A 21st-century gold rush: remote gambling By Ken Adams, CDC Gaming Reports June 20, 2021 at 6:12 pm Remote online gambling is exploding in Michigan, New Jersey, and Pennsylvania, leading other states to rush to duplicate the success — rushing to the gold, as it were. In May, the three states reported $392.9 million in online gaming and mobile sports betting revenue. That was up from $115.4 million in 2020 and from $52.2 million in 2019. New Jersey was the only state with online gaming in 2019; in 2020, Pennsylvania joined the Garden State. The gross revenue numbers are very impressive, but equally impressive are the taxes generated; operators in Michigan, New Jersey, and Pennsylvania paid $91.2 million in taxes in May. It has not come without pain. Casino revenues haven’t experienced the same dramatic growth. In May, while overall gaming revenue was up to record levels, retail casino activity was down, as were the taxes from those operations. By way of comparison, in states without online gaming, retail casinos have been up dramatically since March. During the pandemic, Pennsylvania and New Jersey had virtually the only gaming in the country and were the only states collecting gaming taxes. The other gaming jurisdictions were watching and taking notes. Online gaming revenue from those states undoubtedly helped persuade lawmakers in Michigan to legalize online gambling. Michigan had one additional incentive, in that remote gambling brought tribal gaming under the regulatory and tax umbrella; eight of the 11 online operators in Michigan are Indian tribes. The existing online gaming states are models for other to study. Mobile sports betting offers another model; its success is an incentive for more states to embrace all forms of remote gambling. Mobile sports betting is legal in 11 states and there, more than 80 percent of the handle and win come from remote wagers. Remote sports wagering is demonstrating to everyone that going online is a sure road to revenue and taxes. Virginia is a good example where, in its first four months, sports betting has generated $61.8 million in revenue and $3.1 million in tax. No retail were outlets available. Sports betting is a wave that is sweeping the country, with 31 states authorizing it or on the verge of it. On the evidence from the states with mobile betting, legislators debating sports betting now do not fail to at least consider taking online wagers. It does not happen every time, but the states that reject remote betting are now the exception rather than the rule. In the next year or two, it is certain that more states will authorize mobile sports wagering. Also, some states without it will revisit the legislation to correct the situation. Nothing on the horizon seems like it will slow the spread of sports wagering. Whether retail or remote, sports betting has always been popular. Now, when more people have access, it is even more popular. Until recently, any attempt to put it online met a wall of well-funded, well-connected, and passionate adversaries. However, the major adversaries of online gambling are either dead, like Sheldon Adelson and Arizona Senator John McCain, or they’ve been caught up in the enthusiasm. As the country emerges from the pandemic, the revenues and taxes that online and mobile wagering promise are like gold, glittering in a stream, so they’re initiating a gold rush. Online gambling will continue spreading, in part because it is a piece of a much larger trend. Online shopping and the outrageous success of Amazon are part of that larger trend. Will remote gambling expand until people living in Utah are making bets on baseball, while ordering team jerseys to be delivered by Amazon? Maybe, but probably not in Utah. Right now, it is estimated that the majority of Americans can place a wager on sports and a growing number can do it without leaving home. Over-indulging in shopping, gambling, and watching movies at home could become a social and medical problem. When it’s possible to gamble from home, more people will develop a gambling problem. It is estimated that between six and nine percent of the population is susceptible to gambling addiction. In raw numbers, that means 39 million people could become addicted to gambling. Preventing the spread of remote gambling would be as difficult as stopping the spread of shopping online or streaming movies and television. All three will eventually lead to serious societal problems. However, those problems are down the road. It will take years before online gambling has reached its peak penetration. Even after igaming is available to most Americans, it will take 10 or 20 more years before its impact is recognized, studied, and understood. At that point, it is possible to postulate that a major backlash could occur, leading to an outlawing of all remote gambling. There is only one model for that kind of a reaction, and it is outdated. In the 19th century, the corruption of lotteries and lottery officials led most states to outlaw lotteries and, in some cases, all forms of commercial gambling. Serious students of gambling and its impact on society are becoming alarmed. The alarm is understandable, but there doesn’t seem to me to be anything capable of altering the trend. We are caught up in a gold rush, as the nation is rushing toward the nearest sportsbook with wads of cash in hand. Everyone — bettors, political officials, regulators, legislators, media outlets, sports book operators, sports teams and leagues, and casino operators can see the glitter in the streambed. Like all gold rushes, the prospectors do not all get rich. But regardless of the sad tales of the tragic lives of the losers, the stream of people hoping to find gold only grows.