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Winners and Losers With State-Based Regulation

16 March 2012, By:
Last week we discussed the winners and losers for federal online gaming legislation.
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Last week we discussed the winners and losers for federal online gaming legislation.

We said that online poker companies and the casino industry would win huge with federal legislation while Indian tribes and state lotteries will be the big losers.

This week we will look at who the winners and losers will be with state-based legislation.

The Winners

The biggest winner for state legislation will be the actual state legislatures.

While many feel that online poker would be a major boost to the national economy, it may actually prove more beneficial at the state level.

First, states will receive revenue from both issuing the licenses and from taxes. Next, state regulated poker will force some of the online jobs to stay within the individual states as many states will require those sites to be run by or affiliated with a casino or company within state boundaries.

Smaller online gaming companies also stand to benefit huge from state regulated online gaming. It is already apparent from the bills that have already been proposed in states like California and Iowa that those companies that were operating in the US at any point after December 2006 will not be allowed to operated in states offering legal online poker.

This will present a great opportunity to smaller online companies and smaller poker networks as they will not have the competition of sites like PokerStars and likely Full Tilt Poker should the company be revived.

The Losers

At least in the short run, the biggest loser in state legislation may be online players.

Before you write that off as crazy, realize that at least for the initial onset of online gaming in the States, it will be limited to solely intrastate play.

Depending on the state, this may limit the potential player pool dramatically. California and possibly Nevada will be in decent shape overall, but smaller states like Iowa are going to find the games are just not going to be as great as they might be with a federal solution.

Smaller casinos may also lose out with state run legislation as in many cases the fees may be too large for many operations to afford or there will be a limited number of licenses in some cases.

This same problem may hurt smaller Indian nations as well if they are not granted their own authority to regulate online gaming according to the IGRA.

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