H2 Assesses the Economic Impact Internet Gaming Regulation in the United States
Posted on 20/04/2010 in General News
H2’s modeling of the potential for a regulated US real money Internet gambling market suggests a potential national gross win of $22.0bn in year one (if sportsbetting is included) rising to $42.0bn by 2015. If we are to exclude sports betting then the corresponding figures are $14.4bn rising to $26.7bn.
H2 have concluded that should all forms of real money Internet gambling (including sports betting) across the US it would generate a total gross expenditure in the nation’s economy of $94bn over the first five years, which in turn would generate just under 159,750 FTE job years (an annual average of 19,420 direct/12,530 indirect) and $57.5bn in domestic taxation.
Under the scenario of all forms of Internet gaming being permitted (but no sports betting allowed) across the US H2 have concluded that gross expenditure of $67bn would be generated as a result in the nation’s economy over the first five years. This in turn would create approximately 127,350 FTE job years (an average of 15,850 direct/9,620 indirect per annum) and $30.8bn in domestic taxation.
Should all forms of Internet gambling (including sports betting) be licensed and regulated in the largest 12 potential US state markets H2 have concluded that $65bn would be generated in gross expenditure in the nation’s economy over the first five years. This in turn would create approximately 113,030 FTE job years (an average of 13,730 direct/8,880 indirect per annum) and $26.6bn in domestic taxation during the first five years.
Under the scenario of all forms of Internet gaming being permitted (but no sports betting allowed) across the largest 12 potential state markets in the US H2 have concluded that gross expenditure of $41bn would be generated as a result in the nation’s economy over the first five years. This in turn would create just under 82,100 FTE job years (an average of 10,120 direct/6,300 indirect per annum) and $18.5bn in domestic taxation.
H2 Gambling Capital have developed our US regulated Internet Gambling model in order to assess the complete potential fiscal and economic impact of the sector under a model of Federal legislation. In undertaking this work we have built upon previous taxation scores undertaken by work by PricewaterhouseCoopers (PwC) and the Joint Committee on Taxation (JCT) during last year.
Our work combines H2’s own proprietary US regulated Internet gambling market forecasts with information regarding patterns of employment in the existing Internet gambling sector and general fiscal and economic.
Therefore, we are now able top consider the full range of taxes (income tax, property tax, unrecoverable sales tax, etc) and not only ones such as direct license fees, wagering tax, winnings tax and corporation tax. In addition, we consider both direct (for Internet gambling operators and software suppliers) and indirect employment along the supply chain.
Currently the offshore real money Internet market generates approximately $105bn in turnover and $5.1bn in gross win from the US. The results of the H2 study suggest during the period from the signing into law of UIGEA until the end of the current year since there could have been a total of just under $5.0bn raised in taxation and 33,480 additional Full-Time-Equivalent (FTE) job years generated.
It should be noted that via its spending in the US the overseas real money Internet gambling sector has generated expenditure of approximately $7.7bn during the period 2007 to 2010 which would suggest approximately 9,070 (2,270 average per annum) FTE job years have been created.
In undertaking our assessment we have employed extreme prudence, utilising relatively low multipliers and assuming that there will be some leakage of both spending and profits from the United States even if there are provisions within any legislation to prevent this.
H2 have considered two levels of state participation; 1) All states opt-in and participate and; 2) The 12 largest states opt-in and participate. Under each of the above we have modeled; a) All Internet gambling being permitted including sports betting, and; b) All Internet gaming being permitted (casino, poker, bingo/other gaming is permitted); but sports betting is not permitted.
H2 have assumed that there are 20 licensees, which in the case of gaming are clustered around five platforms. Furthermore we have assumed full repatriation of real money Internet gambling originating to the states that opt in is captured by a legal and regulated market.
Enquiries to: data@h2gc.com
About H2
H2 Gambling Capital is the leading supplier of data and market intelligence regarding the global gambling industry. Regarded, as the ’Industry Standard’ for eGaming – is by far the most quoted source of data in analysts’ notes/company reports.
Over the past decade H2’s team has supplied data to or worked with over 500 organisations including, operators, suppliers, regulators, professional services companies, governments, lotteries, lobby groups and trade associations.
H2’s data has been quoted in much of the media including, the BBC, the New York Times, the Financial Times, the New Yorker, CNBC and Time Magazine. H2 is eGaming Review’s official data partner and a partner firm of Gerson Lehrman Group.