Online Profits From Gambling in the Cards

Legal online gambling is coming to the Internet. And that could spell opportunity for big tech companies such as Facebook, Zynga, Apple and Google.

Last week, the U.S. Justice Department reversed its long-held opinion that most forms of online gambling were illegal. That will allow states to offer nonsports gambling on the Internet, with some limitations. First to go online will be lotteries. These already are a huge business, with $64.8 billion of annual U.S. sales in the year through June, according to the North American Association of State and Provincial Lotteries. Yet lotteries are struggling to attract younger players, says Massachusetts State Treasurer Steve Grossman. He argues that the ability to reach them online or via mobile devices opens up an "enormous new market." Online poker is also in the cards, as some states are likely to roll out casino-style gambling. But that path looks to be more complicated. As things stand, online poker games would be limited to players within a given state. That could limit revenue potential. But it might be possible to strike interstate compacts, as lotteries have done for games such as Powerball, says Mark Hichar, a lawyer specializing in gambling at Edwards Wildman. Casinos such as Caesars Entertainment are hoping Congress will pass a law allowing them to operate online casinos nationwide. But states could be a roadblock; they don't want to lose business to casinos or tax revenue to the federal government. If states control the future of online gambling, that would worry casinos. Some players may choose not to visit Las Vegas or Atlantic City if they can play poker or slots in their living room. As with lotteries, online poker presents an opportunity for social media companies.