Shafting a $12 Billion Industry
Posted On: 2006-10-04
What's next after gambling?
Instead of being allowed to stand on its own the Act was tacked onto a security bill that members could simply not vote against and so now a $12 billion dollar industry is in trouble.
The Act prevents United States based banks and credit card companies from processing payments for Internet gambling and of course that strikes right at the root of the industry. If you remove an industry's ability to charge its customers you are ensuring that the industry will soon go out business if they can't find another way to keep the money coming in.
Even though the Act has not yet been signed by the President the online gambling industry is already feeling its effects. Shares in companies involved in online gambling have slumped on the London Stock Exchange as investors saw nothing but gloom and doom. Even companies not listed on the stock exchange are pulling back from the US market and some have announced that they will block US gamblers from their sites.
Of course I could ramble on about how ineffectual prohibition is and the unfairness of an Act that prevents you from gambling in the privacy of your own home but does nothing about stopping you from hitting a Casino and blowing all your money... but what's the point?
The Act has been passed and within two weeks it will become law and that law will affect more than just gamblers.
It's also going to have a noticeable affect on the online advertising market. Observers suggest that advertising placed by online casinos etc. account for nearly 3 percent of all display advertising on entertainment related sites and slightly more than half of one percent of all online advertising.
A lot of people are going to notice a drop in their advertising income when those ads disappear. Some people are clinging to the hope that the wording in the Act could be interpreted in their favor but somehow that seems to be a faint hope.
The Act refers to 'unlawful' online gambling and some want to suggest that one word is what might save the industry but I wouldn't hold my breath.
How it Affects Us in Adult
You may be wondering why changes to the laws relating to online gambling might affect us but I have to tell you that it certainly could. If the religious right find that they have succeeded in cutting the online gambling industry off from their revenue source then how long do you think it will be before they pull the same move on us?
Our industry is so tied to US card processors that it just isn't funny. Only a few years ago Visa decided to change the rules for adult billing and nearly everyone made a lot of noise but ultimately bent the knee to Visa. Let's face it, they had to do it because there was simply no other really viable alternative.
Of course there were some who thought they could get around Visa's rules and some of us got our fingers burnt by people like Globill who claimed to be able to bill offshore – but couldn't. Other overseas billing companies have come and gone too and now there are no real alternatives left outside of the US.
I did see one commentator suggest that the online casinos might/should be able to find some creative way to get around these laws and maybe they can. But I wonder if our industry will be so lucky if our US based income streams are shut down by Congress.
On the other hand, I suppose that it could be possible for the demand for a reliable overseas processor and billing option by the online gambling industry to fuel some genuine alternatives that we could use too. But once again I'm not overly optimistic.
I'm even less optimistic about seeing the billers that we have now take their business off-shore in an effort to avoid any laws that may be passed in the US. CCBill may have an option for European webmasters but they still expect those of us who could legitimately bill through that option to be bound by US laws whether they apply to us or not.
I suppose the threat of losing all their business may make people like CCBill reassess their options but somehow I'm not optimistic about that either. They see themselves as a US company and genuinely moving off-shore is not an option for them.
So the introduction of this new Act is something that we definitely should be watching and we should be ready for it when the religious minority tries to use the same type of legislation on us.
And if all that sounds as though I'm pessimistic about the future of the industry let me tell you straight, things may get a little difficult but the adult industry is not about to go away. We're creative and resourceful and there will always be some work-around to any problem we face.