Growing Talk Of Lottery Exemption Shows RAWA Isn’t About Gambling At All

John Mehaffey April 1, 2015 1306 Reads
Lindsey Graham

Last week, GamblingCompliance reported that Lindsey Graham (R-SC) was considering an exemption for lotteries under the Restoration of America’s Wire Act (RAWA). The bill as currently written already gives carve outs to the online horseracing industry, fantasy sports, and charitable gaming.

As Chris Grove at Online Poker Report points out, that would only leave online poker and some house banked casino games covered by RAWA. Online sports betting is covered by the current version of the Wire Act.

Potential forms of online gambling exempted by RAWA

The position of allowing so many exemptions shows that outlawing online gambling is not the actual goal of RAWA. Damaging the ability for casino companies to generate revenue over the Internet seems to be the sole intent of RAWA supporters.

Horse racing has enjoyed an exemption from interstate betting laws since the Horseracing Act of 1978 was passed. This opened the door for off-track betting in race books that is so common today. It also allowed the activity to move to the Internet as the industry’s technology progressed.

Fantasy sports is widely supported by the powerful sports leagues. Major media companies and sports teams have gotten involved in the game, as well.

States lotteries would be a new exemption. Any version of RAWA that tramples over the rights of state lotteries appears to be doomed.

There is one thing all three of these examples have in common – powerful political lobbyists.

House edge of proposed exempted games

None of these games offer good odds when compared to online poker and casino games. None of these examples are inherently games of skill.

Daily fantasy sports is the best of the bunch. It offers a house edge of about 10 percent. There is a skill element involved that is similar to online poker. This does not prevent bad beats. Injuries, garbage time points, and unexpected benchings due to big leads or poor performance all play a part and are out of the hands of players.

Some might argue that horse racing is a game of skill. It may be for some, but for most, the house edge is insurmountable. For example, win, place and show bets saw a 17.5 percent hold at Churchill Downs in 2014. Exotics had 22 percent taken from the prize pool. That is a nearly impossible level to overcome, even for the most skilled handicappers.

Lotteries are by far the worst bet. The prize pool for lotto drawings generally returns about 50-55 percent.

Online scratch off tickets give players a slightly better deal. In December 2014, we analyzed the returns of the Georgia Lottery’s online instant games. These are comparable to slot machines without movable symbols. The best game costs $2 a pull. It holds 29.4 percent, as of December 2014. The $.50 game had a house edge of 39.4 percent at the time.

House edge of games RAWA would ban

Games that would be affected by RAWA offer players a much better deal than anything that may fall under proposed exemptions. Online poker cash games have a rake of about five percent. That about doubles for sit and gos and multi table tournaments. These are also beatable games that have a large skill element.

Casino games have an even smaller house advantage, even if the skill element is diminished.

House edge of New Jersey online casino games:

  • Blackjack: 0.5%
  • Video Poker: 0.5-1%
  • Roulette: 2.75%
  • Slots: 5-7%
  • Pai Gow Poker: 1.46%
  • Three Card Poker: 3.37%
  • Craps (Pass Line Double Odds): 0.6%
  • Baccarat (Banker): 1.06%

All of these games offer better odds than anything RAWA looks to exempt. There are a couple of explanations for this. The ability to pass a bill that would ban any of the proposed carve outs would face massive opposition. Another is that none of the proposed exemptions compete directly with large Republican donors.

To claim that banning online gambling is the goal of RAWA is simply untrue. Taking away games with a lower house edge and allowing ones that have exponentially higher advantages for the house does not protect players.

Those pushing RAWA either have no understanding of gambling or have agendas to defeat certain members of the U.S. gaming industry.

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