For Online Gaming, Slow and Steady’s Just Right | Vegas Seven

In this weeks’ Green Felt Journal, I consider whether a “slow” rollout of online gaming in the U.S. is such a bad thing:

Beyond the neon of Nevada and Atlantic City, gaming used to be something the nation spoke about in either whispers like that cousin who never made good or screams like that cousin who never made good and was coming to town to spoil your sister’s wedding. Now, though, online gaming is the subject of serious—and generally calm—discussion. Some bemoan its potential negative effects; others lament the meager trickle of revenues to date. Still others offer both, seemingly contradictory, reactions. But the real news is that there hasn’t been much to either complain or crow about: The rollout of online play has been largely uneventful—and that’s a good thing.

via For Online Gaming, Slow and Steady’s Just Right | Vegas Seven.

The fact that online gaming has been running in the U.S. for over a year–even at a small scale–is, I think, a pretty interesting story.

Inside the NJ casino overhaul

As promised, I’ve taken a deeper look at the recent casino regulatory overhaul that passed the New Jersey legislature. My comments are based on version of the bill that was current as of 1/10/11. You can find it right here.

First of all, the bill codifies into law the current existential angst the industry is facing:

(18) As recognized in the July 2010 Report of the Governor’s Advisory Commission on New Jersey Gaming, Sports, and Entertainment, and as confirmed in subsequent legislative hearings held throughout the State, legalized casino gaming in New Jersey presently stands at a crossroads, facing critical challenges that jeopardize its important role in the State economy, and it is in the public interest to modernize and streamline the current outdated casino regulatory structure in order to achieve efficiencies and cost savings that are more appropriately directed to marketing and infrastructure improvement efforts while, at the same time, maintaining strict integrity in the regulation of casino operations.

(19) The ability of the legalized casino gaming industry in New Jersey to compete in an ever-expanding national gaming market requires a regulatory system that is sufficiently flexible to encourage persons and entities holding casino gaming licenses outside of New Jersey to participate in casino gaming in Atlantic City, to allow licensees to take full and timely advantage of advancements in technology, particularly in information technology, and business management, and to encourage the efficient utilization of resources between and among affiliated New Jersey licensees operating casinos located in Atlantic City and between and among a New Jersey affiliate and its licensed affiliates in other jurisdictions.

There are some small but interesting changes throughout the bill.

It broadens the definition of “family” to include domestic partners and partners in a civil union in addition to the traditional array of blood and marriage relations.

Non-cashable credits are explicitly defined as “not gross gaming revenue,” and therefore not taxable/

Adds a definition:

Multi-casino employee” – Any registered casino employee or licensed casino key employee who, upon the petition of two or more affiliated casino licensees, is endorsed by the commission or division, as applicable, to perform any compatible functions for any of the petitioning casino licensees.

Which suggests we’ll be seeing more cross-staffing in multiple-owner casino groups.

The bill changes virtually every mention of “commission” in the existing Casino Control Act to “division,” reflecting the big shift in regulation.

The bill gives the following responsibilities to the Division of Gaming Enforcement:

conducting investigative hearings on the conduct of gaming and
gaming operations and the enforcement of the casino control act;
issuing reports and recommendations to the commission on entities or persons required to qualify for a casino license, on applications for interim casino authorization, or on petitions for a statement of compliance;
examining records and procedures, and conducting periodic
reviews of operations and facilities, to evaluate provisions of law;
collecting certain fees and assessments;
issuing operation certificates to casino licensees;
accepting impact statements submitted by casino license applicants;
issuing emergency orders;
taking action against licensees or registrants for violations of the act;
imposing sanctions and collecting penalties;
accepting and maintaining registrations for casino employees and certain vendors;
receiving complaints from the public;
certifying the revenue of a casino or simulcasting facility;
creating and maintaining the list of excluded patrons;
and
using private contractors to process criminal history record background checks.

The Commission still actually issues licenses and hears appeals on Division decisions. One notable change: neither DGE agents nor Commission inspectors will have to be present in casinos anymore. I wonder what they’ll do with the CCC podiums in the casinos. Taking a cue from Vegas casino party pits, I suggest “cage dancers.” Bonus points if they dress in Commission garb before stripping it off. Extra bonus points if a patron interrupts their dance to file a dispute.

