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5 Reasons Why Regulating Online Gambling in the United States Is a Good ThingBy Gary Mills in Online Gambling| November 9, 2019 9:27 am PSTShare:ShareTweet
One of the worst days I experienced as a poker player is when PokerStars left Washington State in the fall of 2010.
PokerStars is where I played most of my games. I played on Full Tilt after PokerStars left, but it wasn’t the same, so I decided to take a break.
This was a good move on my part as only a couple of months later, Black Friday happened. The United States Department of Justice indicted all the top poker sites on charges like money laundering and fraud.
The result was that American poker players had nowhere to play and, even if they did, millions of dollars in player funds were locked up.
That was the bad news. The good news is that Black Friday was the catalyst for online gambling regulation in the United States.
Fast forward a couple of years to the spring of 2013. The first regulated online poker site, Ultimate Poker, launched in Nevada. Ever since, several states have passed legislation allowing their residents to gamble on poker, casino games, and sports online.
Currently, only about a dozen states offer some form of online gambling. We have a ways to go before gambling on the internet is legal nationwide, but I believe it will happen.
The following are five reasons why regulating online gambling is a good thing.
1. Americans Are Going to Gamble Online Regardless
It doesn’t make sense to me to prolong regulating or even prohibiting online gambling given that people are going to play online anyway.
I’m not saying we shouldn’t have laws. Or that there aren’t activities that we shouldn’t ban. It’s just that online gambling is nowhere near a prohibitable activity, if anything because you can gamble in nearly every state offline.
I think of gambling as being on par with alcohol. And do you remember (or know about) what happened when the US government tried to prohibit that?
People believed drunkenness was a disease and created abusive husbands and that banning it would reduce crime, corruption, and various social problems.
So, the selling, importing, transporting, and production of alcohol was prohibited from 1920 to 1933. And…that backfired.
Prohibition led to more violence, corruption, and organized crime, not less. It was difficult, if not impossible, to enforce the law, so Americans drank anyway. Many of them died from drinking unregulated alcohol.
This isn’t much different from people choosing to play at offshore gambling sites despite the laws that outlaw it. And then dealing with rogue operators that don’t have gambling commissions to keep them accountable.
Regulated online gambling will keep Americans safe. This is why it’s a good thing, amongst many other reasons.
2. Access to Responsible Gambling Tools and Resources
Another reason why regulating online gambling is a good thing is because every state (and operator) is concerned about responsible gambling.
You can’t say the same thing about offshore sites.
Sure, many offshore sites have a page that talks about gambling responsibly. They might give you some tips on how to be a responsible gambler, and they’ll tell you to get help if you have a gambling problem.
But it’s hard to take offshore sites seriously on this topic when you see how legal operators approach responsible gambling.
Take New Jersey, for example. Here are the tools and resources they offer to their residents.
- Self-Exclusion – Choose to ban yourself from any online or brick and mortar site for 1 or 5 years, or for life. The New Jersey Division of Gaming Enforcement (DGE) will instruct all sites to prohibit you from playing
- Deposit Limits – Set a limit for how much you can deposit during a specified time period
- Wager Limits – Establish a limit for the most you can bet per round during a specified time period
- Session Limits – Set a time limit for how long you can play per day or session
- Loss Limits – Establish a limit for how much you can lose during a specified timeframe
- Account Cool Off – Take a break for a specified duration before continuing to play again
You can contact any regulated gambling site or walk into any brick and mortar casino and request any of these options. Or you can set limits from your player account.
I looked at my offshore accounts, and they don’t offer any of these options. And even if they did, I don’t expect these sites to share my limit or self-exclusion request with their sister sites. So there’s nothing stopping me from gambling elsewhere.
This is another reason why legalizing online gambling in the United States is a positive thing.
3. Online Gambling Generates a Ton of Revenue
Online gambling generates a lot of revenue. It used to all go to offshore operators, fattening their wallets. Now, a lot of that revenue is going to the state.
This money is used to improve the economy on a state and federal level. And it’s used to fund a variety of programs.
- Social programs
- Community programs
- Programs for seniors and older citizens
- Preserving the state’s wildlife (parks, pools, trails, etc.)
- Gambling problem programs
- Improving roads
A large percentage of the revenue that each state generates is directed towards these funds. For example, Texas contributes 27.1% of the funds from lottery ticket sales to their public education fund. They’ve donated $22 billion to this fund since they started in 1997.
Imagine what each state could do if they generated tens of millions in extra revenue from online gambling every year.
It’s possible. Many states struggle in the beginning, but then start to pick up steam after a few months or even a couple of years.
