The global online gambling industry has seen exponential growth in the past decade, driven by technological advancements, increasing internet penetration, and the evolving legal framework.
Among the countries experiencing this shift are the United States and Kenya, two vastly different markets with unique regulatory frameworks, cultural attitudes, and market dynamics.
This Jackpot Sounds’ thorough analysis will compare the online gambling markets of the USA and Kenya. It focuses on their legal frameworks, market size, growth trends, and the societal impacts of gambling in both countries.
Historical Context and Legal Frameworks
Significant differences exist between the legal frameworks surrounding online gambling in the USA and Kenya.
The United States has a fragmented, state by state approach with a long history of gambling regulation.
Meanwhile, Kenya’s relatively new but rapidly growing market operates under a more centralized system.
Understanding the historical context and legal developments in both countries is crucial to appreciating how their online gambling markets have taken shape.
United States: A Fragmented Legal Environment
The history of gambling in the United States is long and complex. While traditional gambling has been legal in places like Nevada and New Jersey for decades, online gambling has faced a tumultuous path toward legality.
The first significant attempt to regulate the industry came in 2006 with the Unlawful Internet Gambling Enforcement Act (UIGEA). It made it illegal for banks and other financial institutions to process transactions related to online gambling. This effectively shut down much of the online gambling market in the country.
However, in 2011, the Department of Justice (DOJ) revised its interpretation of the Wire Act of 1961, which had previously banned all forms of interstate gambling. The new interpretation applied the act only to sports betting, opening the door for individual states to regulate online gambling.
Today, as of 2024, more than 30 states in the USA have legalized some form of online gambling be it sports betting, poker, or online casinos.
Key states like New Jersey, Pennsylvania, Michigan, and Nevada have become major hubs for online gambling, with New Jersey alone generating over $1.66 billion in online gambling revenue in 2023.
Michigan: A Late Bloomer with Rapid Growth
Michigan legalized online gambling in December 2019 with the passage of the Lawful Internet Gaming Act. This allowed the state to regulate online casinos, poker, and sports betting. The Michigan Gaming Control Board oversees all online gambling activities in the state, ensuring operators meet strict regulatory standards.
Online gambling officially launched in January 2021, and Michigan quickly became one of the top online gambling markets in the US.
BetMGM, DraftKings, and FanDuel entered the market, providing Michigan residents access to a wide variety of online games. Read more about these gambling platforms on the Jackpot Sounds website. You’ll discover fruitful information and precious tips and reviews.
In 2022 alone, Michigan’s online gambling market generated over $1.98 billion in gross gaming revenue, with online casinos contributing the largest share.
Michigan’s online gambling laws allow anyone over the age of 21, physically located within the state, to participate. This includes
- online casinos
- poker rooms
- sports betting platforms
Taxes on online casino revenue are set at a progressive rate between 20% and 28%, with revenue funneled into the state’s School Aid Fund, local communities, and the Michigan Gaming Control Board.
Pennsylvania: A Strong, Regulated Market
Pennsylvania entered the online gambling market with the passage of the Gaming Expansion Act in 2017, which legalized online casinos, poker, and sports betting. The Pennsylvania Gaming Control Board (PGCB) regulates all online gambling activities in the state, ensuring operators comply with stringent licensing requirements and responsible gaming measures.
Online gambling launched in Pennsylvania in July 2019, and the state quickly became a major player in the U.S. market. Pennsylvania has one of the highest tax rates on online gambling in the country, with online casino revenue taxed at 54%.
Pennsylvania’s legal framework allows anyone 21 and older, physically within the state, to gamble online. The state has been particularly successful in online poker, with its poker market consistently ranking among the largest in the country.
New Jersey: The Pioneer of Legal Online Gambling
New Jersey is widely regarded as the pioneer of legalized online gambling in the United States. In 2013, the state passed the New Jersey Casino Control Act, which legalized online casinos and poker.
Sports betting followed in 2018 after the U.S. Supreme Court struck down the federal ban on sports betting.
