On Monday at the Mobile and Tablet Gambling Summit USA in Atlantic City, New Jersey State Senator Ray Lesniak told a symposium that his state's online gambling rollout was hurt by credit card firms like VISA and MasterCard.
Gaming analysts and politicians alike predicted New Jersey onine gambling could generate as much as $1 billion in revenues each year. Since licensed gaming sites launched in November 2013, the revenues have reached approximately $100 million, which has disappointed all proponents of licensed iGaming.
Lesniak Sees a Future for iGaming
Despite the shortfall, Raymond Lesniak believes the industry still has a bright future. One of the most overlooked shortcomings to date has been the lack of reliable payment services, at least for the mass market demographic Chris Christie and his political allies wanted to reach. Neteller and Skrill each service online gamblers in New Jersey, while PayPal is likely to do so in the near future. Despite the reliability of those services, many average citizens have never heard of them and certainly don't trust them. That even goes for PayPal, which is owned by Ebay.
Why Credit Cards Matter
People want credit card and debit card deposits, which is why Senator Lesniak believes the state needs to educate payment processors that the New Jersey online gambling transactions are legal. Visa and MasterCard decline at an alarming rate, because the payment processors want to err on the side of caution in the U.S. gaming market. The federal authorities have a history of cracking down on gambling operators and those companies which support their activities, so it is better to be cautious.
For that reason, the two biggest credit card companies in the world give potential gamblers major issues when they try to use them for deposits and withdrawals. At one time, both Visa and Mastercard cards declined at a rate of over 50% when people tried to use them to fund their New Jersey online casino and poker accounts. Eventually, MasterCard rose to the 70% success rate, but Visa still remains at less than 45%.
Many Potential Gamblers Turned Away
When faced with the option of finding an alternative payment method or finding some other form of entertainment, a great many of those potential gamblers simply gave up. Most people have a preferred method of payment and they have little interest in finding an alternative. Consumers are creatures of habit, and nothing makes them more uneasy than finding new ways to transfer money online.
People might wonder why 45% of VISA payments and 70% of MasterCard transactions work, while a huge percentage would decline. It's natural to assume that the rate would be 0% or 100%, depending on the policies set in place by the corporate headquarters. In truth, the big credit card companies are actually associations of tens of thousands of various financial institutions.
Need for Pennsylvania or California
At the MTGS USA conference in Atlantic City this week, people have been discussing the need for one of America's biggest states to get into the online gambling industry. The obvious choices are Pennsylvania and California.
What such an inclusion would do is show all the other U.S. states the potential of the online and mobile gaming industries. It would also give New Jersey a powerful ally in battling public policy groups funded by Sheldon Adelson and overzealous federal government employees wanting to shut down all gambling on moral grounds.
Interstate Poker Compact
Also, if a big state like California or Pennsylvania got involved, then it might provide incentive for other states to get involved in online gambling. The possibilities of an interstate gaming compact like the multi-state lottery associations, Powerball and Mega Millions, would increase significantly if one of the big states joined such a cooperative.
Next month, a similar Mobile and Tablet Gambling Summit Europe will take place in London. The issues to be discussed there will be much different. Europe represents one-half of the world's online and mobile gambling market. Most of the cutting edge technology and mobile game innovations come out of the Europe these days, because of the demand. In the time before the UIGEA, the United States represented the world's largest market, but that was before the inception of mass mobile gaming. If federal law allowed it, the USA would be the top market in the mobile gaming field, too.
Raymond Lesniak and those other industry observers in attendance at the Atlantic City MTGS know that the United States represents a vast untapped market for mobile gaming, if ever federal and state laws allow gamblers to spend their leisure time and disposable income the way they see fit.
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