With California off the table, the prospects for iGaming west of the Mississippi remain dim

While East, Midwest Contemplate Online Poker And Casinos, Western States Lag Behind

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The US online poker and casino landscape is still sparse and dictated by geography.

Three of the four states with legal iGaming are on the east coast — Pennsylvania, New Jersey and Delaware. And most of the others discussing it are in the East and Midwest.

Of the handful of states considering legislation, California is the only one west of the Mississippi River, although we already saw lawmakers there give up for 2018West Virginia is the southernmost of the bunch.

Let’s poke around at some of the reasons the nation is so visibly split on the issue.

Some folks just don’t like gambling

The most obvious thing that sets states apart is their regional receptiveness to the industry in general.

Las Vegas and Atlantic City are the two biggest gambling destination cities in the county. It’s no surprise, then that Nevada and New Jersey were among the first to take the gaming industry online. Nevada was the very first to do so back in 2013.

States that prohibit gambling, on the other hand, often do so for deeply embedded reasons. The long-standing political and cultural climate of the region is a big factor, particularly in the Southeast.

There are gaming states in the Midwest, but many have tribal gaming interests that can present a hurdle for expansions. And even where commercial casinos are present, there’s not always an appetite for expanded gambling.

But interest in legalizing online sports betting and daily fantasy sports in jurisdictions around the US gives reason for hope and a possible path forward. Look at the map of states with legal DFS for a snapshot of the disparity. It’d be reasonable to expect iGaming to take a similar but not identical path through the country.

Market size matters, especially for poker

Some of the split can be boiled down to population, too. The largest states stand to generate the most revenue from legalized online poker. And with a couple exceptions, Eastern states tend to be the more populous states.

Florida and New York, for example, each have a market of around 20 million people. It’s tough for smaller states to make it work on their own.

In 2013, Chris Grove conducted an analysis on states’ suitability for a standalone online poker industry. Criteria for judgment included population, GDP per capita, internet access and attitude toward gambling. Grove concluded that there were around 20 states with the potential to move forward. And only three of them were in the West.

Some of the Southeastern states would be suitable if not for their predisposition against gambling. And some receptive Western states simply don’t have enough residents to support a ring-fenced iPoker industry. An interstate marketplace would, of course, make it more appealing to the states on the fringes of suitability.

And the potential of online casinos far outstrips that for poker, as we’ve seen in NJ revenue.

Population doesn’t explain everything, though. Some of the largest states in the country cannot get over the hump for online poker. California, the very largest, has been discussing legislation for almost a decade.

Financial problems provide an impetus

States’ financial well-being is roughly correlated with their geography, too. And with their receptiveness to online gambling.

As a rule of thumb, Eastern states tend to be in worse financial shape than those in the West, for a variety of reasons. (A big one is population shifts.) For some of those states, online gambling can be seen as a way to help plug the leak in the coffers. Lawmakers have occasionally used iGaming as a possible bargaining chip in budget negotiations. Pennsylvania and New York come to mind.

Let’s look at another study. The Mercatus Center publishes an annual report on the fiscal well-being of each state. On the 2017 list, seven of the states that are most progressive on iGaming rank in the bottom ten. New Jersey, a legalized state, is dead last. It’s followed by Illinois and Massachusetts, two of the states considered most likely to make the move in 2018.

It may not be cause and effect, but there is some clear correlation.

California is one of the few Western states near the bottom of that list, too. It is a progressive state with an enormous gambling population, and it has a land-based casino industry that could easily facilitate online poker. So what is the holdup there?

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Tribal compacts complicate the process

The Golden State is one of several with major tribal hurdles to clear.

In many states, tribes retain gambling exclusivity in exchange for payments to the state. Tribes argue that any expansion must be done within the context of those existing compacts. Any change can upset the apple cart. Their opposition represents the greatest obstacle to legalization in some places, particularly in the West, where gaming is often conducted by tribes.

California has been trying to push online poker through opposition for a decade, without much progress. Tribal leaders have called the state’s efforts “fatally flawed,” standing against the proposed tax and suitability terms. According to California lawmakers, online poker has almost no chance to progress without a consensus approval from the tribes.

There’s legislation under consideration for online casinos in Michigan, but tribes haven’t been won over yet. Tribes from New Mexico and Oklahoma have also expressed opposition to various forms of gambling expansion. And those are far from the only states could face the same hurdles in the future.

Tribal gaming isn’t exclusive to the West, though. Some eastern states have chosen to take up the issue despite the presence of tribal gaming. New York, for instance, has been at it for a long time with only modest progress. It’s trying again in 2018, with legislation carrying over into the new year.

Because of tribal gaming and many of the reasons above, the momentum for iGaming in Western states is probably going to continue to lag well behind states in the rest of the country.

- Eric is a reporter and writer covering regulated US gambling, sports betting, and DFS. He comes from a poker background, formerly on staff at PokerNews and the World Poker Tour.
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