The Commission also loses the right to have an in-house legal counsel, and instead has to contract that work out.

The Division’s office must be in Atlantic City, although it’s allowed to have a secondary office in Trenton, too.

The amount of fines are doubled.

From its signing, the CCC has 90 days to make an “orderly” transfer of its powers to the DGE.

The moves will have a definite fiscal impact, but according to the fiscal estimate, the exact impact can’t be determined yet. The Office of Legislative Services offers some good reasons why:

It should be noted that estimating the cost or possible savings to the Casino Control Fund resulting from the transfer of various regulatory functions from the CCC to the DGE would require the Executive Branch to provide a strategic reorganization plan that details the functions and regulations being transferred and any changes in scope and importance of those functions and regulations. In addition, an estimate of the costs or savings would require the Executive Branch to provide a workload analysis describing how the functions that are transferred will be handled by the DGE in terms of staffing and position restructuring. For example, will the DGE hire new employees to perform the transferred functions, will the existing DGE staff absorb the new job duties by having their job duties expanded to include the new functions, or will some functions be eliminated entirely? Furthermore, because the bill changes the language in current law requiring the DGE to be principally located in Atlantic City, will the State incur new building or facility costs?

In other words, it’s anyone guess how all this will play out. It could save money, but it might cost money in the short term.

Inside the NJ Internet gambling law

You might not have heard, but the New Jersey legislature voted to legalize Internet gaming. The bill in question (S490) passed both houses and awaits Governor Christie’s signature. So what does it mean?

The new law changes the Casino Control Act to permit Atlantic City casinos to offer gambling over the Internet to residents of New Jersey and those who live outside the United States.

To play, gamblers must first establish an account with the casino.

The computers, servers, monitoring rooms, and hubs must be housed in a “restricted area” in a casino or in an off-site location that is still in Atlantic City.

Things get tricky with taxation. There’s a gross tax on wagers of 8% (same as for regular gambling), with a 30% investment alternative tax and a 15% investment alternative–a 52% effective tax rate. According to the bill, CRDA can use that money to support racetracks in other parts of the state.

Within a fiscal year of sports betting being implemented in New Jersey, the investment alternative tax falls to 10%, and the investment alternative to 5%, leaving a much more manageable 23% effective tax rate. Subsidies to the tracks also stop then. Seems like the horsemen have a real incentive to block any sports-betting law, and the casinos have a big incentive to push it.

Applicants have to verify their name and residency before opening an account and gambling.

None of the following people can bet online:
(1) the Governor 1or Lieutenant Governor1;
(2) any State officer or employee or special State officer or employee;
(3) any member of the Judiciary;
(4) any member of the Legislature;
(5) any officer of Atlantic City; or
(6) any casino employee, casino key employee or principal employee of a casino licensee.

Bad news for casino employees who were hoping to unwind by playing legal online poker in their off-hours. This seems a bit onerous.

If money in an account sits dormant for too long (a period that’s not specified in this law), the casino must contact the holder (“by mail, phone, and computer”) and, if it doesn’t get a reply, must close the account, with 50% of the account’s value going to the state, 50% to the casino. Didn’t Christie suggest stores do this with gift cards, too?

There are some problem gambling controls:

The words “If you or someone you know has a gambling problem and wants help, call 1-800 GAMBLER,” or “some comparable language approved by the commission, which language shall include the words “gambling problem” and “call 1-800 GAMBLER,”” must be “prominently and continuously displayed to any person visiting or logged onto Internet wagering.” It’s like a surgeon general’s warning on cigarettes; hopefully it has more impact.

An account holder can establish a loss limit, beyond which he can’t gamble anymore, or cap his max bet, or suspend his account temporarily or permanently. While in suspension, casinos can’t market to him.

There’s a lot of material in the bill that hasn’t been widely reported on–I suggest you read it for yourself.

NJ to take over AC casino district

New Jersey governor Chris Christie’s Advisory Committee on New Jersey Gaming, Sports, and Entertainment has issued its report, which calls for a partial state takeover of Atlantic City. From the AC Press:

But Atlantic city and state officials have naturally focused most on the governor’s plan to create a state-run portion of Atlantic City, in a plan already described as a city within a city. Christie said he could no longer watch the “teetering”; of Atlantic City’s institutions.

