The New York Times is reporting that some states, while willing to open the doors for online gaming and poker within their borders, will not see the windfall revenues that would be necessary to solve critical budget issues.
The article, written by New York Times writer Michael Cooper, examines the profits that states that are considering legalizing and taxing internet gaming might be able to pull in. Cooper starts by detailing out how the lotteries of different states – and especially the multi-state lotteries such as PowerBall and the Mega Millions – now draw in around $18 billion per year four decades after their launch. The money that the states would make from online gaming and poker, however, would be much less, Cooper observes.
Cooper looks at the latest study by the state of Iowa, which found that the taxation of online gaming and poker would not make a significant mark in budget considerations. The Iowa Racing and Gaming Commission study suggested that a licensed online gaming operation in the state of Iowa could pull in somewhere between $13 and $60 million annually from regulated online gaming inside the state. With the state tax rate in Iowa of 22%, that would result in somewhere between $3 million and $13 million into the state coffers.
When it comes to the state of California, the most populous state in the United States, the profits of online gaming might be larger, but would not even impact the significant budget shortfall that the state faces. Supporters of the legalization, regulation and taxation of online gaming in the Golden State say that it would bring in between $100 million and $250 million per year. Those profits, however, pale in comparison to the state budget shortfall, which is expected to reach $9.2 billion this year.
Still, the impact of online gaming and poker regulation in California would help, according to Cooper. He quotes California State Senator Lou Correa as saying, “$250 million will buy you a lot of teachers. Half a billion buys you even more teachers. The budget deficit is tremendous, but you take $500 million here, $500 million there, and pretty soon you’re talking (some) serious money.”
What may be significant in the discussion regarding the legislation of online gaming and poker could be the proposals to follow what happened with the lotteries. While an individual state may not have a sizeable enough population to make online gaming profitable, if they were able to enter into multi-state operations – as many in the legislatures and legal committee believe may be allowed – then the profits could be maximized, much like the lottery system that has grown over the past forty years.
The thing that may thwart the individual states is the potential for legislation from the federal government. Although there is only one bill from Texas Representative Joe Barton even being discussed in the House of Representatives (where it has not come for a vote), Senator Harry Reid made noise over the past weekend in stating that discussion in the Senate is “making progress” and that the issue of regulation of online gaming should be left to the federal government, rather than the states.
“We cannot have a series of laws around the country related to gaming,” Senator Reid stated to Gambling Compliance on Sunday following an appearance on the political talk show “Meet The Press.” “I know a lot about gaming (and as) a former chairman of the Nevada (Gaming) Commission, I think it’s very important that we have a national law.”
Senator Reid has joined with Senator Jon Kyl, the outgoing senator from Arizona who has long been against online gaming, in pushing the discussion of regulating the online gaming market in the United States, but it is unknown how close they actually are to any proposed legislation.
Although Nevada has regulations in place for a legalized online poker market, licenses have yet to be issued. No state has, as of yet, moved forward with any plan regarding online gaming. So who will get there first – the states or the federal government – in solving the online gaming question?
poker alone is not going to save the economy, but the peace of mind you get by legalizing it and giving american players the freedom to choose will surely go a long way. As it is now, the cost of the process will take its toll, and allegations of crimes will shift between the prosecuted and prosecuters. There should be no price on freedom, just the inalienable right.