The New Jersey Division of Gaming Enforcement (DGE) oversees online gambling in the state, ensuring that operators meet regulatory standards for fairness, security, and responsible gaming. New Jersey’s legal framework allows residents and visitors over 21 years old to participate in online gambling, as long as they are physically located within state borders.
New Jersey’s online gambling market is one of the most robust in the U.S., generating over $1.66 billion in revenue in 2023 from online casinos alone.
The state’s tax rate on online gambling revenue is set at 15%, with a portion of the funds directed toward Atlantic City revitalization efforts.
West Virginia: A Smaller, But Growing Market
West Virginia became one of the earlier states to legalize online gambling, passing the West Virginia Lottery Interactive Wagering Act in March 2019. This law allowed for the regulation of online casinos and poker, with online sports betting already legalized in 2018. The West Virginia Lottery Commission oversees online gambling in the state.
Online gambling officially launched in West Virginia in July 2020.
Despite its smaller population, West Virginia’s online gambling market generated $163 million in 2022, showing strong growth potential.
The state’s tax rate for online casino revenue is 15%, and like other states, the revenue is used to support public programs, including education and state infrastructure.
West Virginia’s online gambling laws allow individuals 21 and older to gamble online, as long as they are within state borders.
Kenya: A Progressive and Growing Market
In contrast, Kenya’s online gambling market is much younger but no less dynamic. The Betting Control and Licensing Board (BCLB) regulates all forms of online gambling in Kenya.
Unlike the USA, where online gambling has been fragmented at the state level, Kenya has a more centralized approach to regulation.
The introduction of mobile money services like M-Pesa in the late 2000s played a significant role in the rapid rise of online gambling in Kenya.
By 2023, it had been estimated that over 7 million Kenyans, or 16% of the adult population, regularly engaged in online gambling activities, with the majority of them using mobile platforms.
The Kenyan government initially welcomed the burgeoning industry, imposing a 7.5% excise duty on betting stakes in 2021, alongside a 20% tax on winnings.
This has generated significant revenue for the government, although there have been growing concerns about the social impacts of gambling, leading to periodic crackdowns and license suspensions for operators.
Market Size and Revenue Comparisons
The market size and revenue potential of the online gambling sectors in the USA and Kenya highlight the stark contrast between these two regions.
While the U.S. boasts one of the largest and most lucrative gambling markets globally, with billions in annual revenue, Kenya’s market is smaller but rapidly growing, particularly driven by mobile sports betting.
This section explores the financial performance and market dynamics of both countries, offering insight into their respective growth trajectories and economic impact.
USA: A Market Worth Billions
The U.S. online gambling market is one of the largest in the world, with total revenues exceeding $13.5 billion in 2023. This market is expected to continue growing, with projections indicating it could reach $24 billion by 2026.
Sports betting has been the major driver of growth, especially since the Supreme Court’s 2018 ruling that struck down the federal ban on sports betting.
States like New York, Illinois, and Pennsylvania have seen a surge in sports betting revenues, with New York alone generating $16 billion in sports betting handle in 2022.
Online casino games and poker also contribute significantly to the market, with New Jersey and Pennsylvania leading the way in terms of revenue generation.
New Jersey’s online casinos generated over $1.4 billion in 2022, while Pennsylvania’s online casinos brought in $1.66 billion.
Kenya: A Mobile First Market
Kenya’s online gambling market, while smaller than that of the USA, is still significant in the African context. In 2023, the Kenyan gambling market was valued at $200 million, with a large portion of this revenue coming from mobile sports betting.
The success of mobile betting can be attributed to the widespread use of mobile payment platforms like
- M-Pesa
- Airtel Money
- T-Kash
It’s estimated that over 90% of online gambling transactions in Kenya are conducted via mobile phones, a stark contrast to the USA, where mobile gambling is growing but not yet the dominant form.
SportPesa, Betin, and Betway are among the leading operators in the Kenyan market.
SportPesa, in particular, has become a household name in Kenya, sponsoring several local football teams as well as international teams like Everton FC in the English Premier League.
In 2021, after a brief suspension due to regulatory issues, SportPesa returned to the Kenyan market, continuing to dominate the industry.
Technological Advancements and Market Access
Technological advancements play a crucial role in shaping the accessibility and user experience in online gambling markets.
