Can States Balance Budgets with Online Poker and Gambling?

Posted on July 17th, 2012 by Todd Wilkins

Online Poker in the USFor close to a year now numerous states in the US have debated if online poker and other forms of gambling can balance their budgets.

Online poker, casinos and sports betting are seen by many as having great potential due to tax revenues from licensing fees and also the possibly of taxing people’s winnings. This week it became clear that the issue itself is still open to debate.

Two Roads Ahead

There are two roads ahead for the legalization of Internet poker in the U.S. The online game may first become lawful within individual states, or if the U.S. Congress can take action, it may become part of federal law. Although the Barton Bill and the Campbell Bill, both of which are in House committees, have garnered quite a bit of support from various advocacy groups and have support inside Congress, neither may see the light of day.

Individual states, however, are making progress towards developing online poker and gambling legislation and the U.S. may see states such as Delaware, New Jersey and California operating online gaming sites before a federal law is ever passed. That is if various types of opposition can be overcome.

The Golden State

California, the Golden State, is noted for its golden sunshine, valleys and gold dust. About a year ago, Playtech inked a deal with Scientific Games in California. The two companies banded together to create Sciplay. Playtech and Scientific Games, which are major players in the gaming scene, were looking towards the future when California, which has a lot of poker players, would finally have legalized the online game.

The new company, Sciplay, signed a contract with the California Online Poker Association (COPA). Playtech was charged with supplying COPA, which is comprised of 29 tribal Native American governments and entities and includes 31 card clubs, with its latest poker technology for online play money games. Analysts saw this as a move putting Sciplay in the driver’s seat once online poker became legal in the Golden State.

That’s all well and good. However, a recent California poll on sports betting and online poker found that although a majority of residents favored sports betting, the state was split regarding Internet poker. In the most recent survey, 49% favored Internet poker, 45% were against it. Those results were a virtual tie as the 4% difference fell within the margin of error. That was bad news as support for poker dropped by 4% since a September poll that showed 53% were in favor of it in.

The Majority Vs. COPA

Although a majority of the major Indian tribes in California are against online poker, as they see it having an impact on land-based poker rooms, COPA, with its connection to Sciplay, is supporting it. COPA generated its own survey in June that revealed 76% of residents supporting online poker regulation and taxation.

This is one part and a major part of the battle to legalize online poker in the U.S. Indian tribes are very concerned about their sovereign rights when it comes to gambling and protections that have been written into the law. Anything that jeopardizes their ability to continue to thrive in this area, such as online poker and gambling, is usually met with opposition. COPA is an anomaly due to the connection they made with Sciplay last year.

California a Microcosm

The large State of California serves as a microcosm for the type of battle that is being pitched across the U.S. It is both within states and nationwide and it means that online poker will not be an easy sell. On the East Coast a poll of residents in New Jersey by Farleigh Dickinson University revealed that just 31% were in favor of online poker.

What may finally make online poker a reality in the U.S. is the amount of tax revenue the states may realize. When it comes to something like online poker and individual cash-strapped states money talks.

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