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With an eye to capturing a share of the potential $2.6 billion in U.S. online gambling revenue expected by 2017, payment processor First Data Corp. launched PayLucky, a suite of existing products for gambling and gaming providers, the company announced today.
The suite, which includes the Clover point-of-sale system, prepaid cards, check acceptance, and automated clearing house services along with dynamic currency conversion and mobile-wallet capability among others, comes in response to what First Data says is a need for a “one-stop shop,” says Jonathon O’Connor, general manager of online gambling and alternative markets. “The emerging payment market is quite fragmented in the U.S.,” O’Connor tells Digital Transactions News. “What we’re bringing together is a repurposing of our existing products.”
The foundation of the $2.6 billion forecast for 2017, from consulting firm H2 Gambling Capital, is established in states like New Jersey, which allows online casino and poker gaming, and Illinois and Georgia, which have online lottery sales, O’Connor says. U.S. states regulate gaming operators and companies that service them. O’Connor is hopeful California, which has multiple interests, such as gaming operators and Native American casinos to attend to, soon will authorize online gambling.
The size of that market is essential, he says, to the industry’s growth. It takes liquidity and mass acceptance for online gambling to grow, O’Connor says, drawing on his experience setting up online gambling ventures in Italy and the United Kingdom. “It needs to be California,” he says. “New Jersey is the foundation bed of the growth model now, and it takes a state with a population mass for it to ignite.”
O’Connor says First Data will work with gambling and gaming companies around the world, including Europe.
Some estimates suggest than in 10 years U.S. online gambling revenue could be as much as $23 billion, Bill Beatty, editor-in-chief of CalvinAyre.com, a gambling news site, told Digital Transactions magazine in May.
No doubt that potential is attractive, not just to First Data but other payment companies, too, says Gil Luria, an analyst at Los Angeles-based Wedbush Securities. “Online gambling has always been a very large payments market but U.S.-based payment providers have had to stay away for legal reasons,” Luria says. “As some states change their laws to accommodate some forms of online gambling, this becomes an attractive new market for processors.”
Online gambling in the U.S. is not new, having been available until passage of the Unlawful Internet Gambling Enforcement Act of 2006 (UIGEA), which restricted payments for Internet wagers. Since then, a different interpretation of that law has emerged, one that has resurrected online gambling at a time when state coffers are tapped out.
A major turning point came in December 2011, when the U.S. Department of Justice released a memo in which the department interpreted the 1961 Wire Act to apply only to online sports betting. This interpretation, which came in response to states looking to sell lottery tickets online, appeared to clear the way for online poker and other games, as well.