In the USA, innovation through mobile apps, virtual reality, and cutting edge security has enhanced the gambling experience. In Kenya, mobile money platforms like M-Pesa have revolutionized how people engage with online betting.
Here, you’ll explore how technology drives market access and fuels growth in both the USA and Kenya, catering to their unique needs and challenges.
USA: Diverse Platforms and Technological Innovation
In the United States, online gambling operators leverage cutting edge technologies to provide a seamless user experience.
Most operators offer both mobile apps and desktop platforms, allowing you to gamble anywhere, at any time.
Mobile sports betting has become particularly popular, with DraftKings, FanDuel, and BetMGM among the leading brands.
These platforms use state of the art encryption and geolocation technologies to ensure that users can only place bets from within states where online gambling is legal.
Virtual reality (VR) and live dealer games are also becoming increasingly popular in U.S. online casinos.
The rise of 5G networks is expected to further enhance the online gambling experience, providing faster speeds and more immersive gaming environments.
In fact, some industry analysts predict that VR based online casinos could generate up to $250 million in revenue by 2025.
Kenya: The Power of Mobile Payments
Kenya’s technological innovation is most visible in the integration of mobile money platforms with online gambling services. The introduction of mobile money services like M-Pesa in 2007 revolutionized the Kenyan economy, enabling millions of people to access financial services.
Today, mobile payments are the primary method for depositing and withdrawing money on gambling platforms.
The simplicity of mobile payments has made gambling highly accessible to even those in rural areas, where traditional banking infrastructure is lacking.
This accessibility has contributed to the rapid growth of the online gambling market in Kenya. By 2023, it was estimated that over 65% of the country’s population had access to a mobile phone, and mobile internet penetration stood at 55%.
Regulatory Challenges and Taxation
Regulatory challenges and taxation are key factors shaping the online gambling landscape in both the USA and Kenya.
In the U.S., a fragmented system of state level regulations creates a complex environment for operators, with varying tax rates and compliance requirements across states.
Meanwhile, Kenya’s centralized regulations face fluctuating government policies and rising tax burdens, sparking concerns among operators.
USA: A Patchwork of Regulations
One of the most significant challenges facing the U.S. online gambling market is its fragmented regulatory landscape. Because online gambling is regulated at the state level, operators must comply with different rules and taxation structures in each state.
For example, New Jersey taxes online casino revenue at 15%, while Pennsylvania taxes it at 16%.
Additionally, operators must navigate the complex licensing processes of each state, which can be both time consuming and costly.
There are also concerns about responsible gambling in the U.S. market. With the rise of sports betting, particularly among young adults, states are pressured to implement measures that promote responsible gambling.
Some states have introduced self exclusion programs and deposit limits, while others require operators to contribute to responsible gambling funds.
Kenya: Periodic Crackdowns and Increasing Taxes
In Kenya, the government’s attitude toward online gambling has fluctuated between support and opposition.
While the industry has generated significant revenue, there have been concerns about its social impact, particularly among the youth.
In 2019, the Kenyan government suspended the licenses of 27 betting firms, including SportPesa, citing non compliance with tax laws. This was followed by the introduction of a 7.5% excise duty on betting stakes in 2021.
Despite these regulatory challenges, the Kenyan online gambling market continues to grow.
However, some operators have expressed concerns about the high taxation rates, which they argue could drive customers to unregulated, offshore betting sites.
In response, the government has increased efforts to clamp down on illegal operators, although enforcement remains a challenge.
Cultural Attitudes and Societal Impact
Cultural attitudes toward online gambling and its societal impact vary widely between the USA and Kenya, influenced by each country’s social norms and economic conditions.
In the U.S., gambling is increasingly accepted but still faces concerns about addiction and responsible gaming.
Meanwhile, in Kenya, sports betting has become a cultural phenomenon, especially among the youth, though it raises issues around poverty and gambling dependency.
USA: A Changing Landscape
In the United States, public attitudes toward gambling have evolved significantly lately. Historically, gambling was viewed with skepticism, with many states banning it outright.
However, the Supreme Court’s 2018 decision to lift the federal ban on sports betting marked a turning point.
