CT And MA Could Surf Second Online Gambling Wave

Connecticut And Massachusetts Prime Candidates For Second Wave Of Online Gambling Regulation

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State-by-state online gaming expansion appeared to be on the fast track in 2013, when it seemed to some only a matter of time until legal online poker was available in most of the United States.

Unfortunately that expansion came to a grinding halt following the legalization of online gambling in Nevada, Delaware, and New Jersey.

But, as we pass the halfway mark for 2015, there are signs that the trend is beginning to turn.

Pennsylvania has a shot at passing an online gaming bill this year. California is closer than ever before. And New York is in the early stages of online poker expansion.

Connecticut and Massachusetts could come in second wave of regulation

Even if California drops off and if New York is still a year or two away from regulation online gambling there are other candidates in the Northeast that have the potential to go from A to Z rather quickly, especially if Pennsylvania moves ahead: Connecticut and Massachusetts.

Passing an online gaming bill at the state level has proven to be a multiyear process. The good news is both states have already had some preliminary discussions about online gaming expansion.

Massachusetts has seen iGaming bills introduced in 2013 and 2014, and held a day-long forum on the topic in March of 2014.

Connecticut’s two gaming tribes have informally broached the topic in public statements, and both offer very successful free-play online gaming sites.

And political, economic, social and market factors in both states could expedite the passage of an online gaming bill.

Political path exists

To start with, both states’ legislatures have super-majorities, and both governors, Charlie Baker in Massachusetts and Dan Malloy in Connecticut are open-minded on gaming issues.

Combine this with the fact that both states also possess a small number of gaming operators (more on this below), which should lessen the chances of California-esque factions and conflict, and you have all the necessary ingredients for quick passage if online gambling legalization gains any kind of traction.

Social opposition could prove lower than typical

Socially, Massachusetts (4th) and Connecticut (10th) are among the most secular states in the country, a factor that should limit the amount of moral opposition to online gaming.

We’re also likely to see the conversation focused on the economic impacts of online gaming expansion, and not on the “won’t anyone think of the children” arguments we’ve witnessed elsewhere.

Economic argument strong

The potential revenue from online gaming would be a powerful argument in both states.

Massachusetts and Connecticut are both running steep deficits (Massachusetts as high as $750 million by some estimates and Connecticut in the $300 million range), but not to the point that an additional $10-$20 million of annual tax revenue, and another $10 million in licensing fees, wouldn’t make a difference.

Compare this to California, where the revenue iPoker could generate for the state is relatively puny compared to the budget at large.

Online gaming could be sold as a significant way to help close either state’s budget deficit and protect consumers, and on a separate note, particularly in Connecticut, as a way to aid their land-based casino industry.

Demographics to support healthy market

Both Massachusetts and Connecticut have the potential for  higher penetration rates and average spend per player than the average market.

On the financial front, the two states rank 4th (Connecticut) and 5th (Massachusetts) in median household income, and 1st (Connecticut) and 3rd (Massachusetts) in disposable income.

According to the 2007 U.S. Census, Massachusetts ranked first in the number of “Persons 25 Years Old And Over With A Bachelor’s Degree Or More,” at 39.4%. Connecticut wasn’t very far behind, coming in 4th, at 36.5%.

This is a strong demographic for online gaming sites, as research has shown online gamblers tend to be younger, better educated, and better off financially than the general public.

Stakeholder consensus could be easier to come by

But all of this data means squat if the principles involved don’t want online gaming.

Fortunately, both the MGM in Springfield and Penn National’s slot parlor in Plainville would likely lobby for online gaming expansion.

MGM started the Let NY Play advocacy campaign in New York, and has been a central figure in fighting against Sheldon Adelson’s proposed online gambling ban. MGM also owns 50% of the Borgata which offers online gambling in New Jersey,

Penn National is lobbying for online gaming expansion in Pennsylvania.

The third casino in Massachusetts is more of a wild card. Based on Steve Wynn’s current apathetic view of online gambling, the Wynn Casino being built in Everett would likely be a [muted] voice of opposition.

However, with all of the other issues (here, here, here, and here) swirling around the project, fighting online gaming doesn’t even seem like it would be on their radar.

In Connecticut, the Mohegan Sun and Foxwoods are exploring ways to boost their falling revenue numbers – numbers that will likely take another hit (as much as a 30% according to Foxwoods Director of Administration for Interactive Gaming Frank Pracukowski) when the Massachusetts casinos open their doors.

While land-based expansion has gotten the most publicity, online expansion shouldn’t be ruled out.

Pracukowski said the state has told Foxwoods and Mohegan Sun, “When you’re ready [for online gaming] you come to us,” at the recently held C5 Online Gaming Conference in New York City.

Both tribal casinos already operate social/freeplay online gaming sites, and Pracukowski is a firm believer that online poker drives brick & mortar poker, using the irrefutable example of Foxwoods Poker Room being so busy during the heyday of online poker that the casino was forced to expand. But now, with online poker a shell of its former self in the U.S., the poker room’s popularity has dipped dramatically.

Add it all together, and the conditions seem ripe for Connecticut and Massachusetts to ride along on the second wave of online gambling regulation.

- 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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