Impact of Legal U.S. Online Gambling on Search and the Web

The U.S. Congress passed H.R. 2267, the Internet Gambling Regulation, Consumer Protection, and Enforcement Act of 2009 Wednesday.

Advocates of the bill note that legalized online gambling will bring in as much as $42 billion in tax revenues over the next 10 years, noted. But the potential income is much more than that when you factor the money Google, Yahoo, and Microsoft would get from pay-per-click (PPC) advertising, the income from affiliate marketing, and other income people will make online.

Apart from the income the search industry will gain, the impact should be interesting in other ways. Like the adult space, online gambling initiated many innovations now used in the e-commerce space and online gaming. This should continue with the increased revenues.

The impact will also be seen in the addition of spam elements cluttering the web. While this is already a factor, once gambling marketing is legal, the gates will open. Forum and blog comment spam will no doubt see a huge increase and endless new content will hit the web, taxing the search engine crawlers.

The gambling industry was also influential in the analytics space in the early days of the web and has started working in the behavioral targeting space in Europe, where it has been legal for many years. No doubt with the larger potential audience in the U.S. this will get more investment.

As WSJ notes, it will likely fall to the individual states to develop regulations. This will be a hard system to develop and fully monitor.

States have started to tax online companies that have affiliate programs operating in their states. Some major sites, such as Amazon, have denied affiliate members from those states, and work-arounds for this have been developed. When this comes, the larger income to the states may help the governments develop advanced monitoring programs, which will have wider impact.

The legalization hasn’t passed all its hurdles yet — it needs to be passed by the Senate and be signed off on by President Obama — but advocates are confident it will prevail.

This first step has web marketers preparing for positive results. How it will all play out should be interesting to follow. For good or bad, the impact will be felt throughout the search industry and the web as a whole.

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