Can Retail and Online Casinos Co-Exist in America?
Here is some interesting data related to casino gambling in the U.S. More than 40 U.S. states allow residents to gamble at commercial or Indian-owned retail casinos. Interestingly, only seven (7) states have been able to pass iGaming or online casino gambling legislation successfully. That’s startling information, given the crazy popularity of online casino gambling in other parts of the world.
Those above seven (7) states are:
- Connecticut
- Delaware
- Michigan
- New Jersey
- Pennsylvania
- Rhode Island
- West Virginia
It is worth mentioning that rumblings about iGaming legislation are currently being bandied about in states like Indiana, Illinois, and New Hampshire. Still, that’s not much movement, given how many states have no issue with casino gambling as long as it’s done in retail casinos only.
What’s the Problem?
When data is this skewed, there has to be a reason for it. Remember, states had the green light to legalize iGaming activities in 2018 when the United States Supreme Court lifted the nation’s ban on sports betting and internet gambling. iGaming immediately became a states right issue that came with very little response.
To understand why iGaming legislation moves so slowly in the U.S., one has to dig through the dozens of prior legislative attempts to see why such legislation keeps getting booted to the curb. We have come up with three issues that keep popping up.
1. Tribal Control of Casino Gambling
One of the primary nemesis of online gambling in many states is the Indian Gaming Regulatory Act of 1988. This legislation granted Indian Tribes exclusive control over casino gambling in their respective states. The U.S. Department of the Interior regulates and adjudicates this law.
Because of this exclusive control, many states must negotiate with their respective Indian Tribes whenever an issue related to casino gaming arises. Indian Tribes have proven to be very leery of online casino gambling, in large part due to fears that allowing iGaming access in their respective states might materially hurt their retail casino revenue. These concerns include both gaming revenue and revenue that might come in from hotel and restaurant operations.
The extent of this problem has been very evident in states like California and Florida, where Tribal concerns are prominent.
2. Conflicts With Other Gambling Concerns
Fear over lost revenue caused by allowing residents access to iGaming sites is not restricted to Indian tribes. In states like Indiana, Kentucky, and New York, horse racing and corporate casino gambling operations are also quick to protect when the iGaming fires get too warm. It’s a massive problem in Kentucky because of its historical connection to the horse racing industry. Have you heard of the Kentucky Derby at Churchill Downs in Louisville, Kentucky?
It doesn’t help much that the U.S. horse racing industry has struggled mightily in recent years due to an aging customer base. It also doesn’t help that corporate-owned casinos face the same fears as Indian casinos, losing revenue from gaming and hotel/restaurant operations.
3. Cultural Issues
Last on this list are states that have to wrestle with cultural issues like religion and fear of gambling addiction. Unsurprisingly, online casino gambling will likely never see the light of day in states like Utah and Colorado, where Mormans make the rules. It is surprising to see that Texans struggle with online gambling issues mainly due to the Southern Baptist faith that states gambling is an absolute no-no.
Can Retail and Online Casinos Co-Exist in America?
In many states, the pressure is building to find new ways to create tax revenue. Historically, raising new taxes was put on the shoulders of vices like drinking, smoking, and prostitution. Why not gambling?
The answer is that many states are starting to rethink the iGaming issue to help cover revenue shortfalls. Ultimately, that will force retail and online casinos to play nice together to help their fiscally strapped states. One might consider it a mutually beneficial compromise.
Without further delay, there is one way to motivate these similar but different industries to co-exist. That would be to ensure everyone gets a share of the online gambling pie. It’s a big pie, as evidenced by the revenue generated in states like New Jersey and Pennsylvania. One would think there is enough to go around for all concerned parties. One would think.
In states like Arizona, corporate interests, sports franchises, and Indian Tribes found a way to co-exist as online sports betting operators. Based on that, would it not make sense that something could be worked out related to iGaming access? A reasonable person would say yes. It’s simply a matter of finding revenue-sharing percentages that make sense for all concerned parties.