The gaming sector traded up sharply today on reports that a Department of Justice opinion could open the door to legalized online gambling.
The Department of Justice’s opinion was sought as New York and Illinois seek permission to bring their lotteries online.
Stocks of traditional Las Vegas casino companies like Wynn and MGM got a boost from the news that the legality of online poker and online gambling as a whole in the United States might be a decision handed over to individual states soon.
While traditional casinos certainly stand to benefit by expanding online, it wil be interesting to see what position they take when it comes to state level regulation. When online poker was made illegal, lobbyists for casinos were actually some of the largest groups to support the decision. Online poker – which was in a gray area, since poker players argued that it was more a skill game than gamble – was seen as a threat to brick and mortar casinos.
If Las Vegas and physical casino operators extend their brands online, it could certainly bring a new stream of revenue, but it would undoubtedly also bring a new stream of competitors. In addition to off shore companies who’ve had years to develop their sites in countries where online gambling is legal, now there are also companies like Zynga. Those companies that use Facebook as a platform for social games could easily turn to it for age and location verification and enter the online gambling arena with a massive customer base chomping at the bit.