only compete with each other.

The Competition

The competition between the casinos inside their own particular market niche is going to get tougher and tougher over time: for this is a long-term trend. Currently, there is no sign that competition in the USA will slacken up even a little. Just look at the online gambling products offered on the market: the games, the bonuses, the interface, the design, and other features that are improving all the time. There is really intense competition for the customer’s attention.

But, at the same time, the market for online casinos is still growing quite fast, along with an ongoing global trend of about 10% annually. The tough competition on this quickly growing market might mean only one thing: the actors fully understand what is at stake, and so they keep on striving to prevail over the competition as they go on. They are strong believers in rapid growth!

Growth Potential

It comes without saying that all growth is limited. The limits to growth are many in number, and they are quite difficult to track, as they constantly change both in terms of their numerical value, and their importance relative to each other. For example, demographics change over time, which brings around new players. However, it is not fully clear whether demographics are going to significantly contribute to the growth of this industry in the U.S.

Nor is there a direct correlation to the general level of wealth either; even among the target groups. It might have seemed that the more money people could afford for gambling, the better overall industry performance would be. Of course, it is not quite as simple as that, because there are many other factors which are likely, in fact, to reverse the trend.

We can be sure that there are more of these attractively designed games on the way, with the excellent user interfaces and user experiences we have all come to expect. Indeed, this is the advantage online gambling has gained over traditional casinos and other gambling venues. And this advantage is going to be a strong factor of growth. But again, it is difficult to exactly predict how many new players will be recruited through this channel; or indeed,  any other one, the only exception probably only being mobile platforms. Mobile gambling applications will strongly drive market growth in the online casino business.

The same probably relates to virtual reality technology in online casinos! First introduced in 2015, this technology has been improving quickly. And up to now, it has succeeded in offering a fascinating new gambling experience that was previously unavailable online, and which is capable of attracting more and more customers.

Legal Issues Limiting Growth

There are several limiting factors for further growth, including certain legal issues which do represent some major uncertainty for online casino entrepreneurs. For the gambling industry, such factors are always a kind of force-majeure, a force beyond the reasonable control of the market actors – both customers and service providers alike. The Unlawful Internet Gambling Enforcement Act (UIGEA) adopted in the United States in 2006 was exactly the case. In particular, online gambling-related transactions suddenly became illegal for financial institutions. This caused many online gambling providers to quit the U.S. market. And some of these businesses even folded completely!

UIGEA is still effective in the U.S.; nevertheless, some states are legalizing online gambling. There still are many controversies within society about different aspects of this legislation. And yet the math goes in only one direction: online gambling does turn a considerable profit. Administrative bans never work well, and many countries prefer to regulate rather than forbid. However, the question is what precise regulations will be applied, as well as how they will work.

Is There a Way to Reliably Predict the Future of Online Casinos in the U.S.?

There is one way of forecasting market performance: looking at the previous market dynamics in order to make our extrapolations more accurate. This works for market analysis in other industries, but it is hardly a useful strategy in online gambling. The reason for this is gambling legislation; a real force majeure that can change everything. So, if you want to get a truly accurate angle on this topic, you will need to keep an eye on possible changes in legislation to begin with!

It is very likely that more states will end up legalizing online casinos. And this is the major factor of future growth. There are only three states in the U.S. where online casino businesses are legal: Delaware, New Jersey, and Pennsylvania. Nevada is a poker-only state so far. These states will only contribute a little to the growth of the industry.

It should be noted that some other kinds of gambling, like online lotteries and sports betting, are legal in some other states as well. The new legislation on online casino will certainly come as a whole package: complete with sports betting, poker, lottery and DFS (daily fantasy sports) too! There is a certain synergy here for online casino business to enjoy; and so, it does look very likely we will all see some growth in this particular business.