Is online gambling good for Southern California?

The gambling laws in the US are complicated. Much more so than those of the United Kingdom because of the sheer size and complexity of the country. Being made up of 50 states with their own state legislatures and being occupied by varying groups of people with very different backgrounds, has meant that the federal government has decided to leave gambling legislation at State level. In simplistic terms, gambling in the US is legally restricted in many areas, but participation and availability is increasing.

California deems itself to be one of the more progressive states although there is no regulation, as such for players. Despite some attempts to regulate the industry, none of the bills that have gone through the State Assembly have been successful. As with many other areas of the US, the Tribal entities and the opponents of gambling in general, have prevented and blocked all attempts at regulating it.

Across the US, there are over 300 indigenous tribes that host some sort gambling activity. Usually, this is the way of a land-based casino. The sometimes-exclusive rights, which were negotiated with the relevant States in return for a cut of the profits, means that they fight hard to prevent any regulation which wasn’t ever in place when the original agreements were made. The history of tribal gambling rights is relatively short but has been taken up rapidly. These Tribal-State compacts, as they are known, agree how much of the revenue goes to the state.

The story only began in 1979 when the Seminole tribe of Florida State began to run bingo games. In 1988, The National Indian Gaming Commission was set up to oversee the Native American gaming on behalf of the federal government. The rules of the Indian Gaming Regulatory Act dictate that any revenues must only be used for governmental or charitable purposes. For a tribe to establish a casino, they must negotiate with the State to allow it to be built.

There are now 30 states that have some sort of Native American gaming – this equates to around 40% of the 562 federally recognised tribes. The reason for them all not having gambling operations is either due to their geographical remoteness from potential players or a simple refusal to have non-native Americans on their land.

In California there are 73 ratified Tribal-State Gaming Compacts with three more in process and, between them, they run 63 casinos. This sort of dominance of the land-based gambling scene in the State and the fact that they generate a lot of revenue for the State coffers means that there is a natural reluctance to allow online gambling concerns to take root in the State. The convenience of online gambling is only ever seen as a threat to the land-based outfits.

However, the experience in the United Kingdom and other areas of the US (Las Vegas in Nevada, and Atlantic City in New Jersey) have shown that the presence of a properly regulated online sector actually improves the lot of the land-based casinos. The principal reason for this is the ease with which the online game is able to find and excite new players. Being able to learn and play any number of casino and slot-based games on a smartphone at home – and at any time – means that the sector has been opened up to more people. An example of this is the World Series of Poker (WSOP) which is played every year in Las Vegas and which has seen a huge increase of the number of entrants. Many of these players have only previously played the game online or have watched the drama of the WSOP unfold on the TV. The opening up of the casinos to people who have never seen inside one before has attracted many millions of new players.

Likewise, in the UK, the popularity of online gambling, and, in particular, online slots has seen huge increases in players. In the case of slots, there are games available in every niche – there really is something for everyone. Once again, the ease and convenience of the online games has benefitted land-based casinos through ensuring that people get a taste for the games, they then visit a proper casino as a social event.

Apart from the ease of use and the convenience of the games, there are a number of reasons why the popularity of online slots has risen so quickly in the UK. The developers are now not only developing games that can be played on all the mobile operating platforms including iOS, Android, Blackberry and Windows, all the versions are comparable in their user experience. By turning the games into apps it means that an internet connection is no longer necessary to be able to play – players can even sync their accounts across a number of devices. Advances in technology have played a large hand in the growth of the online games.

So how should the Californian legislators and the existing land-based operators deal with the threat of the online companies? How can they be convinced that the perceived threat is more of an opportunity? As it happens, online gambling isn’t illegal in the State, as there are no laws to regulate it. Any winnings do need to be declared for personal taxation purposes, and gambling itself is subject to age limitations. This means that there is a very high possibility that the game is being played and that the State is missing out on valuable tax revenue from the activities.

Gambling is legal under US federal law, and the only restrictions are placed on interstate and online activities by the States themselves. There are only two states (Hawaii and Utah) that completely ban all forms of gambling, and the rest are slowly relaxing their rules. California is a progressive State that is likely to move to offer regulation for online gambling at some point because of the revenue it can generate for the State and the benefits the sector can bring to the land-based casinos.

 

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