Up To Fourteen States Could Actively Explore Online Gambling Legislation In 2017
Online Poker Report

If Everything Falls Into Place, These Nine Dark Horse States Could Legalize Online Gambling

Dark Horse States Online Gambling
Online gambling has been a hot topic of discussion in a number of states, but actual legislation has been sporadic and legalization has run into the proverbial roadblock since 2013.

Even though a state hasn’t passed a bill legalizing and regulating online gambling since New Jersey in February 2013, some progress has been made in other locales.

There are also states that have briefly flirted with online gambling legalization or haven’t yet jumped into the online gambling pool, but could make some serious waves if they decide to take the plunge.

The dark horses

As we saw last year with daily fantasy sports legalization efforts across the country (with more than 30 bills introduced and seven states passing DFS legislation), if a legislature decides it wants to act on something it can do so pretty quickly.

Online Poker Report has identified nine dark horse states with the potential to pass an online gambling expeditiously, provided the right atmosphere exists.

  • West Virginia
  • Connecticut
  • Illinois
  • Maryland
  • Ohio
  • Florida
  • Indiana
  • Mississippi
  • Washington

In each of these states, online gambling must first become a topic of conversation in the statehouse.

If it’s brought up in the legislature, this talk could quickly turn into action, as the basic infrastructure for supporting a regulated online gambling industry already exists. And in most cases, so does the need.

West Virginia

West Virginia is the epitome of a dark horse. If Pennsylvania passed an online gambling bill in 2016, West Virginia would have been in the front runners category.

The need

Surrounded by gaming states, West Virginia’s casino industry already faces stiff competition.

The state is constantly in search of new revenue sources, which is why online gambling has been brought up several times in the past few years.

Looking to boost declining lottery revenue, West Virginia state lottery director John Musgrave talked about taking the state’s lottery online in 2014. This is something West Virginia appears capable of doing without going through the legislature.

At the same time, Musgrave also mentioned other new gaming revenues, such as online gambling.

The path

Musgrave is no longer in charge of the West Virginia Lottery, but new director John Myers will face the same issues that caused Musgrave to first explore online gambling.

Myers’ position on online gambling isn’t entirely clear, but he seems open to the possibility, particularly because of what is transpiring in neighboring states.

“There are certainly things we need to consider going forward,” said Myers last summer, when Pennsylvania was close to legalizing online gambling. “To stay competitive, we’ll have to consider these, as well.”

The obstacles

The key hurdle in West Virginia will be the quite conservative legislature (Republicans outnumber Democrats 64-36 in the House and 18-16 in the Senate).

But as we’ve seen in other locales, it’s often fiscal conservatives pushing for online gambling to avoid increasing taxes.

Connecticut

Connecticut has been on the online gambling radar for several years, but to date there hasn’t been a legitimate attempt at legalizing online gambling.

This is ostensibly due to the two gaming tribes in the state not pushing for iGaming legalization.

The need

The state’s two tribal casinos, Mohegan Sun and Foxwoods, have both fallen victim to cannibalization from new and expanded gaming in the region.

This cannibalization is only going to get worse as:

  • Massachusetts casinos in Springfield and Everett are slated to open in 2018 and 2019
  • New York’s latest round of gambling expansion will see four new casinos spring into being
  • Rhode Island voters approved the relocation and expansion of offerings of the Newport Grand Casino
  • New Jersey is expected to continue to push for North Jersey casinos

In late 2015, the state’s two tribal casinos made a push to mitigate the impact of the Massachusetts casinos by building a border casino of their own.

This was a decision some analysts see as trying to put out a fire with gasoline.

An alternative solution is online gambling, something Connecticut’s neighbors are also exploring.

The path

Connecticut has two tribal and zero commercial casinos.

This means Foxwoods and Mohegan Sun would be able to negotiate a compact with the state that is favorable to the tribes without the tribal vs. commercial element that causes so much friction in other states.

Former Foxwoods Director of Administration for Interactive Gaming Frank Pracukowski went a step further. At the 2015 C5 Online Gaming Conference in New York City, he said the state has told Foxwoods and Mohegan Sun, “When you’re ready [for online gaming] you come to us.”

