"It's coming," said attorney and gaming-law expert Cory Aronovitz.
"They're taking baby steps, and they're working within state laws,
but it's coming. And it's going to be big."
How big? There's a potential $5 billion in annual revenue for
Zynga alone from online gaming, according to a January investor's
note from J.P. Morgan. And there's another potential windfall for
Facebook, which currently takes a 30% share of revenue on virtual
products purchased through Zynga.
But before anybody starts to cash in their nonvirtual chips,
there are some fairly extensive legal hurdles to get over. For one,
very few states in the U.S. have legalized online gambling.
"They would have to be licensed by whatever jurisdiction they
want to operate in, and they would have to have the controls in
place to clarify that the player is in a specific spot [that offers
legalized online gambling]," said Sue Schneider, a gaming-industry
consultant in St. Louis. "The other option is , they provide the
technology to partner up with an operator who would get the
Zynga has reportedly been in discussions with Steve Wynn and
Wynn Resorts about an online-gaming partnership. Zynga declined to
comment, but if true, that brings up a second problem. Wynn Resorts
has a license to conduct gaming in Nevada (and outside the U.S., in
Macau), but the company said it does not have one in any other
Another potential pitfall is that Indian tribes with gaming
rights in states such as Connecticut will most assuredly put up a
fight against legalized online gambling.
"Those are the issues that are being worked out now. It's not a
federal licensing system, it's a state-by -state system, and it's
quite challenging," said Keith Furlong, VP of Catania Gaming
Consultants. "Everyone will want their piece of the tax revenue as
well. It's a complex issue and, frankly, I don't know if the
country has come to grips with the ability to game from the house
Mr. Furlong said Zynga will also be required to change its
corporate culture should it start accepting real money. "They're
going to be regulated," he said.
Mr. Aronovitz, founder of the Casino Law Group and an adjunct
professor of gaming law at the John Marshall Law School in Chicago,
said that the online-gaming industry received a huge boost in
December when the Obama administration reinterpreted the Interstate
Wire Act of 1961, noting that "interstate transmissions of wire
communications that do not relate to a "sporting event or contest'
fall outside the reach of the Wire Act."
Added Mr. Aronovitz, "It has opened a floodgate of people of
looking to get involved in internet gambling and it has spawned a
huge debate of whether online gaming would be allowed. For
instance, Illinois had been sitting on an online retail
lottery-ticket bill. It has now launched; you can now go on their
website and buy lottery tickets. Now the question is , "When will
states offer poker, either through intrastate, or offer their own
gaming bill?' And then the question is , "What is the
I don't know the answer to the first question," Mr. Aronovitz
said, "but the logical answer to the platform question is social