The State Of U.S. Online Gambling Expansion Heading Into 2016

December 23, 2015
The State Of U.S. Online Gambling Expansion Heading Into 2016

With Pennsylvania’s hope of passing an online gambling bill slipping away by the day, it looks like state level online gambling expansion in the United States will be shut out for the second straight year.

Two years with no expansion is extremely disappointing, considering three states went live with legal online gaming in 2013 — Nevada, Delaware, and New Jersey. But I’m an optimist, so once again, in true Bill Belichick fashion, I speak for all iGaming supporters when I say, “we’re on to 2016.”

So, let’s take a look at how 2016 is shaping up on the online gambling front.

The anticipated hurdles for online gambling

Problem #1: Election year

Conventional wisdom says that controversial legislation cannot pass in an election year, let alone a presidential election year. Lawmakers, likely up for reelection, don’t have the stomach for it. To that, I ask, is online gaming expansion still a controversial issue? I’m not so sure it is.

Take Pennsylvania for example. Once you get past Sheldon Adelson and his hired allies, there was barely a whisper of moral outrage about the state’s desire to legalize online gambling.

Brick & mortar gaming has also come around to the fact that online gaming isn’t cannibalistic, it’s actually beneficial. Of the 12 casinos in the state, only one, Sheldon Adelson’s Sands Bethlehem, (surprise, surprise) opposes online gambling.

Gaming, even online gaming, is no longer the polarizing, hot-button issue it was just a few years ago, and I’m of the opinion that online gaming expansion can pass in an election year, in certain states.

Problem #2: Show me the money

iGaming in Nevada, Delaware, and New Jersey hasn’t exactly lit the lamp (to borrow a hockey phrase) on the revenue front, and lawmakers now realize that online gaming isn’t the panacea they once thought it could be.

However, New Jersey is going to post nearly $150 million in online gambling revenue in 2015, which puts the state’s take at around $22 million — not a ton of money, but not insignificant either. This is on top of the larger economic impact iGaming has brought, from high-tech jobs to advertising dollars flowing into the state’s economy.

Furthermore, iGaming has proven it can buoy brick & mortar casinos that are feeling the economic pinch from increased competition, not to mention regulated online gaming has been extremely successful on the consumer protection front.

Problem #3: Pushed to the backburner

DFS, and perhaps sports betting (depending on how the Third Circuit rules in the New Jersey sports betting case), will likely be a priority in state houses in 2016. Both appear to be better revenue generators — the latter moreso than the former — than online poker or even online casino, and could push iPoker and iCasino talk to the backburner.

That’s certainly one way to look at it, but another way to view the expected DFS talk is that potential legalization of DFS or sports betting continues the normalization of online gaming, and as I posited above, makes the very idea far less controversial.

This could lead to online gaming piggybacking off of DFS, and perhaps being considered in several new states.

Problem #4: Adelson and RAWA

Following a disaster of a hearing, and the bill’s failure to latch its tentacles around the $1.1 trillion bill to fund the government, the Restoration of America’s Wire Act (RAWA) bill Adelson has been pushing over the past two years seems like a lost cause. However, Adelson (and his deep pockets) still supports a federal online gaming ban, and the mere presence of the RAWA has the capability of stalling state-level legislation, as it muddies the waters in regards to online gambling’s legality at the federal level.

The good news is RAWA only seems to be worth a passing mention during recent hearings in statehouses, and the older it gets the less steam it seems to have.

Online gambling expansion candidates

Here are the states where you’re most likely to see iGaming expansion discussed in state legislatures.

California

California has slipped mightily in the past couple years. The state once seen as the clear frontrunner to legalize online poker is now in the long shot category, and doesn’t seem to capable of solving its varied issues. Until California addresses the underlying issues that are dividing the state’s numerous and varied potential stakeholders, there is little hope anything will get done in 2016 or the foreseeable future.

Pennsylvania

Pennsylvania appears poised to pass legislation that will legalize and regulate online gambling in the spring of 2016. But as iGaming supporters have come to realize, until a bill is passed, nothing is a certainty.

Pennsylvania is the Luke Skywalker of online gaming expansion; on the surface, the state appears to be pretty much our only hope for iGaming expansion in the near future. However, if you follow the online gaming industry and legislative developments closely, you know that if Pennsylvania doesn’t pass an online gambling bill this spring, “there is another,” or others to be more precise. But Pennsylvania is certainly the best chance.

New York

New York seemed to get serious about online gaming expansion towards the tail end of 2015, after it looked like its southern neighbor, Pennsylvania, was ready to move on its own iGaming legislation. With Pennsylvania looking like a favorite to pass online gambling legislation in early 2016, it might continue to speed things up in New York.

If Pennsylvania passes a bill, I fully expect New York to get really serious about iGaming, and get something done, perhaps in 2016, but more likely in 2017.

Mississippi

You’re probably wondering what Mississippi is doing on this list, but Representative Bobby Moak has introduced an online gambling legalization bill every year since 2011, and there’s no reason to believe he won’t do the same in 2016.

That being said, Moak’s bills haven’t gained any traction, and I don’t expect that to change in 2016.

Massachusetts

Massachusetts has been toying with the idea of online gaming legalization for a number of years, but none of those efforts have gone very far. However, with the current DFS situation, and with Massachusetts leading the way on regulation, it’s conceivable that online gambling could piggyback off of DFS.

Massachusetts feels like the one state that could pass an online gambling bill in 2016 regardless of what Pennsylvania does.

Washington state

Thanks to the grassroots advocacy of Curtis Woodard, Washington State managed to get an online poker legalization bill introduced in 2015. Woodard and his allies plan to make another push in 2016, but the state still seems a ways away from passing legislation.

Washington state still feels like it’s a couple years away from getting serious about potential online gambling.

Five potential new hotspots for iGaming

In addition to the states mentioned above, there are several other states that could suddenly start exploring iGaming expansion.

Connecticut’s casinos are bracing for new competition from Massachusetts and New York. Illinois and Michigan have already passed online lottery bills and could give online gaming a look. And there is always the possibility that a new state emerges as an iGaming candidate: perhaps Maryland, Rhode Island or West Virginia.

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