Basically, Connecticut legislators wouldn’t have competing visions of what the online gaming industry should look like and could hash out a bill with the input of Foxwoods and Mohegan Sun.

The obstacles

The biggest obstacle in Connecticut’s path is the size of the state.

With a population of about 3.5 million, even a healthy online gambling market would produce only scant revenue.

Based on New Jersey’s online casino numbers, Connecticut could expect online casino revenue in the $50-$75 million range annually.

Going further, the state’s population would make online poker a difficult lift.

To even consider launching online poker sites, the two tribes would almost certainly have to create a singular intrastate network and actively look for interstate networking opportunities.

Illinois

Illinois has all the traits one looks for in a potential online gambling candidate. But other than a brief attempt in 2013 there has been a lack of efforts to legalize online gambling.

The need

The state’s land-based casinos are doing well, so unlike Connecticut, where the need comes from the land-based casinos, in Illinois the need for revenue comes from the state.

And with near 13 million residents, an Illinois online gambling industry would generate in the neighborhood of $200 million annually. The state’s cut would be in the 15-20 percent range, in addition to seven- or eight-figure upfront licensing fees.

The path

Should the Illinois legislature introduce an online gambling bill, it would have a solid foundation for regulations on which to model.

The state’s lottery went online in 2015, which means Illinois has experience with online gambling regulations and the arguments for and against it.

This should cut down on the amount of time spent educating lawmakers on the issue.

The obstacles

Illinois is already considering DFS legalization, and historically states have adopted a “let’s deal with one thing before looking at another” approach to gambling and gaming issues.

Another potential sticking point is the poor performance after the state lottery went private. Illinois was the first state to go this route with its lottery.

Even though the lottery and online gambling are apples and oranges, the problems the state has dealt with after the privatization of the lottery may cause lawmakers (and Illinois residents) to question the wisdom of further gambling legalization.

Florida

With 20 million residents, legal online gambling in Florida would be extremely positive for online gambling across the US.

However, online poker is the state’s current focus.

The need

Florida’s casinos and card rooms could certainly use the boost that would come from online gambling. The state could use the tax revenue, but the need to pass an online gambling bill isn’t as strong as in other states.

This explains why the push is coming from the grassroots level and in the form of online poker.

The path

There is a serious grassroots effort to introduce legislation to legalize online poker in the Sunshine State. The effort is being led by Martin Shapiro, better known as PokerXanadu on 2+2.

The question is: Can Shapiro and other supporters get a bill onto the floor of the Florida Legislature?

They’re bullish on their chances, but it would take close to a miracle in my opinion. Even though there was an online lottery bill introduced in 2014, Florida has more obstacles than any other state on this list.

The obstacles

The biggest obstacle in Florida is Governor Rick Scott, a supporter of a federal online gambling ban. It’s difficult to envision how a bill avoids ink from the governor’s veto pen, but then again, stranger things have happened.

Scott’s opposition isn’t the only hurdle that would need to be cleared, as Shapiro told PokerFuse.com in 2015.

“There is the opposition of Disney and of the conservative legislators, who oppose any type of gambling expansion in the state,” he said. “There is the influence of Sheldon Adelson with the Republican leaders in Florida, and his self-serving campaign to outlaw internet gambling.”

Maryland

Maryland has the perfect market to support an online gambling industry, but the state has shown little interest in online gaming.

The need

There isn’t a pressing need for online gambling in Maryland on the casino or state side. But with neighboring states looking into online gaming, Maryland would be well served to get the ball rolling sooner rather than later.

Another motivation is the recent introduction of MGM National Harbor, the state’s first billion-dollar, Las Vegas-style casino. With MGM gobbling up customers, Maryland’s other casinos could start exploring.

The path

First and foremost, Maryland needs an online gambling champion to emerge, followed by an education process to get lawmakers up to speed.

That’d be similar to what Pennsylvania did in 2015 when it held more than 50 hearings on online gambling.

The obstacles

Maryland is very protective of its lottery, and considering the recent casino expansion, state lawmakers may want to sit tight for a few years before they consider legalizing online gambling.

The other obstacle has already been mentioned: bringing lawmakers up to speed.

This process has taken multiple years in other states.

