Two Frontrunners for Massachusetts Governor Divided on Online Gambling

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Last Thursday, Massachusetts Attorney General Martha Coakley came out against online lottery sales in the Commonwealth, stating concerns over problem gambling and the current age verification methods according to this article.

Coakley states in the article,‘‘I feel pretty strongly that it is not a good idea for consumers. It’s not a good idea for Massachusetts.’’

Forgetting that consumers can only be protected through regulations, and that online gambling is already available in Massachusetts thanks to unlicensed offshore sites, there is a serious problem with both of her stated concerns over age verification methods and problem gambling, in that they are patently false.

Like many politicians that have waded into an online gambling debate, Coakley’s comments highlight the gubernatorial candidate’s lack of knowledge on the topic.

Fortunately for Massachusetts, there is another high level elected official who sees things differently, State Treasurer Steve Grossman.

Grossman also happens to be a gubernatorial candidate, but before I get to Grossman’s views let me first deal with the unsubstantiated talking points that came out of the mouth of Martha Coakley.

Problem gamblers and credit cards

The idea that the online sale of lottery tickets will cause problem gamblers to rack up mountains of debt is yet another logical fallacy perpetrated by someone who is simply opposed to online gambling.

First off, there has never been any legitimate study conducted that shows problem gambling increases either through the use of credit cards or from the introduction of online gambling.

Just because something sounds reasonable doesn’t make it true.

Furthermore, while it sounds logical and convenient on the surface, do we really think the inability to purchase lottery tickets with a credit card (at a brick & mortar location or online) is actually preventing problem gamblers from going into debt? Is this really the argument that is being made by educated adults?

I have two points to make on this:

  1. As we have learned in New Jersey, many credit card companies decline gambling transactions, particularly online gambling transactions. According to a recent panel discussion at IGLSMasterCard has a 35% rejection rate and Visa a whopping 50%.
  2. Have these people never heard of cash advances with credit cards? You know, that option to use your credit card at an ATM machine and withdraw cash at a much higher interest rate than your normal purchases.

Age verification is better than people think

Online age verification has been in place for a very long time and is utilized by a number of different industries, including online alcohol and tobacco sales and credit card applications.

Fortunately I recently had the chance to talk to someone who knows a bit about this process, CAMS CEO Matthew Katz.

CAMS is at the forefront of the player verification industry and works in both the Nevada and New Jersey online gambling markets, but that’s not the only use of age verification.

According to Katz, “It is important to note that age verification methods are not new. They’ve been in use for many years by banks and other mainstream industries.”

Katz explained the process thusly:

“Age verification begins with the player providing their personal information, including their date of birth. CAMS then compares the data to multiple data bases to verify that their name corresponds to dates they provided. If we can verify their DOB with a high degree of confidence, the process is ended.

If we cannot verify, we’ll then move on to other methods such as KBA (Knowledge Based Authentication) to ensure not only their DOB, but that they are who they claim to be.”

As for Coakley’s fears over the process, it would seem that she should also be worried about kids circumventing the system to receive credit cards, based on Katz’s statements.

“Banks and other financial institutions use age verification extensively. Basically, any business that extends credit or uses an installment plan – from banks to mobile phone providers – will seek to verify a client’s age and identity,” he said.

As for sidestepping the system, it wouldn’t be easy. Said Katz:

“Any player who wishes to beat the system has a life’s worth of public records (stored in the databases mentioned above) to circumvent. The likely outcome is that their DOB fails to be verified and – as a result, they are not authorized to play.

A similar thought process can be considered for false-negatives. We live in an information society where our dates of birth are everywhere.”

State Treasurer Steve Grossman has a different view

On the flipside of the coin, Massachusetts Treasurer and one of Coakley’s main rivals for the governorship, Steve Grossman, has been pushing for online gambling in the state for a couple years now. He recently asked the legislature for permission to start trialing online lottery sales, which could potentially include or turn into other forms of online gambling.

An internet forum will be held on March 11th by the Massachusetts Gaming Commission to discuss Internet gambling in the state.

Grossman envisions an online gambling industry in Massachusetts run by the state and using current brick and mortar lottery vendors as a point of sale for purchasing pre-paid online gambling credits or direct funding of accounts.

This funding method would eliminate potential opposition from current lottery retailers who might feel they are losing out on their cut. Lottery retailers get a percentage of winning tickets, which is why they love when a big jackpot is hit from a scratch card or lottery ticket sold in their store.

While he shares Coakley’s unfounded concerns over credit card sales (or perhaps he is just compromising to keep the ball rolling on online gambling) he also envisions a comprehensive state-run online gambling system.

Time is of the essence

Grossman’s vision may have to be implemented in the next year or two, and here is why.

Massachusetts is currently in the midst of licensing and building three resort casinos (as well as a slots parlor at the Plainridge Racetrack in Plainville, MA that has already been approved for a license). Once those casinos are up and running, you can bet your bottom dollar they are going to want in on any online gambling action in the state.

Furthermore, these casinos are getting closer and closer to becoming a reality.

In addition to the licensed slots parlor run by Penn National Gaming, Springfield voters ok’ed the casino project proposed by MGM Resorts, while Revere gave the green light to Mohegan Sun’s proposed casino.

The Massachusetts Gaming Commission still needs to approve these projects, but things are starting to advance beyond the proposal phase, and if Steve Grossman wants the state to run (or at least be in charge of) online gambling, he’s going to need to get something done before these casinos are operational.

The potential gridlock that could be caused by the casino corporations and the state lottery could prevent any type of online gaming bill from passing.

- 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.
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