Today, gambling is widely accepted, with 55% of Americans reporting that they have gambled in some form over the past year, according to a 2022 Gallup poll.
Despite this growing acceptance, concerns about problem gambling persist. It is estimated that around 2 million Americans suffer from gambling addiction, and many states have introduced measures to address this issue.
For example, New Jersey requires online gambling operators to display information about responsible gambling and provide links to helplines for those seeking help.
Kenya: A Love Affair with Sports Betting
In Kenya, gambling particularly sports betting has become a popular pastime, especially among the youth.
A 2022 survey by Geopoll found that 79% of Kenyans aged 18–29 had participated in sports betting, with football being the most popular sport to bet on.
However, this widespread participation has raised concerns about the social impact of gambling, particularly its role in exacerbating poverty. A 2019 study by the BCLB found that 45% of Kenyans who gambled did so with the hope of escaping poverty.
To address these concerns, the Kenyan government has launched awareness campaigns aimed at promoting responsible gambling.
Additionally, some operators have introduced tools that allow users to set limits on their gambling activities.
However, critics argue that more needs to be done to protect vulnerable populations from the negative effects of gambling.
The Future of Online Gambling in the USA and Kenya
The future of online gambling in both the USA and Kenya promises continued growth, but each market faces distinct opportunities and challenges.
In the USA, technological innovations and expanding legalization in more states are driving rapid industry expansion.
In Kenya, the rise of mobile gambling and regulatory adjustments will shape the market’s trajectory, especially as the government balances growth with social concerns.
USA: Continued Growth and Innovation
The future of online gambling in the United States looks bright, with continued growth expected in both revenue and participation.
As more states legalize online gambling and new technologies like virtual reality and artificial intelligence are integrated into gaming platforms, the industry is poised for even greater expansion.
However, the regulatory landscape will likely remain fragmented, with individual states continuing to set their own rules.
Kenya: A Balancing Act Between Growth and Regulation
In Kenya, the future of online gambling will depend on the government’s ability to strike a balance between encouraging growth and addressing social concerns.
While the market has tremendous potential, particularly in the mobile betting space, the government will need to ensure that operators comply with tax laws and promote responsible gambling.
Besides, with the increasing penetration of smartphones and mobile internet, the Kenyan online gambling market is expected to continue growing in the coming years.
Conclusion
The online gambling markets of the USA and Kenya present a fascinating case of contrast and similarity. While the U.S. market is larger and more fragmented due to its complex regulatory environment, Kenya’s mobile first approach has allowed for rapid growth in a relatively short time.
Both markets face regulatory challenges and societal concerns, but they also offer immense opportunities for operators and players alike.
As the global online gambling industry continues to evolve, it will be interesting to see how these two markets adapt to new technologies and changing legal landscapes.
References
Paul, Ron. Unlawful Internet Gambling Enforcement Act of 2006. US Congress, 6 Apr. 2006. H.R. 4411. Accessed from https://www.congress.gov/congressional-report/109th-congress/house-report/412/1
“Monthly Internet Gross Revenue Reports.” New Jersey Office of Attorney General, www.njoag.gov/about/divisions-and-offices/division-of-gaming-enforcement-home/financial-and-statistical-information/monthly-internet-gross-revenue-reports/.
Nicholas Obudho Simon. “Exploring the Potential Impacts of Mobile Sports Gambling on Economic Growth in Sub-Saharan Africa: A Case Study of Kenya.” European Journal of Business Management and Research, vol. 9, no. 3, 22 June 2024, pp. 125–134, https://doi.org/10.24018/ejbmr.2024.9.3.2329. Accessed 17 Sept. 2024. Retrieved from https://www.ejbmr.org/index.php/ejbmr/article/view/2329/1510.
“American Attitudes towards Gaming 2023.” American Gaming Association, 9 Oct. 2023, www.americangaming.org/resources/american-attitudes-2023/.
“Gambling in Kenya: Mobile Phones and Football Boost Popularity.” GeoPoll, 24 July 2019, www.geopoll.com/blog/gambling-kenya-mobile-phones-football/.
