The digital advertising rebound may soon have an ace up its sleeve. Congress is on track to retract its ban on internet gambling. The taxes from such a move could send the government as much as $42 billion over the next 10 years. Digital publishers stand to gain a lot from those winnings as well.

Mainly the new legislation would reverse a ban on internet gambling that was passed in 2006, requiring credit card companies to determine whether a customer's transaction is with an online gambling company. If it is, they are expected to reject it. The ban clearly hasn't worked. For starters, the regulations implementing the ban only took effect on June 1.

Online gambling is a huge industry. And one that runs deep with American internet users. But most of those companies are based offshore. This law would allow more companies to exist in the U.S. And tax them appropriately.

The new bill would apply mainly to online poker, which is rapidly growing, but other forms of gambling — like bingo — would also be affected.

According to The New York Times:

"The vote suggests a willingness by Congress to look for unconventional ways of plugging holes in the budget and comes as struggling states have also been looking to extract revenue from the gambling industry, which took a hit as consumers cut back on travel and entertainment during the recession but continues to reap billions of dollars in annual profits."

Opening the door to more online gambling businesses is likely to bring in revenue for many different entities. Gaming publishing group iGaming Business, recently released a report estimating that the online casino industry is expected to increase by around 80% by 2014. Rachel Church-Sanders, author of the report, tells Betatastic ("your guide to online gambling"):

“Each online casino operator is looking to participate in a sector becoming more socially acceptable, benefiting from a liberalised regulatory structure in some markets, and enjoying very substantial growth across many key demographics including those that have been hard to reach through other types of gaming or betting such as women.”

Of course, gaming sites already advertise online. But that market will grow as restrictions on the actual business happening on those sites lift.

Already, online advertising has benefitted from its low price point. Advertisers looking to save money have shifted their budgets into digital — which is still growing — as traditional ad markets have shriiveled.

Last week, AOL opened its display product to political ads, in response to looser restraints on those ads. And advertisers are also likely to receive more gambling ads if this bill goes into effect.

According to eMarketer, online advertising spend is on track to handle rapid growth, and hit $61.8 billion worldwide this year. The spend grew 2% to $55.2 billion in 2009. By 2014, it is expected to hit $96.8 billion worldwide, growing at an 11.9% annuallly. 

Allowing more advertising content online will help grow that pie. And if online gaming makes its way past Congress, all sorts of other entities are set to profit. Tax collectors and online publishers included.

Meghan Keane

Published 29 July, 2010 by Meghan Keane

Based in New York, Meghan Keane is US Editor of Econsultancy. You can follow her on Twitter: @keanesian.

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Comments (1)



No doubt this bill will be littered with clauses and take years to be fully active. Still it's a step in the right direction.


almost 8 years ago

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