Ohio

With several neighboring states looking at online gambling expansion, Ohio could also turn to iGaming to create a firewall against residents being lured to out-of-state casinos and their online counterparts.

The need

Ohio’s situation is similar to Maryland’s, in that the state doesn’t have a specific reason for legalizing online gambling. Ohio is unlike Pennsylvania, which needs the revenue to close a growing budget deficit.

But like Maryland, Ohio needs to keep an eye on its neighbors. With Pennsylvania to the east and Michigan to the north, Ohio could soon find itself surrounded by online gambling states.

The path

Again, Ohio resembles Maryland. A supporter of online gambling needs to emerge and make the case, and the legislature needs to be brought up to speed.

The obstacles

Once again, Ohio and Maryland look very similar, the major difference being Ohio has a more conservative legislature than Maryland.

Indiana

With now-former Governor Mike Pence on his way to the District of Columbia to serve as the Vice President of the United States, Indiana immediately becomes a contender for online gambling legalization.

The need

Indiana’s casinos and the state’s coffers are sorely in need of some revenue.

From 2005 to 2013, the state’s casinos generated between $2.4 billion and $2.8 billion annually. In 2014 and 2015, that tally dropped to $2.1 billion.

The legislature has passed a number of gaming expansion/reform bills in recent years, including legalizing daily fantasy sports, but it’s been avoiding online gambling.

This is largely because Gov. Pence has come out firmly against online gambling, going so far as to support a federal online gambling ban.

The path

With Pence out of the picture, Indiana’s legislature has an excellent opportunity to pass an online gambling bill.

With 6.5 million residents, the annual revenue tally should be around $100 million annually for the casinos, with the state getting about 15 percent, on top of the upfront licensing fees.

The obstacles

Even without Pence, Indiana is still a conservative (and socially conservative at that) state and legislature.

If a bill is introduced, we might have a better idea of the state’s appetite for online gambling.

Mississippi

A seemingly unlikely candidate, people forget deep-red Mississippi is a gaming state and has seen online gambling legalization bills introduced by Representative Bobby Moak dating back to 2012.

The need

Mississippi’s casino industry has seen revenue slide since its heyday in 2007 when Mississippi casinos hit $2.8 billion in revenue. The 2015 tally was $2.1 billion.

The state could also use the additional tax revenue online gambling would generate.

The path

As noted above, Rep. Moak has four times introduced legislation that would legalize and regulate online gambling in Mississippi — in 2012, 2013, 2014, and 2015.

Moak didn’t introduce legislation in 2016, but it might be back on the table thanks to gaming expansion in other parts of the South.

Georgia is exploring casino expansion, and recent polling shows support for the initiative, which could mean more saturation for the region, likely cutting further into Mississippi’s casino revenue.

Because of this, Mississippi may give online gambling a closer look.

The obstacles

This is still Mississippi we’re talking about.

Washington

The state of Washington has the most antiquated online gambling law in the nation, which has led to a grassroots movement to repeal said law and, at the same time, legalize online poker.

The need

Washington is interesting in that it’s the only state where playing online poker would be considered a felony.

This archaic law was passed in 2006, and even though no one has ever been prosecuted under it, online gambling supporters point to it as an extreme case of the punishment not fitting the crime.

Because of this, Washington has three reason to legalize online gaming:

  1. Bring in new tax revenue
  2. Assist the state’s card rooms and casinos
  3. Undo the overreaching law

The path

A grassroots effort in Washington was able to get an online poker bill introduced in 2015. But this was more of a moral victory than anything.

The bill failed to gain any traction in the legislature. The grassroots effort, led by Curt Woodard, is still in progress.

The obstacles

As we learned with DFS, it’s much easier to explicitly legalize something that is implicitly legal. Passing an online gambling bill in Washington requires repealing an existing law.

Upshot

There are a lot of ambiguous areas and extenuating factors, but the introduction of an online gambling (or the emergence of an online gambling champion in a legislature) in one of these states has the potential to trigger a chain reaction leading to legalization.

If Everything Falls Into Place, These Nine Dark Horse States Could Legalize Online Gambling
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Steve Ruddock
- Steve covers nearly every angle of online poker in his job as a full-time freelance poker writer. His primary focus for OPR is the developing legal and legislative picture for regulated US online poker and gambling.