Big Debate: Will one or more US states pass legislation this year to regulate online casino?

Yes

Jeff Ifrah, founder and general counsel, iDevelopment and Economic Association

I believe Illinois and New York both show promise for approving legislation this year. State lawmakers recognise that passing legislation to allow legalised, regulated online casino games makes great business and economic sense. While there are many reasons to support legalised igaming, the direct benefits to states will compel legislators to vote for laws that bring responsible online gaming to their states this year.

Studies find that the six states that have legalised igaming generated $970m in tax revenue in 2021. Those states, in turn, are investing those funds into their communities. Legislators in states considering legalised and regulated igaming can see how neighbouring states enjoy additional tax revenue.

Legalised igaming also creates jobs. For example, we’ve found that in New Jersey’s first six years of legalised online gambling, 6,600 jobs were created to support the new industry.

Black market and offshore igaming operators, meanwhile, steal revenue and jobs from regulated states. Americans bet an estimated $338bn a year on illegal igaming sites, which equates to nearly $4bn in lost tax revenue for states, according to a 2022 report by The Innovation Group for the American Gaming Association. Research shows there are more than 50 illegal online gambling websites attracting Indiana’s consumers. In the first two weeks of 2023, more
than 500,000 online searches were conducted from Indiana for online casino gambling sites.

Illegal sites operate without consumer protections, requirements or oversight, all without paying taxes. Legalised igaming operators use state-of-the-art technology to provide safe transactions, combat underage and problem gambling, and protect against crimes such as money laundering, cyberattacks and terrorism. This is why state lawmakers will decide that legal, regulated igaming is a safe bet for their states and look to regulate this year.

No

Chris Grove, co-founding partner, Acies Investments

It’s unlikely that a major US state will pass online casino legislation this year as it is notoriously difficult to pass. It usually takes a few tries to pass a bill in a given state, and we haven’t had much in the way of incremental progress over the last few legislative sessions. Remember, even New Jersey needed multiple attempts to get an online casino bill across the finish line, and the same was true for Michigan and Pennsylvania. It will be the rare state that pulls off an online casino bill on the first attempt.

The states widely regarded as the best opportunities (eg Illinois and Indiana) appear to be off the board for 2023 despite some promising signs earlier in the year. While we may hear chatter in other states – and possibly even see a bill or two emerge – those states are fundamentally long shots.

Long shots do come in from time-to-time, but I wouldn’t take anything other than the longest of odds when it comes to online casino bills. Remember, the casino industry itself – the largest and arguably only external stakeholder interested in pushing for such bills – remains deeply divided on the question of authorising online casino.

And that’s just one way that online sports betting differs from online casino. There are also other, important ways: policymakers definitely view sports betting and online casino as fundamentally distinct activities. Sports betting drew support from peripheral stakeholders like pro sports teams, support that casino will not garner. And online casino will absolutely attract a wider, more vocal array of critics that could easily delay or sideline any bill.

Finally, the recent backlash against legal sports betting in the media and various statehouses is likely to shove to the ‘not this year’ side if any state was sitting on the fence. The intensity of the backlash and the spotlight that the backlash has trained on politicians both ensure a hostile legislative environment for an already controversial topic.