Is the Internet Ready for Casino Gambling?

The internet gambling story gets more interesting by the day.  For the last few years, internet gambling has been mostly a side story.  It was important, but not a dynamic story; not much happened from day to day or even month to month.  The story started to gain momentum in December of 2011 when the Department of Justice issued an opinion on the Wire Act that opened the door for individual states to legalize all forms of online gambling except sports betting. Almost immediately, states began examining the possibility of offering some form of online gambling; Delaware, New Jersey and Nevada each passed laws permitting some form of online gambling within a year.

The story slowed as those states drafted regulations and issued licenses to casino companies and secondary content providers.  When New Jersey casinos started to take online wagers in November 2013, the story picked up momentum again.  Nevada and Delaware struggle to generate much business, but New Jersey’s online gaming revenues increased each month and reached $9 million in January.  Possibly as an outcome of New Jersey’s experience, an industry battle emerged.  Until Sheldon Adelson fired the first shot in that battle it appeared the casino industry was united behind the efforts to expand onto the internet at both the state and the federal level. But Adelson changed that perception.

Now it appears that there are two very different opinions among existing gaming companies about online gambling; some see it as the future and very good for the industry.  Others see it as a threat to their individual properties and to the industry overall.  There are many casino operators on each side of the issue, but four operators have come to characterize the debate; Caesars and MGM stand for those advocating national legislation and regulation, while Steve Wynn and Sheldon Adelson stand for those advocating for national prohibition of online gaming.

It was shaping up to be the major story of the year, but then out-of-the-blue a really, really big story broke.  The websites of Sheldon Adelson’s Las Vegas Sands were shut down by hackers.  The hackers prevented any access to the website by the company, customers or regulators; the shutdown was total and involved the Las Vegas Sands’ casinos in Las Vegas, Pennsylvania, Singapore and Macau. It lasted for nearly a week.

The Sands was not the only online gaming story at the time; there were quite a few others. Boyd said its online players in Atlantic City were all new players and online gaming was not cannibalizing the existing customer base.  Analysts opined that cell phone use would accelerate the growth of online gaming in New Jersey and elsewhere.  And Jackie Gaughan’s South Point became the third online poker company in Nevada.

Those stories and the stories of the revenue numbers from New Jersey pale before the news of the Sands’ hacking.  If outsiders can shut down the Sands website and access the records of the company, the employees and the customers, they can shut down any online casino and hack into their records.  The internet is relatively new, it is still a frontier inhabited by some very unruly characters.  There are some major issues that have yet to be solved for those doing business online.  Hacking is possibly the biggest of those issues.  Recently, Target, Marriot, Sheraton, Westin, Kickstarter, Advocate Heath Care, Neiman Marcus and other major companies have been hacked.  Usually the perpetrators are seeking financial gain, but not always; sometimes it is just a game by the hacker and other times it is politically motivated.

After the Sands website was shut down, there was much speculation about the cause and perpetrators.  It does not matter who is responsible or why they did it.  All that matters is that it happened.  It matters that it is possible to hack almost any private, commercial or government website.  It means that at this time internet gambling can never be secure.  The security and integrity of gambling is fundamental to the casino industry. Without it the gambler may find himself in a back alley craps game, playing with loaded dice in a game dealt by a guy with gun and a bad temper.

Everyone involved in the process of legalizing online gaming is adamant that it is safe and secure.  They maintain the games are honest, that minors cannot gamble and everything is just as it would be on the Las Vegas Strip. They maintain the casino industry is ready for internet gaming. But, I think the internet is not ready for casino gaming.  I am not an expert on the subject, but I read about it.   And daily, I read stories about the vulnerability of every bit of information online.  The internet is too new and the problems are too big for casino gaming.  The casino industry might be ready for the internet, but the internet is not yet ready for the industry.


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