2012 is the Year That Online Gaming and Online Gambling Merge, but is that Good?

States across the Union are passing or debating laws that will make online gambling legal, either for their entire state, or – as is the case being discussed in New Jersey, presently – just in certain cities/areas. These legislative changes may represent a shifting in the ideals of voters, but the impetus is most certainly tax revenue and perceived job creation. How it all relates to gaming, game publishers and developers: the major casinos are steadily gobbling them up, and the popularity of gaming versions of gambling games is indisputable.

Caesar's Entertainment acquired Israeli gaming developer, Playtika. And Seattle-based Facebook game developer, Double Down Interactive was purchased by video poker behemoth International Game Technology. But seeing an opportunity in reverse, Zynga announced back in the beginning of the year that they were actively seeking partnerships in the space, raising speculation amongst the media and a land rush for opportunistic venture capitalists and developers.

The domino that started this movement was the Administration's December statement about interstate and intrastate gambling, which the Justice Department reviewed, and then issued a new interpretation of the Interstate Wire Act of 1961. By simply clarifying that any communication which excludes 'sporting events or contests' falls outside the scope of the law, it opened up to state-level legislators to craft or edit their own laws.

It also removes the legal concerns that public gaming contests and competitions such as MLG/Gamespot, IPL/Twitch or Virgin/Xbox may have had as they expand their business beyond sponsored pro gamers, to cash prizes, to charging for streams, to betting on the outcomes of matches, teams and seasons.

One would imagine that this paradigm shift would also make the game publishers happy, given all of the perceived new opportunities, but one would be wrong. Claiming the moral high ground and distinguishing gaming as an inherently different activity than gambling has been the industry's defense in many a legal and public relations battle. As just one of many many new bridges being regularly constructed (and torn down by industry lobbyists) relates to gambling addiction being similar to gaming addiction. Successfully defending against those charges and claims is going to become increasingly difficult for the trade – potentially opening them up to legal exposures that were marginal, previously.

Legislators could also see loosening up their gambling laws as a win-win: gaining all of the positives mentioned above, while also opening the door to new legislation around fines for award systems and programs – which would need to be defined clearly… a point that the ESA has used successfully in winning hundreds of pieces of anti-games legislation in the pre-SCOTUS days (victories for which former ESA staffers Gail Markels and Jennifer Mercurio simply do not get enough credit). Awards programs couched as member benefits are a staple for non-profit orgs, but have only recently been employed as a customer acquisition cost by services, such as Xbox Live or Raptr.

In any case, brace yourselves. It's gonna' be a bumpy ride!

[Full disclosure: GamePolitics is an ECA publication.]

Sources: All Things D, Law.com, The Star-Ledger SF Gate. Image: Zynga Poker

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