In the early 1980's, there was a Broadway musical production that had a successful run in London and New York called Barnum, about the life of P.T. Barnum, the famed circus showman. The opening musical number, performed by Michael Crawford for a number of those shows, was entitled "There's A Sucker Born Every Minute." It chronicled Barnum's colorful career and reflected his business strategy, too. One of his great business innovations was, of course, the sideshow, where an unusual performer or physical specimen would entertain the crowd while the real work of the circus was underway, moving elephants and raising tents and the like.
That bit of theater, and Barnum himself, remind me of the last couple of weeks with the events of Black Friday and the implosion of the illegal offshore internet gaming operators. It is a story of Barnums and sideshows that has us all wondering what will happen next.
Many were stunned by the events that led to the indictments of a number of the offshore moguls, who had been purposefully avoiding U.S. regulation and taxation, even as they were unscrupulously operating here on our shores. Not me -- I've been warning of this for over a year and suggesting that this is just the tip of the iceberg to the issue.
Everybody in gaming and in government knew who these foreign characters and companies were, yet chose to turn an eye toward their presence in our industry. Many in Washington were blinded by their high-priced lobbyists and their campaign contributions. One day, the huddle would want a federal bill, when the influence seemed to point toward victory there. The next day, they'd be hustling into a state where their friends would try to clear the path for a legislative or regulatory win. In either scenario, the efforts were doomed, as the truth was certain to emerge and the lawful, American system would recognize the smokescreen which, it did.
So Black Friday comes and goes and has many wondering, does this mean that U.S. Internet gaming is doomed? Did they damage or destroy the opportunity? My answer is no, Black Friday didn't ruin the emergence of U.S Internet gaming; it actually helped it.
Black Friday forced us all to realize four key points. First, there is no role for the illegal operators in the U.S. system, however that ultimately gets structured. Those companies were a dark cloud that would constantly hover over our industry. They needed to be removed to create a clean slate and, they were. Secondly, it reaffirmed that online gaming must be held to the same regulatory standards of all other U.S. gaming, which is the strictest, most professional and effective in the world. I get that and, support it entirely, having been licensed in a number of states from my years with Mirage. And third, it confirms a point that I've known all along -- there is plenty of American know-how and capability in the online space, with our Silicon Valley technology and world-class financial services platforms and transactional processes. We don't need the seedy games, the uncertain finances and lax attitudes of many of the offshore operators. We have plenty of know-how and expertise right here and, the tax revenues should remain in the U.S., where they were generated. I know all of this for sure, as someone who has been on the front lines of this industry every day for the last couple of years. And fourth, this tells me once again that it is a state-by-state issue. The feds have tried twice in the last couple of years to do this but, cannot get it right and, they won't. The states have the infrastructure and know how to create a sensitive balancing act that also protects the bricks, even as they move toward clicks.
Black Friday was an ugly set of circumstances for many. But, the sideshow is gone now and, the rest of us can look ahead with optimism on a path that is cleaner than ever and more clear, too.