Last year, the United States Congress passed a bill banning financial institutions from processing internet gambling transactions, effectively outlawing online gambling. Shares of off-shore online casinos like Party Gaming, a British company, plummeted. Recently, Manchester won the rights to build the island-nation's first Las Vegas-stlyle casino resort. England has traditionally been anti-gambling and British tabloid The Daily Mail referred to the decision as "Labour's day of shame." Other news outlets warned of addiction and organized crime.
Let's talk about online gambling in the United States, and our government's policy on it. On the one hand, the vast majority of states have the Lottery, which entices people to waste their hard-earned money on an infinitely small chance at untold riches. Yet when private companies seek to tap into the appetite for gambling that so many Americans possess, our elected officials manage to muster up moral outrage, and pass laws banning it. Now far be it from me to accuse our political leaders of hypocrisy, but running a gambling operation while simultaneously banning other people's gambling operations seems a bit... inconsistent.
Our ban on online gambling has attracted worldwide attention. Charlie McCreevy, commissioner for the European Union's internal market, said this about it at the European Parliament in Brussels: "In order to protect, I'd say, their own business, their industry there, they have de facto prevented foreigners from online betting into the United States." He also referred to the ban as "protectionist."
Brick and mortar casino operators such as Harrah's Entertainment, Inc. (NYSE:HET) and MGM Mirage (NYSE:MGM) are asking Congress to fund research into whether online gambling can be effectively regulated. Given the widespread controversy over the online gambling ban, it seems likely that, eventually, we will have regulated, legalized online gaming in the United States. When that happens, companies like Cryptologic, Inc. (NASDAQ:CRYP) should prosper.