Will Virtual Sports Play a Key Role in Opening up the US Online Betting Industry?

Written By Ian John on March 21, 2018

Here in the UK, and indeed across Europe and in many other parts of the world, it is relatively easy to understand which forms of gambling are legal and which are not. Head online and there are national laws and restrictions which are in place that allow betting service providers to offer certain types of products to customers in their respective countries.

So, in the UK for example, customers can play a wide choice of casino games, they can play slot games, they can also indulge in bingo, poker or other card games and of course they can also bet on sports with licensed bookmakers and betting exchanges.

With the UK having just one set of laws for these services, it offers punters across the country fair and equal access to all forms of betting available by law. However, there is one notable country in the world where this is not the case; the United States of America.

How the US differs to the UK in terms of betting legislation

In the UK, all gambling legislation comes direct from central government and applies to all of the United Kingdom. However, in the United States, central government in Washington D.C. has decentralised the rules on gambling and instead allows each individual state to decide what forms of gambling are allowed (if any) and which forms of gambling are not allowed.

In the US, gambling is legally restricted and to further complicate matters, there may be different laws in place for betting in person, compared to betting online. To add another level of complexity, rather than seeing gambling as a single operation in all its forms, the US breaks down gambling into further sub-sections namely:

  • Charitable Gambling – This is where a charitable organisation organises the gambling activity and receives a proportion of the profits generated from it.
  • Parimutuel betting – Similar to the Tote betting in the UK
  • Lotteries – As in the Powerball lottery
  • Commercial Casinos – As you find in Las Vegas, Atlantic City and similar
  • Tribal Casinos – Casinos based on reservations held by native American tribes across the United States.
  • Racetrack – Horse racing venues that allow betting
  • Online – This includes all form of online betting such as casinos, sports books, poker and bingo rooms.

Then each of the 50 states of the U.S will then either allow or ban each type of betting based on their own decision-making processes. This leads us to a somewhat crazy situation where one form of betting is outlawed in one state, but you can travel 5 miles over the border into another state and place a bet there perfectly legally.

Then there is the issue that affects areas such as Atlantic City where the state has banned a certain type of gambling (in this case commercial casino gambling), but these this city is exempt from that law! Amazingly, the only state where sports betting on single betting markets is legal is Nevada.

It is little wonder then that when online gaming first began to grow in popularity the US Government invoked the Unlawful Internet Gambling Enforcement Act (UIGEA) of 2006, which does not outlaw online gambling specifically, but does make it illegal to indulge in any financial transactions involving an online gambling service.

This is akin to saying that deep sea diving is not illegal, but if you want to do it, you’ll have to do so without any oxygen.

Challenges to the UIGEA and Introduction of Online Sports Betting in some states

However, in recent times there have been plenty of challenges to the UIGEA from people with a vested interest in online gambling. That can be companies who want to operate legally from within the US to a market already primed to gamble in many ways, to individual states or other jurisdictions that want to allow some forms of online gambling to their customers. The most notable was New Jersey taking its case to allow Sports betting in the state to the U.S. Supreme Court in 2017.

However, one form of gambling could be about to change all that and perhaps be the catalyst for sweeping changes when it comes to online gambling across the United States and that one form of wagering is Virtual Sports.

Why Virtual Sports is changing the face of online betting in the US

So how is Virtual Sports leading the way in attempts to give the US a more coherent policy towards gambling and online gambling? Well in 2017, emboldened by the success of Virtual Sports betting in the state of Nevada, which was first offered by William Hill, then a succession of other bookmakers in the state, a number of states decided to see whether they could challenge the ruling on online betting on sports, by offering Virtual Sports instead.

Of course, there is one big difference between betting on real world sports compared to virtual sports and that is how the result of the “match” is worked out. In the real world, two teams or individuals compete. In the Virtual Sports world, a computer algorithm with a built in random number generator is the way in which the results are worked out.

These states successfully argued that by working results out in this way, this was not sports betting but instead shared more a similarity with wagering on slot games. As such, Virtual Sports sits right on the great divide between slot gaming and sports betting.

New Jersey was the first state to offer Virtual Sports towards the end of 2017 and by all accounts, the first few months of operation have been a real success. So much so that Pennsylvania and Delaware have now joined New Jersey and Nevada in offering the game.

However, the feeling amongst experts is that a great number of other states will join up. A CBS News Report predicted that if New Jersey’s Supreme Court battle was a winner, which it was, then up to 32 states could soon be offering sports betting to customers within five years.

It will be interesting to see whether the sports betting revolution started with Virtual Sports in New Jersey sweeps the nation as predicted. But one thing is sure, with such a large market of potential customers, and such a thirst for sports in the United States, if and when Virtual Sports and Sports Betting is legalised in the United States, it could well bring in significant revenue (estimated in the CBS article at between $7.1 billion to $15.8 billion) for the major players and, of course, local government.

And it is for that reason alone, that many people are hoping Virtual Sports is the key to unlocking online sports betting across the United States.

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Ian John

Ian John is an expert across many realms of online gambling, both in US and international markets. Based in the UK, Ian covers sports betting, poker, and the regulated online casino and esports betting markets for a wide number of industry-focused publications.

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