Legalized Internet Gambling - Pipe Dream or Inevitable Reality
Charles Carreon
Just to consider what kind of explosion in gaming you would probably see if Internet gambling were legal, consider this. While conservative estimates indicate that Internet gambling will gross $4.2 Billion in 2003, and more liberal estimates double that number, here in the State of Oregon we already have legal interactive gambling. We call it “video poker,” and it is actually a modified lottery game. There are over 1,850 video poker retailers (each of whom usually have at least two or three machines on premises) scattered throughout the state, many in bars and delis. Run by the Oregon State Lottery, which prevents video poker retailers from harvesting anything more than two-thirds of their gross revenue from video poker sales, the revenue flows from the game are massive. During year 2000, more than $5 Billion were wagered through the video poker system. At least 50% of the lottery's annual sales must be returned to the public in the form of prizes, and at least 84% of the total state gambling revenue must be “returned to the public in the form of prizes and net revenues benefiting the public.” During 2001, after paying off prizes, the State of Oregon kept $3.2 Billion in revenue, and chalked up $1.6 Billion of that as net profit. The Oregon Lottery, OregonLottery.org, claims that the typical Oregon lottery player has “some college education, a household income of $40,000 per year, is about 41 years old, and is equally likely to be male or female.” Funds from the system are used to fund treatment for “problem” gamblers, who, it turns out, are mostly employed, single, divorced or separated men in their peak productive years. Oregon State government, which has no sales tax, is at this time hopelessly addicted to gambling revenues, receiving 9% of its budget financing from gambling. Given these facts, the very notion that any Oregonian's money is going to Antigua should be enough to make some Salem bureaucrat's skin crawl.
To my eyes the largest area for legitimate growth in online gambling will be from providing software, website design, financial monitoring and other services to the Internet gambling industry that grows up legally within the limits of state and federal regulation that we can expect will evolve during the next 2-5 years. The revenue flows during this time period are going to increase so dramatically that the gridlock existing between the DOJ, Congress, the states, and established gaming interests will have to give way. If you are skilled in providing these types of services to the interactive gaming industry, you will see a boom time. Right now, the most important thing you can do is avoid involvement with shady enterprises. As regulation locks into place, those who have skirted or broken the rules will be punished, exiled from the legitimate online gaming industry. This is not the time to risk all on a shaky bet, but rather, to watch where the house places its money. And the house odds, ultimately, will be set by Congress and the laws of the fifty states.
Just to consider what kind of explosion in gaming you would probably see if Internet gambling were legal, consider this. While conservative estimates indicate that Internet gambling will gross $4.2 Billion in 2003, and more liberal estimates double that number, here in the State of Oregon we already have legal interactive gambling. We call it “video poker,” and it is actually a modified lottery game. There are over 1,850 video poker retailers (each of whom usually have at least two or three machines on premises) scattered throughout the state, many in bars and delis. Run by the Oregon State Lottery, which prevents video poker retailers from harvesting anything more than two-thirds of their gross revenue from video poker sales, the revenue flows from the game are massive. During year 2000, more than $5 Billion were wagered through the video poker system. At least 50% of the lottery's annual sales must be returned to the public in the form of prizes, and at least 84% of the total state gambling revenue must be “returned to the public in the form of prizes and net revenues benefiting the public.” During 2001, after paying off prizes, the State of Oregon kept $3.2 Billion in revenue, and chalked up $1.6 Billion of that as net profit. The Oregon Lottery, OregonLottery.org, claims that the typical Oregon lottery player has “some college education, a household income of $40,000 per year, is about 41 years old, and is equally likely to be male or female.” Funds from the system are used to fund treatment for “problem” gamblers, who, it turns out, are mostly employed, single, divorced or separated men in their peak productive years. Oregon State government, which has no sales tax, is at this time hopelessly addicted to gambling revenues, receiving 9% of its budget financing from gambling. Given these facts, the very notion that any Oregonian's money is going to Antigua should be enough to make some Salem bureaucrat's skin crawl.
To my eyes the largest area for legitimate growth in online gambling will be from providing software, website design, financial monitoring and other services to the Internet gambling industry that grows up legally within the limits of state and federal regulation that we can expect will evolve during the next 2-5 years. The revenue flows during this time period are going to increase so dramatically that the gridlock existing between the DOJ, Congress, the states, and established gaming interests will have to give way. If you are skilled in providing these types of services to the interactive gaming industry, you will see a boom time. Right now, the most important thing you can do is avoid involvement with shady enterprises. As regulation locks into place, those who have skirted or broken the rules will be punished, exiled from the legitimate online gaming industry. This is not the time to risk all on a shaky bet, but rather, to watch where the house places its money. And the house odds, ultimately, will be set by Congress and the laws of the fifty states.