Why Are States Legalizing Sports Betting And Fantasy Sports And Ignoring Online Gambling?

To the dismay of legal online poker advocates, the legalization of online gambling has never been a pressing issue for state legislatures. Even after three states passed legislation in 2013, legislatures either ignored or merely flirted with online gambling.

And then along came daily fantasy sports. Online gambling moved to the backburner once DFS appeared on the legislative radar.

With the onset of the legal sports betting era, online poker and online casino games can barely get a seat at the table.

Not only have they displaced online gambling, DFS and sports betting have been legislative darlings over the past few years.

The topic of legalized sports betting has been raised in no fewer than 22 states over the past two years. In that time, six states have passed legislation legalizing sports betting, with legislation pending in many others.

When it comes to DFS, it’s easier to count the states that haven’t broached the issue. DFS legalization has come up in 41 statehouses since 2016, with no less than 18 states passing DFS legislation in that time.

For whatever reason, online gambling can barely get a mention.

Since 2016, just 11 states have considered online gambling legislation, and just one state, Pennsylvania, has passed a bill.

Basically, states are not only ignoring online gambling as an issue, it’s batting well below the Mendoza Line in the states that are actively pursuing it.

So what gives?

A messaging problem for online casino

Online gaming has been a reality in the US since 2013, and in New Jersey, it’s been a rousing success, and a key driver in Atlantic City’s turnaround.

Five years in, online gambling is generating nearly $25 million per month for New Jersey operators, and has been a key customer acquisition tool from Atlantic City’s land-based casinos.

Despite its successes, it continues to be one of the most maligned and misunderstood sectors of the gaming industry.

Instead of moving the conversation forward and building on the experiences of New Jersey, Delaware and Nevada, it feels like we’re simply covering the same ground whenever online casino and poker are discussed.

That is a testament to the efforts of online gaming opponents. Even though these efforts – ranging from a federal bill that would prohibit online gambling nationwide to a reversal of the 2011 Depart of Justice opinion that greenlit intrastate online gaming — haven’t rolled back the legal online gambling market, they’ve been extremely effective at obfuscating the reality of online gaming, and putting enough of a scare into some state lawmakers to halt efforts.

This dynamic has apparently even wormed its way into gaming conferences, as I learned at the recent National Council of Legislators from Gaming States conference.

Based on the discussion from panelists, even though online has been legal for five years in three states, the lack of understanding is still high. Very basic topics compared to other panels at #NCLGS.

— Steve Ruddock (@SteveRuddock) July 14, 2018

Maybe the panelists are unnecessarily dumbing it down, but we should be beyond this point by now. Definitely not a good sign for future expansion efforts. Feels like most states can't be bothered to learn the absolute basics of the industry.

— Steve Ruddock (@SteveRuddock) July 14, 2018

Why aren't we discussing the issues regulators in legal states have faced? What the reception has been? How the interstate agreements between NJ-DE-NV were worked out and implemented?

— Steve Ruddock (@SteveRuddock) July 14, 2018

In the dark ages?

While sports betting panels discuss the different models available, setting the proper tax rates, and migrating players from illegal to legal markets, online gaming panels are discussing the same issues they were a decade ago. Instead of asking what’s the best way to do this, online gaming is stuck on “Should we do this?”

Even though we’re past the theoretical with online gambling’s impact on land-based gambling, and even though online gambling is the best revenue generator of the three, and even though it uses the same technology to geolocate and verify players’ ages and identity as DFS or online sports betting (technology that has proven its efficacy), online gambling just can’t move past these hypothetical what-ifs that have been refuted a hundred times over, such as:

• How do we know the person playing isn’t a child?
• Won’t online gambling cannibalize land-based gambling?
• Bad guys will launder money online, right?

What’s the answer?

The solution is simple; Stop giving lip service to the people spewing this nonsense.

The efficacy of geolocation and player verification technology is settled. It works. If you disagree, it’s up to you to disprove it. Not the other way around. If your state legalized DFS, you believe in this technology.

In fact, most experts are of the opinion that online gambling is superior when it comes to age verification, anti-money-laundering and responsible gaming features.

Scott Gunn: iGaming generally believed to be a more aggressive form of gambling. But notes there re many controls in place in iGaming that don't exist in B&M gaming: No anonymous play, RG features, 100% tracked betting #NCLGS

— Steve Ruddock (@SteveRuddock) July 14, 2018

Stephen Martino of MGM makes a good point about online and AML monitoring. Online you can see if someone is structuring bets at multiple properties to come in under the reporting threshold, you can't always identify this at sportsbooks #NCLGS

— Steve Ruddock (@SteveRuddock) July 14, 2018

Every land-based casino operator in Atlantic City is in complete agreement, online gambling is beneficial, not a detriment to land-based gambling.

Bottom line: If online gambling is going to get a seat at the adult table, it needs to start demanding the same treatment sports betting and DFS are getting.

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