Alabama study says gambling could bring up to $710 million in annual revenue and 19,000 jobs

Alabama Study Comes Up Strongly In Favor Of New Gambling Options, Though Resistance Remains

As surprising as it may be to hear, Alabama might be a favorite to introduce some form of gambling legislation next year.

A study, commissioned in February by Governor Kay Ivey, arrived on her desk on December 18. Despite her own professed opposition to gambling, the twelve-member study group concluded that the benefits of gambling to the state would outweigh the costs.

This doesn’t mean that we should expect to see a full slate of online and retail options such as we see in New Jersey or Pennsylvania. Rather, the most likely short-term outcome of the study is that Alabama will finally get a lottery. It is, at the moment, one of only five states which lacks one.

The study is a hefty document, weighing in at 876 pages. It covers the following topics in great detail:

  • The current situation for gambling in the state,
  • What new forms of gambling the state is in a position to allow,
  • The costs and benefits of each, using other states as examples, and,
  • How such new forms of gambling should be regulated

The group concluded that gambling will work in Alabama. Just establishing a lottery would be enough to bring in anywhere from $200 to $300 million annually. A broader range of gambling options, including retail casinos, could bring in up to $710 million. Unfortunately, that wouldn’t include online casinos or online poker, at least not immediately.

Bingo, parimutuel and DFS

In its current situation, Alabama isn’t completely devoid of gambling options. They are, however, extremely limited.

The land-based choices available are the dog tracks and tribal casinos. Parimutuel wagering has been legal in Alabama since 1973, but the state doesn’t have live racing anymore. Its first and only horse track, Birmingham Race Course, never fared well. For a time, greyhound racing was popular and the state had four tracks running at its peak, but the last of these ended live racing this year.

Now, the greyhound tracks serve as simulcast facilities for wagering on races elsewhere in the country. They also feature electronic bingo machines, though these have at times been removed, then reinstalled as a result of ongoing legal battles. Clearing up their legality is one reason Alabama needs a gambling bill soon.

The state’s three tribal casinos, all owned by Wind Creek Hospitality, are Class II facilities. This means that they can only offer games like bingo and the same slots-like bingo machines as the dog tracks. They would be able to upgrade to full (Class III) casino gaming if the state were to build any commercial casinos.

For online gambling, the choices are daily fantasy sports sites or parimutuel racebooks. The former were just legalized last year.

Best case scenario: $710M tax revenue, 19,000 jobs

The study doesn’t make many assumptions about what the state will ultimately be willing to do. It does seem to exclude the possibility of skipping retail casinos and going straight to online, however. That’s presumably because no other state has yet done this.

It does look at a range of outcomes, from complete prohibition of even existing forms of gambling, to full legalization of every type under consideration. As far as online goes, this means only iLottery and mobile sports betting. Indeed, the study states that online betting without in-person registration would be a prerequisite for sports betting to be worthwhile.

The high end estimate of $710 million in tax revenue naturally assumes the latter scenario. This breaks down as follows:

  • Lottery (including iLottery): $300 million
  • Casino gaming: $400 million
  • Sports betting (including mobile): $10 million

On top of this, the study estimates that the full package would create roughly 19,000 jobs, with wages better than the state average.

The study also recognizes that additional forms of gambling would increase the risks of problem gambling. However, it concludes that if some of the money is allocated to awareness and education campaigns, the net effect would be positive:

“While there are costs associated with gambling, the taxation of regulated gambling activities creates an opportunity to dedicate public funds to gambling treatment, prevention, or education services. T he best way to avoid or mitigate treatment is prevention, and in the case of legalized gambling, perhaps the most effective prevention measures are education and awareness. There are a variety of best practices observed within gambling industries and other states.”

Public opinion is softening on gambling

The time looks to be right for gambling in Alabama. There were in fact two separate bills in the legislature this year – one in the House, the other in the Senate – which would have established a lottery.

These weren’t expected to pass, as Gov. Ivey said she’d veto any lottery legislation until the study was complete. However, they demonstrate a willingness on the part of lawmakers to get this done.

Alabama has a constitutional prohibition on gambling, so any such bill requires a referendum. There has already been one such vote, in 1999. That was very close, and looked likely to pass. However, grassroots efforts by anti-gambling groups resulted in a high turnout of conservative voters, just enough to tip the scales in favor of the No vote.

A poll four years ago showed that at least Republican-voting Alabamans were still strongly opposed to casinos and split on the idea of a lottery. However, a broader and more recent poll showed a clear majority of the overall populace was in favor of a lottery to support education.

The study group did some polling of its own, and found greater than 50% support for all the types of gambling under consideration. The level of support varied however:

  • 67% supported some form of gambling expansion
  • 63% supported legalized slots
  • 61% supported other forms of casino gaming
  • Only 52% supported online sports betting

Lottery seems like a no-brainer, casinos possible

Between public support, political will and the findings of the study, the odds look good for Alabama to get a lottery. There is also the fact that neighboring Mississippi caught up with the times last year, which should help matters too. That leaves Utah as Alabama’s only company among states without a lottery for reasons of social conservatism.

Online sports betting is far less likely. Support for it is more marginal, and it would risk causing the whole effort to fail. Furthermore, the estimated $10 million in would bring in annually amounts to crumbs relative to the other options. Disappointing as it is for Alabama bettors, we probably shouldn’t expect this next year. The study does, however, suggest that ticket-based parlay betting run by the lottery could be an option, and this seems like an easier lift at the moment.

Casinos could go either way. Were it not for Wind Creek’s tribal casinos, the lottery would likely come first, with casinos perhaps following later. However, the Poarch Creek tribe (to which Wind Creek belongs) is opposed to a lottery. That’s because it fears the possibility of video lottery terminals poaching its revenue.

One of this year’s lottery bills included provisions to allow Wind Creek to expand its operations to Class III gaming. It would also let the company build two additional properties outside of tribal lands, and guarantee it exclusivity.

This was introduced by Senator Greg Albritton,  who is an unabashed advocate for tribal interests. It’s therefore unlikely that whatever bill ultimately passes hands Wind Creek such a generous deal. However, some sort of provisions for casino-style gambling in the state might end up included, in order to bring the tribe on board.

 

- Alex is a journalist from Dartmouth, Nova Scotia, Canada. Now site runner for OnlinePokerReport, he has been writing about poker and the online gambling industry in various capacities since 2014.
Privacy Policy