Maybe the UIGEA is good for now

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The unlawful Internet Gambling Enforcement Act is good for those in the online sportsbook business right now, even if they do not know it. This pause is going to give the smart books the necessary time to build a business and business plan on how they are going to cope once the industry is more accepted and regulated in the <?xml:namespace prefix = st1 ns = "urn:schemas-microsoft-com:office:smarttags" /><st1:country-region><st1:place>US</st1:place></st1:country-region>. Regulation may not happen soon, but it will happen eventually. Do you have a plan on how you are going to compete with the well capitalized land based casinos in the <st1:country-region><st1:place>US</st1:place></st1:country-region> that most certainly will enter the sportsbook online industry once it becomes legal? You would have to be very naïve to believe that the law will simply be repealed and that the status will return to what it was before the UIGEA. There is just too much revenue (taxes) at stake for this to happen, so I can promise you it will.

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Since the passage of laws in the <st1:country-region><st1:place>United Kingdom</st1:place></st1:country-region> regulating online gambling, established <st1:country-region><st1:place>UK</st1:place></st1:country-region> land-based casinos and sportsbooks have aggressively entered the online gaming market. The same is going to happen in the <st1:country-region><st1:place>U.S.</st1:place></st1:country-region> Fortunately it will take some time. The big question for the online sportsbook industry is who is going to use this time wisely and how.
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Everyone seems to have an opinion about what is important to get into the business. However virtually nobody seems to have a plan on how they are going to stay in business. The lack of business planning is frightening and is a significant contributing factor to business failure in this industry. Everybody has been fat, dumb, and happy, do not want to listen for now, and would rather wait and see what happens. <o:p></o:p>
What options do today’s sportsbooks have? First of all they can continue in the same fashion as they have in the past. If they choose this option hopefully, they can continue to maintain existing customers while simultaneously finding new ones. This will work for companies that are better established and have the most resources, but it probably will not work for the smaller, less well established companies that are a majority of the online sportsbooks in the market unless they have a better plan than the competition.
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The sports betting aspect of online gambling is a much smaller part of the overall gambling pie than the online casino business in general. This in part explains the ease of entry into this business as well as the number of smaller businesses that have populated this market segment. It also explains why many if not most sportsbooks have branched out into the online casino business.
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For sportsbooks, in the foreseeable future something has to give.
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It is clear to me that the future of many of the online gaming companies, particularly sportsbooks is still a huge question mark. As with any major market segment, the future will dictate that only the innovative and strong will survive. Currently there is a plethora of online sportsbooks aimed principally at the <st1:country-region><st1:place>U.S.</st1:place></st1:country-region> market. As the market matures, many of the estimated seven hundred plus companies in this sector will fall by the wayside due to various limitations. On top of this you need to factor in the legal pressure from countries like the United States that have had a yet to be determined impact on demand. The net result, regardless of this last statement, is that only a select few of the existing companies today will exist in a profitable manner in five to ten years. The rest will go out of business, sell their business, or merge with other companies to improve economies of scale. The eventual entrance of the <st1:country-region><st1:place>US</st1:place></st1:country-region> land-based casinos will only accelerate this process.
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Where will the successful companies be located? Will they be those currently in Costa Rica, Antigua, Panama (the Caribbean Basin) or will they be the located in the well capitalized land-based companies of the US, UK and Macau.?
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The reality is that many of the losers in this industry just do not know it yet. What do you do if you are one of the hundreds of companies listed on one of the various ratings web sites “avoid” or “black” lists? What happens when you continue to have trouble receiving money from and paying money to your clients? Money transfers won’t be easier under new post UIGEA law, it will be more difficult!
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The overall market for online gaming in general continues to grow substantially, particularly on a worldwide basis. In the sportsbook industry, the truth is there are more than enough companies around to service the current level of business as well as future growth of this segment. Do today’s companies have a plan that will cause them to be around in ten or twenty years? Is BetonSports an example of a sportsbook that did not have an adequate plan? Certainly they had other problems, but the underlying lack of planning probably contributed significantly to their downfall. Weren’t they perceived by many to be one of the industry leaders?
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Those companies without an adequate plan are the most likely to fail or to fall short of expectations. I would venture a guess that a majority of today’s online gaming companies either do not have a business tactical, marketing, or strategic plan or if they say they do, it is probably not in an up-to-date form.
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There are a lot of uncertainties in the sportsbook industry to be for sure. There are certainly individual company challenges, but there seems to be a bigger overall challenge particularly to the <st1:place>Caribbean</st1:place> based entities. Organizations like the OSGA who represent all offshore gaming entities may help, but isn’t there a natural conflict between offshore entities in <st1:place><st1:City>Gibraltar</st1:City>, <st1:country-region>Malta</st1:country-region></st1:place>, or <st1:place>Macau</st1:place> when compared to the <st1:place>Caribbean</st1:place> basin? The OSGA is working for the repeal of the UIGEA but what form do they want that repeal to be in and how will it affect their members on a case by case basis? I am not sure they have thought that far ahead.
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Maybe it is time for the <st1:place>Caribbean</st1:place> entities to organize themselves in a more professional manner and to promote their interests in a more effective fashion. I understand this is a difficult and controversial concept. Who needs more work and especially more expenses? But, what happens if nobody does anything? How much longer will the majority of the <st1:place>Caribbean</st1:place> companies last?
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Food for thought!<o:p></o:p>
 

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It's got me away from spending another dime at Pinnacle - which is a good thing.
 

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