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Business

March 17, 2013

Companies ready as online gambling makes inroads

It used to be you had to go all the way to Las Vegas to play the slots. But soon, you may be able to gamble on your smartphone.

Thanks to improvements in technology, a change in federal rules and shifting political calculations, a push to legalize online and mobile gambling is picking up steam. Three states already have moved to allow it, and tech companies, including San Francisco-based social gaming giant Zynga, are rushing to cash in.

“It’s inevitable that this spreads pretty quickly,” said Doug Walker, who studies casino gambling as a professor of economics at the College of Charleston in South Carolina.

Last month, the governors of New Jersey and Nevada signed laws to legalize online gambling in their states. And earlier this year, Delaware, which legalized online gambling last summer, solicited bids from companies to run the service that will oversee online gambling there.

Similar legalization proposals are being promoted in numerous other states, many of which are searching for new revenue to replace tax dollars wiped out by the Great Recession.

It’s not just cash-strapped state governments that see a potential jackpot in online gambling. Casino operators and Silicon Valley tech firms are also pushing for legalization. Zynga, for example, is already moving to offer online gambling in the United Kingdom and Nevada.

Legalization proponents argue that many consumers already gamble online through offshore sites. By legalizing the activity, they say, states can tax and regulate it _ and U.S. companies can benefit.

“Prohibition, like the prohibition of alcohol, just doesn’t work,” said Joseph Kelly, a professor at Buffalo State College in New York who has consulted with governments outside the United States that have considered legalizing online gambling. “I like to think of (legalization) as recapturing revenues.”

But gambling opponents, consumer advocates and addiction researchers warn of potentially dire consequences. They say the gaming industry will use techniques perfected in online advertising and marketing to target vulnerable consumers, leading to a spike in problem gambling and, more broadly, a rise in income inequality.

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