The Justice Department of the United States has reversed its stand on the 1961 wire act, which prohibits the operation of certain types of betting businesses in the US. They reiterated that it only applies to sports gambling, but not in online gambling. This is after they have hunted down online casinos such as the billion dollar Full Tilt Poker.
According to Rick Bronson, chairman of U.S. Digital Gaming, the change would give states the ability to legally operate online gambling and will begin with poker and selling lottery tickets online.
He said that the poker alone would generate at least $12 billion a year in revenue for the states and the lotteries which are already around $60 billion to $70 billion will continuously grow.
Analysts from the 2010 Morgan Stanley Report said that this change could bring in $5 billion.
According to Nelson Rose, Whittier Law School Professor and an expert on gaming law, the Justice Department move is a major Christmas present for the Internet gambling community.
“We are about to see this explosion of Internet gambling sweep across the nation. All we’re seeing is every single state proposing more and more legal gambling. Gambling is seen as a painless tax, involuntary tax so it is an easy way to raise revenue without raising real taxes,” he said.
As a matter of fact, Washington D.C and Nevada are plunging into the online gaming business, starting with poker, while Illinois is looking forward to the increase of online lottery ticket sales and Kentucky’s Governor Steve Beshear is promoting expanded gambling in his state.
In Florida, lawmakers are planning to bring three casino resorts in the southern part of the states and in New York, Governor Andrew Cuomo is working on the legalization of casino gambling.
“It’s money and some of the states can’t raise taxes anymore and they can’t cut services anymore so they need a way to raise money and gambling seems to pay more tax,” Rose said.
Bronson supported this by saying that the estimated tax revenue for the states is around 25%.
The only downside of internet gambling is that it would be difficult to monitor the players. Rose said that states should ensure that no minors will participate and that the gamblers altogether should be prevented from becoming total addicts.
According to Keith Whyte, the executive director of the National Council on Problem Gambling, there were half a million youth aging from 12 to 17 with gambling problems.
“The youth are already gambling online and the industry was not doing a good job preventing it,” he said.
Whyte said that they are concerned with the expansion of these existing industries because they might continue doing the same shoddy job of enforcing set rules and regulations. He advised the states interested in online gambling to first do a study on the current rate of gambling addiction among youth and adults to see if there would be a spike.
“States are looking to maximize revenue from gambling, but they also need to minimalize the social costs,” he said.
