The Future of Online Gaming

I had the opportunity recently to see a talk by Richard “Skip” Bronson, Chairman of USDG, a business focused on helping states, through a proprietary technology platform, capture tax revenue from the (illegal) gaming activity happening online in the US.  Illegal gaming is a $5B industry and Skip anticipates that market to double if it were to be made legal.

Skip clearly knows this business, he’s been at the top of the gaming and hotel industries for years having partnered on multiple projects with Steve Wynn and sitting on the Board of Starwood Resorts, and he believes the key to unlocking business opportunity in this industry is licensing on a state-by-state basis.  It’s not creating the next best online game as there is already incredible creativity and progress made in that arena, rather it’s partnering with states in a way that allows them to capture tax revenue from all the gaming transactions.

Apparently, many states are listening to USDG’s pitch for a responsible, regulated and legal online gaming system.  Now that 43 states have lotteries, an obvious form of gaming where consideration changes hands, gaming is no longer seen as socially unacceptable or taboo.

And California seems to be leading the way with Bill SB40 which would license and tax Internet gaming and which is under serious consideration.

What really struck me about Skip’s talk is the incredible business opportunities that will open up if and when gaming begins to become legal among the states.  Advertising is a prime example.  Large brands with huge online ad budgets are obviously reticent to advertise on illegal gaming sites, but imagine the value of ad placement and sponsorship to an audience that averages over an HOUR online per session if sites were operating within the law.

What other opportunities do you think legalization of online gaming will uncover?