Forget the monkey or the rooster, 2012 could be the year of the gambler and experts say that while that would mean more money in states’ pockets, it could also put young people and adults at further risk of addiction.
On Friday, the Justice Department reversed its previous stand on the 1961 Wire Act — saying that it applied to sports betting but not online gambling — after years of hunting down online casinos like the billion-dollar-plus Full Tilt Poker.
Rick Bronson, chairman of U.S. Digital Gaming, said the change would give states the ability to legally operate online gambling beginning with poker and also sell lottery tickets on the Internet.
He said that poker would likely generate $12 billion a year in revenue for states and that the lotteries — already a $60 billion to $70 billion business — would continue to grow.
According to a 2010 Morgan Stanley report, analysts said that allowing Internet gambling could bring in $5 billion.
I. Nelson Rose, Whittier Law School professor and expert on gaming law, called the Justice Department move a “major Christmas present for the Internet gambling community.”
“We are about to see this explosion of Internet gambling sweep across the nation,” he said. “All we’re seeing is every single state proposing more and more legal gambling. … Gambling is seen as a painless tax, involuntary tax so it is an easy way to raise revenue without raising real taxes.”
In fact, Washington D.C. and Nevada are already poised to start online gambling, mostly poker. Kentucky’s Gov. Steve Beshear is pushing for expanded gambling in his state. And in Illinois, there are hopes that online tickets will increase sales for the lottery.
“It’s money and [states] can’t raise taxes anymore and they can’t cut services anymore so they need a way to raise money and gambling seems to pay more tax,” Rose said.
Bronson of U.S. Digital Gaming estimated that tax revenue for the states would be about 25 percent. He said online gaming would likely bring more visitors to casinos.
This would be good news for Florida, where lawmakers are set to consider a measure to bring three casino resorts to the southern part of the state. In New York, the governor is pushing for the legalization of casino gambling.
Regarding Internet gambling, Rose said states would have to require strict regulations to prevent gamblers from becoming addicts and to ensure that minors do not participate.
Keith Whyte, the executive director of the National Council on Problem Gambling, said there were a half a million youth ages 12-17 with gambling problems.
He said that youth were already gambling online and that the industry was not doing a good job preventing it.
“In some ways, we’re concerned that when these existing industries expand [under the new Justice Department rule] they’re going to do the same shoddy job of enforcing that they’re already doing,” Whyte said.
He advised states looking to jump into online gambling to first do a study on the current rate of gambling addiction among youth and gambling adults to see whether there would be a spike.
“States are looking to maximize revenue from gambling, but they also need to minimalize the social costs,” Whyte said.