For example, New Jersey earned $23 million for both March and April in 2014. They struggled with payment processors, software, geolocation (which was touchy), and poker liquidity.
Fast forward to 2019. New Jersey’s casino and poker revenue exceeded $41 million. And then online sports betting added another $19 million on top of that.
NJ earned well over $60 million in August 2019, which was nearly 6x more than they earned 5.5 years ago.
There’s no reason to think that other states couldn’t accomplish something similar.
4. Gambling Regulation Creates Lots of Jobs
Another reason why online gambling regulation is a good thing is because it creates more jobs. Why do we need to create more jobs when the employment rate in the United States is over 60%, the highest it’s ever been?
Well, what about the other 40%? That’s a large chunk of the population who wants to work but for one reason or another can’t find a job.
On paper, the online gambling industry doesn’t provide a ton of jobs. There were only 200-300 jobs created in New Jersey when they first launched their gambling sites.
That’s still 200-300 more people who might be able to pay their bills, though. And online gambling provides more jobs than it seems at first.
Think about this – most, if not all, states have rules that say that anything related to online gambling must be housed in state. That goes for servers, payment processors, and so on.
This is cool because it means that the jobs created are specifically for the people who live in the state where the gambling site exists. Meaning, New Jersey gambling sites have NJ residents working on them.
What’s better is that there are more jobs available than what you see on paper. For every software developer, there are several more coders working behind the scenes. You also have security specialists, customer service reps, and designers that work on the website.
You also can’t forget the people who work the kiosks at hockey or basketball games where gambling sites have a deal with the home team.
Then you have the people who do the marketing for the site, which includes running paid ads, creating content, search engine optimization (SEO), and more.
The point is that a new gambling site creates hundreds of jobs that will eventually pump more money into the local economy.
It’s a win all-around — a win that you don’t get when Americans play at offshore gambling sites.
5. Online Gambling Will Help, Not Hurt, Land-Based Casinos
A common opponent to online gambling is brick and mortar casino operators. They’re opposed to online gambling because they fear residents will choose to play online instead of live, cannibalizing their profits.
These operators pay high taxes and overhead, and there are lots of people who count on them for work. There’s a lot of perceived risk.
Their fears aren’t unfounded, either.
Look at the retail business. Many brick and mortar businesses have closed in the last 5-10 years following the rise in online shopping and services. For example, Blockbuster and Hollywood Video have closed. And Sears, Macy’s, and JC Penny’s have all closed hundreds of stores.
It makes sense that brick and mortar casinos would be wary. But the rise of online casinos may not be a bad thing for them.
Why There’s Nothing for Casino Operators to Fear
While these fears are understandable, we now have data that suggests cannibalism isn’t a concern. Online gambling sites don’t take from offline casinos, but, in fact, they help drive more new business to brick and mortar casinos.
New Jersey found this out firsthand.
NJ casino operators testified that a small minority of their online customers had accounts with their land-based casinos. Many of them didn’t come to play live until after they played online.
For example, the Golden Nugget in Atlantic City found that only 11% of their online customers had accounts with their land-based casino. And only 8% had used their cards within the last year.
This means that 92% of their online players that came in were new customers.
Caesars Entertainment had a similar story. More than 80% of their online customers were new players. Only 12% were active customers at any of their other land-based properties.
What they discovered is that people who come to the casino do so for the experience. They want to eat at nice restaurants, listen to music, go to shows, and visit the spa.
So what they do is focus on attracting a younger demographic to their online casinos. Then they create marketing to encourage them to also patronize their land-based properties.
Here’s the moral of the story.
There are people who oppose online gambling because they fear it will harm their revenue.
The good news is that the data shows that won’t be a problem.
In fact, online casinos will drive new business to land-based casinos. This will interest people who might not otherwise gamble live. And it will create a stickiness that will keep people coming back to all of their properties.
There’s no reason to worry about online sites taking from land-based casinos. The fact is that the complete opposite will happen.
And that’s a good thing.
Regulating online gambling in the United States is a good thing for the following reasons.
- People are going to gamble anyway
- Operators offer a variety of tools to help you gamble responsibly
- Gambling generates a lot of revenue that each state can use to fund social programs, education, and maintain their state parks
- Regulation will create hundreds of jobs, which will improve job unemployment rates and the local economy
- Online gambling sites will generate new customers for land-based casinos and create a brand stickiness that operators might’ve failed to achieve otherwise
The bottom line — regulating online gambling is a good thing for everyone involved. It will happen nationwide, too. It’s just a matter of when.
The sooner the better, if you ask me.
If you’re looking for more detail, we offer a page to help keep you up to date on the latest developments in US gambling regulation, including a breakdown of each state’s current gambling laws.MOST POPULAR
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