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Will Massachusetts Roll the Dice with Online Gambling?

Monday, February 10, 2014

 

Massachusetts is among 10 states eyeing online gambling this year. Bills introduced last year being discussed again on Beacon Hill would expand state lottery ticket sales to the Internet and open state-regulated online poker and blackjack rooms.

Not everyone is on board with the latest proposals, however, in the midst of a statewide repeal campaign to roll back the 2011 law that legalized slots and casinos in the first place.

“The idea that states are turning to Internet gambling is an exclamation point on how extreme a failure the state's experiment in lottery has been,” says Les Bernal, the executive director of the Washington, D.C.-based Stop Predatory Gambling Foundation. “This isn't about people gambling. ... We're not anti-gambling,” he added.

“We don't think government should be in the business.”

Online gaming grows after justice department opinion

Last year was historic for Internet gambling legislation according to a new briefing paper from GamblingCompliance, an industry research group that tallied more proposed measures in 2013 than in any year previously. Since 2008, the number of states considering bills has risen from two to 10, and that number could grow again this year.

Online gambling received a big boost in 2011 with a U.S. Department of Justice legal opinion that said the Wire Act of 1961 did not prevent states from using the Internet to sell lottery tickets. The ruling was interpreted to also allow other forms of gambling, but not on sports.

In the past year, GamingCompliance reported $8.24 million was spent on federal lobbying for Internet gambling legislation. Three states commenced online gambling in 2013: Delaware (poker, table games, and video lottery), New Jersey (poker and table and slot games), and Nevada (poker).

What does online gaming mean for brick-and-mortar casinos?

With the Massachusetts Gaming Commission awarding the state's first license for a slots parlor later this month, followed by licenses for casinos next fall, what would online gambling mean for the burgeoning industry?

“It shouldn't affect it at all,” says Clyde W. Barrow, director of the Center for Policy Analysis at University of Massachusetts Dartmouth. An industry expert who runs the center's Northeastern Gaming Research Project, Barrow said proposals for Internet keno/lottery and poker/blackjack rooms targeted a different audience than the slots parlor and casinos.

Technically prohibited (but unenforced), Barrow said about 2 percent of the state's population currently gambles online. “Maybe that percentage goes up, but probably not much.”

Instead of serving as competition, Barrow said online poker and blackjack rooms could serve as the “minor leagues” for people to learn to play the game before they head to the casino.

Where will Massachusetts go to game?

With three slots-parlor proposals and the commission set to award one license this month, “I don't know who they go with,” Barrow said.

This September, when casino licenses are awarded, MGM Springfield appears to be a “shoo-in” as the only current bidder in the western part of the state, while two proposals are currently competing for a license in eastern Massachusetts.

One thing is for certain: There's a market in Massachusetts. In its fourth biennial New England Gaming Behavior Survey last year, the Center for Policy Analysis found Bay State residents were the majority of visitors at Rhode Island's Twin River Casino and Newport Grand, as well as Connecticut's Foxwoods Resort Casino. (Massachusetts drove the second-most visitors to Mohegan Sun.)

With about 50 percent of their revenue coming from Massachusetts, Barrow stressed the impact in-state venues will have on Rhode Island casinos.

Who's gambling now?

The gaming behavior survey finds Massachusetts residents report the highest propensity to gamble in New England (excluding Vermont), with 58 percent of residents legally gambling in some form over the previous 12 months. Nearly half the population reported playing lotto or buying a scratch ticket at least once. One in five visited a casino in another state.

The highest proportion of casino gambling was in Connecticut and Rhode Island, showing a pattern “consistent with research that indicates a higher propensity to casino gamble the closer residents are to a gaming facility,” according to the survey.

The sex of visitors to Connecticut casinos was split fifty-fifty, while the average age was around 46. Fifty-five percent of visitors there made under $75,000 a year, including one in four whose annual family income was below $45,000.

Women visit Rhode Island's casinos slightly more than men, meanwhile, and 34 percent of visitors had an annual income below $45,000. An additional third reported making between $45,000 and $75,000.

Not all welcome the new way to lose money

Gambling's inroads have not been universally appreciated in the Commonwealth. Repeal the Casino Deal is a ballot initiative set out to overturn the 2011 law this November. The online lottery proposal faces opposition from retailers.

“We are opposed to the lottery taking customers out of our stores and creating what we potentially see as jobless casinos online, and turn potentially every home computer, laptop, and smartphone into a lottery machine,” said Stephen Ryan, the executive director of the New England Convenience Store Association, responding to the online lottery bill, S. 101, which he testified against in committee last month. “We think it's clearly a step in the wrong direction,” Ryan told GoLocal.

Formerly of Massachusetts, Bernal said residents “aren't clamoring” for the online expansion. “This is being driven by very powerful special interests,” and supported by states as a revenue source, he said. “Government sponsorship of casinos and lottery, and now possibly internet gambling, produces just two things: Unfairness and inequality in American life.”

Bernal said upper-income Americans weren't standing in convenience store lines buying $20 scratch-offs. And “they're not building casinos in Dover or Wellesley.”

Barrow, the Dartmouth gaming researcher, acknowledged revenue as the main motivation for online gaming legislation. “It's another source of voluntary taxation,” he said.

Now, with more extreme forms of what he calls “predatory gambling,” Bernal said online initiatives were targeting the younger generation. Delaware's trial online poker rooms allowed visitors to sign in using their Facebook accounts.

“This Internet gambling initiative is targeted to kids,” Bernal said. “These are Facebook casinos.”

Connecticut casinos placing property liens on gamblers beyond their means

A report Sunday in the Boston Globe recounts the story of an 80-year-old retiree whose home had liens placed on it by Mohegan Sun and Foxwoods after he failed to repay credit at both casinos, a combined bill totaling over $66,000, despite the fact that bankruptcy filings in 2007 reported the man's sole income was a monthly Social Security check for $640.

While operations in Rhode Island don't afford visitors lines of credit, Bernal said casinos opening in Massachusetts would offer the same courtesy as those in Connecticut.

“They'll lend you money to gamble, knowing you're going to gamble it all away at the casino,” he said, with the state reaping its share over the course of the game.

“Someone has to plow the roads.”

The Massachusetts State Lottery Commission reported a $955 million profit in fiscal year 2013, topped only by the $983.7 million profit the lottery generated the year prior.

 

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