The State of US Online Gambling

state of us gamblingThe state of US gambling is not strong. Sorry, I couldn’t help myself with my state of the union pun. But, it’s the truth. No meaningful dialog has gone on any level: state, federal or otherwise. Things looked so promising a couple of years ago when a few states decided to create legislation and regulations for online casino sites. Since New Jersey, Delaware and Nevada created their own laws that governed placing bets online, nothing major of note has happened.

A handful of states have suggested some kind of legislation. This includes California, Illinois, Massachusetts, Mississippi, New York and Pennsylvania. However, none of the bills have made it past the introductory phase of legislation. This is frustrating for a lot of people when we can look across the ocean and see the way that European countries regulate sports betting, casinos and poker.

Why there isn’t more states with online gambling regulation

Why did the wind get taken out of the sail of the expansion of legalized online gambling? In part, the tax revenues collected were nowhere near the amount that they were projected to be.

Let’s take a look at the example that legalized marijuana is providing the nation. Here is a vice that by all estimates is more illicit and dangerous than gambling that is making a major push towards full legalization on a federal level within the next 10 years or so. Pot has been legalized in 4 states and looks to expand by as many as 6 more states in November.

The reason? Because the model of tax collecting and the punishment of individuals combined to make this a reasonably good sale for the majority of people. The states that have legalized pot have collected billions of dollars in tax revenue. The states that have legalized online gambling have seen a little over $100 million per year in tax revenue.

People don’t generally go to jail or get probation for betting online. Meanwhile, people definitely get in a lot of unnecessary trouble for possessing a plant. Most people don’t have an opinion about online gambling unless they have an interest in it. The majority of Americans have a solid opinion about marijuana on one side of the argument or the other.

Solution

If any of the politicians are actually telling the truth, they should treat both of these issues the same way – let the states decide what to do. There is a precedent for doing this. After the federal government repealed prohibition, not all of the states allowed alcohol to be produced or sold right away. In fact, several states waited until the 1960’s to repeal their statewide laws on the prohibition of alcohol.

There are always going to be several states that don’t want these new laws pushed on them; I’m looking your way Utah and Alabama. That’s fine, just create your own state laws. You just have to realize that prohibition has never worked and only creates an unregulated and untaxed black market. You aren’t going to be able to tell a lot of individuals that they can’t do something that doesn’t hurt anybody else.

Looking Forward

The next year is going to be a wasted effort for anyone trying to bring up legislation for anything that has to do with gambling. This is an election year and nothing of value is going to get passed. So, something that a lot of people perceive as something of little value to them, such as online gambling, doesn’t have a chance.

The best chance of having an expansion of online gambling in the United States is for several of the states mentioned above passing new legislation, specifically California or New York. The best case scenario for this to happen would be midway through 2017 once the newly elected officials start to settle in and try to find ways to generate revenue for the state. This is exactly the reason why we went from having two states with regulated casinos in the 1980’s (Nevada and New Jersey) to having about half by the turn of the millennium.