Good gambling bills are few and far between

Who’s To Blame For All Of These Bad Gambling Bills?

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From online gambling to sports betting to land-based casino expansion, state lawmakers have passed a plethora of gaming bills over the last few years. The problem is that few, if any, of the enacted laws would be classified as “good” by the industry.

States continually miss the boat when it comes to best practices in gaming, with shortsighted approaches stemming from:

  • Fear of political fallout, whether it be losing an election or currying favor.
  • Expedient cash grabs designed to fill budget deficits.
  • Capitulating to stakeholders trying to shape the market to their advantage.

There’s plenty of blame to go around.

Doing it for all the wrong reasons

Far too many states are looking at expanded gambling as a cash grab.

This is especially true of the recent rush to legalize sports betting. For lawmakers, it’s a way to point to a repaired road or a reason property taxes didn’t increase.

This is the absolute wrong approach.

By focusing on the bottom line, states miss opportunities to maximize the long-term economic benefits and minimize the social harms of gambling. Those should be the top two priorities for any gaming bill.

It also creates a perception of failure when a young vertical fails to meet inflated revenue projections.

Playing the blame game

It’s easy to lay the blame at the feet of those who make the laws. And frankly, it’s deserved most of the time.

There are plenty of lawmakers who are looking out for number one, willing to do whatever it takes to stay in office. There are also those that will drag out debates over a controversial issue (like gambling) for several years to keep the lobbying dollars rolling in. And some who are already thinking ahead to their post office careers.

To be fair, lawmakers have to walk a fine line of representing their constituents and their businesses, keeping their jobs and effectively managing the state. And the gambling issues they’re dealing with are often especially complex and nuanced.

To no one’s surprise, political calculus almost always comes into play.

Protectionism: The game within the game

Stakeholders and special interests who whisper sweet nothings in lawmakers’ ears also shoulder some of the blame.

As we saw in Pennsylvania, entrenched gaming businesses have an outsized influence on representatives from their districts. These entities are adept at using that political clout to shape laws to their advantage.

Here are just a few examples:

  1. State lotteries can decide to put their thumb on the scale and intervene.
  2. Outside interests can flex their political and financial muscle to sow confusion.
  3. Casino groups can force self-serving provisions into law that cap total market revenue.

By and large, these are nothing more than attempts to stifle competition and maintain the status quo. But they’re not victimless crimes. The victims are the state — which loses out on a potential source of revenue — and the residents who are denied access to some forms of regulated gambling.

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The end result is …

For all these reasons, bad decisions are all too common. Bargains are made, and the theoretical end result is a compromise intended to make everyone happy.

In practice, though, this tends to lead to flawed legislation.

It’s this type of thinking in Pennsylvania that gave us a 54% tax on online slots and a 36% tax on PA sports betting. It also gave us the ridiculous and inconsistent policy that prohibits traditional online gambling inside of PA casinos while allowing on-site mobile sports betting.

Lest you think this is a PA problem, these attempted compromises are also responsible for:

At the end of the day, these policies undercut the industry’s effectiveness and make it more difficult to stamp out black-market operators. Rather than maximizing the economic benefits of expanded gambling, states are limiting it.

At the same time, a near-universal lack of funding for problem gambling research and treatment isn’t minimizing the social harms.

- 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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