December 9, 2011
Casinos, Online Poker Get State Attention
By Pamela M. Prah, Staff Writer
The Massachusetts and Florida schemes are part of a nationwide gambling expansion that has affected more than a dozen states in the last three years. But states aren't just looking to add more casinos and slots. Many of them are eyeing the billions of dollars that Americans bet online illegally every year. Nevada, for example, is preparing for the possibility that Congress might change the laws that ban most Americans from legal online betting.
Any way you look at it, state-sanctioned gambling is only getting bigger. The crucial question, though, is whether more gambling will lead to increased revenues for all the state governments that authorize it. "State and regional gambling markets are close to reaching saturation," warns Lucy Dadayan of the Nelson A. Rockefeller Institute of Government , a specialist in state gambling revenues.
All states except Hawaii and Utah collect revenue from lotteries, casinos and/or betting at horse tracks, totaling a combined $24 billion in 2010. But some states are much more reliant on this activity than others. For Nevada, gambling revenue represents a third of state general funds. It's also the third-largest revenue source in Rhode Island and the fifth-largest in Connecticut, according to some estimates.
Massachusetts is hoping for a big payout now that the legislature has legalized three resort casinos and one slots facility, becoming the 40th state to offer slot machines . Governor Deval Patrick finally got the resort-style casinos that he has been promoting since he was first elected in 2006. One idea from the owner of the New England Patriots football team is to open a casino complex near the team's stadium. But that would need approval from the local community and the National Football League, both of which are doubtful, says Clyde W. Barrow, director of the Center for Policy Analysis at the University of Massachusetts at Dartmouth.
Much farther south, the Miami Dolphins earlier this fall floated the idea of leasing land near their football stadium to a casino developer. An even bigger proposal has come from a Malaysian company that wants to build what some are saying would be the world's largest casino on the Miami waterfront.
But bringing resort-style private casinos to Florida has many opponents, including The Walt Disney Co., which worries that casinos might conflict with Florida's reputation as a family-friendly vacation spot. Another opponent is the Seminole Tribe of Florida , which currently has a monopoly on legal casinos in the state, operating Hard Rock Casinos in the cities of Tampa and Hollywood, among others.
The Seneca Nation of Indians likewise plans to fight New York Governor Andrew Cuomo's call for bringing legalized private casinos to the state as part of his plan to create jobs there. The Seneca tribe currently has exclusive gambling rights in western New York, with casinos in Buffalo and Niagara Falls.
New casinos are not the only kind of gambling expansion on states' radar screens. There also is a growing interest in Internet gambling on two fronts.
In many states, this involves heightened scrutiny of what is currently going on. Among the most prominent targets are the "Internet cafes" that offer online "sweepstakes" with cash awards. States are investigating whether these operations are really illegal, untaxed gambling parlors. Massachusetts, North Carolina and Virginia this year approved laws or new regulations specifically banning this type of activity at Internet cafes. In Ohio, which is to open four casinos in 2012, the attorney general has lent his support to legislation that would regulate gaming at Internet cafes and make it subject to oversight.
More significant than the sweepstakes phenomenon, however, is the much-larger world of online gaming and "remote" gambling, which essentially is any gambling in which a person does not need to be physically present. This includes Internet sites, cell phones and text messages.
Nevada, the only state with unlimited legal sports wagering, now allows its residents to bet on sports from their smart phones. As Stateline has reported , the Nevada Gaming Control Board approved the first smart phone betting for the Blackberry in September of 2010, and for the Droid in April of this year. The iPhone was the most recent to get the green light from the state. The app is free and restricted to Nevada residents over the age of 21.
While Nevadans can legally place sports bets remotely, online gambling in most other states is illegal under a 2006 federal law. But it is commonly practiced. No one really knows how many Americans gamble this way or how much revenue states could collect if it were legal. The American Gaming Association figures that in 2010 Internet gambling revenues from U.S. bettors exceeded $4 billion , and that states could collect up to $2 billion in tax revenue if online poker was legal.
"People have been gambling online for 15 years," says David G. Schwartz, director of the Center for Gaming Research at the University of Nevada , who calls online play "the industry's future." He says it's only a matter of time before the federal government legalizes Internet gaming.
And some states are betting on that. Nevada passed legislation this year that allows the state's Gaming Commission to write rules for online gambling just in case Congress declares it legal. Iowa lawmakers this month got a framework for regulating intrastate online poker if they decide to go that route. Efforts are underway in New Jersey to allow the state to offer remote sports betting, just as Nevada does.
California has debated online poker for years but has never acted. A coalition of Indian tribes, card rooms and the California Online Poker Association has launched a website that allows people to play online poker without wagering any money, in the hope that someday real gambling will be allowed. "Regulated online poker for Californians, by Californians will ensure that jobs and revenues remain in California," the coalition says .
The District of Columbia could be the test case. This year, it became the first U.S. jurisdiction to approve an online gambling product known as iGaming , with plans to offer Texas Hold 'Em Poker, Black Jack, e-scratch games, and Bingo. Players will not have to be D.C. residents, but they must be within the District of Columbia boundaries to play and be at least 19 years old. The games will be offered only at D.C. Lottery retailers and there are no plans for new betting parlors to be created. Similar games are already available in Canada and several European countries, including Italy, Spain and the United Kingdom.
"The U.K. has been doing [online gambling] for years and the sky hasn't fallen," says Schwartz of the University of Nevada.
But some worry that legalizing online gambling will make addiction even more of a problem than it is now. "It is inconceivable that Internet gambling would be legalized without dedicating a portion of revenue to reduce the social costs of gambling addiction," Keith Whyte, executive director of the National Council on Problem Gambling, told Congress. But none of the leading federal proposals offer funding for such programs.