He said he gave “fair warning” to Atlantic City’s government to fix problems pointed out in a recent state audit or face state takeover.

He said he wanted to see the state run a clean and safe tourism district there within a year.

“Delay leads to demise,” he said.

Gaming enforcement would be streamlined, he said. He described the current system as an “antique car.”

via Christie unveils state takeover plan for Atlantic City gaming district – pressofAtlanticCity.com.

You can look at the report itself here. The Atlantic City section starts on page 13.

According to the report, Atlantic City’s gaming industry is in decline–no argument there. They attribute the decline to nine chief factors:

• The perception of the City as unclean and unsafe, and the failure of City government to effectively address such concerns (including blight and the overall image of the City) at any level or to work effectively with the industry to create a tourist-friendly environment.
• The City’s fiscal mismanagement of the large tax base provided by the industry (as much as $175 million/year in property taxes alone). Atlantic City spends almost four times as much per capita than comparable New Jersey Cities, such as Edison, Long Branch, and New Brunswick.
• 2003 audit results, which reveal that staffing in Atlantic City per 1,000 residents was twice the level of benchmark cities like Orlando and Norfolk.
• The absence of a visible police presence or effective law enforcement on the Boardwalk.
• The absence of evidence of a Master Plan that addresses the primary tourist area or the large swaths of urban blight surrounding the tourist area.
• Underinvestment by the casino industry in development of non-gaming amenities, attractions and surrounding areas appropriate for a “destination resort.”
• An outdated regulatory process marked by both high costs and the inability to attract development activity by other world-class ownership to the New Jersey market.
• Lack of coordination in positioning and marketing Atlantic City as a competitive tourist resort.
• Failure to effectively attract meeting and convention business to Atlantic City and to integrate such business with the existing destination resort hotels.

I think in general these are true, but point 5, underinvestment, isn’t across the board: you can’t look at the Borgata, or Harrah’s Resort, or the Pier at Caesars and say that these aren’t filled with good non-gaming amenities. Some companies have consistently put more into capital expenditures and expansion than others, and they’ve been rewarded with a bigger share of the market. You can’t legislate that you have to run your casino intelligently. It its recommendations, the committee acknowledged this. Here’s a crucial section:
Research provided to the

Commission by McKinsey & Co. indicates that the Atlantic City “brand” still has value with customers, and if the reality met customers’ expectations, there would be sufficient latent demand to more than double Atlantic City’s revenues in the medium term. The Commission is also encouraged by the economic success enjoyed by properties where proper investment has been made, including the Borgata, the Walk, Harrah’s and Taj Mahal, all of which are generating encouraging results. It appears that in Atlantic City, customers will come to quality offerings.

However, the status quo is not workable. In simple terms, almost every potential Atlantic City customer has a closer, more convenient place to gamble. If Atlantic City cannot provide reasons for customers to make the trip, its decline will continue. Atlantic City has no choice but to try to reestablish itself as a true “destination resort” against its new convenience gaming competitors in surrounding states. Meeting this challenge will require aggressive actions by both the public and private sectors.
(emphasis mine)

That’s exactly what the city has to do, but unfortunately that’s what the city’s had to do for the last twenty years.

To get the city back on track, the committee recommended seven goals:

• Creating a “Clean and Safe” Tourism District with State oversight, with the goal of making Atlantic City clean and safe by July 1, 2011.
• Creating a Master Plan for the new Tourism District, focused on enticing new entrants to build both gaming and non􀍲gaming attractions that will increase demand in the City. The Plan should be delivered to the Governor no later than July 1, 2011.
• Improving the financial stability of Atlantic City by attracting other world class operators to ownership of the eleven existing facilities as well as any new ones. These operators should be committed to supporting both their properties and the District.
• Increasing the meeting and convention business in the Atlantic City market by at least 30% per year for the next five years.
• Bringing the New Jersey regulatory structure into the 21st century by reducing costs and redundancies and by supporting the attraction of operators while maintaining strict integrity.
• Increasing visitation and spending through joint marketing efforts on par with other national destination resorts.
• Improving intermodal transport to Atlantic City, including increasing air, rail and ferry options.

Great plan, but the devil’s always in the details. As far as attraction more investment, look at the country’s biggest gaming companies: one of them already owns 40% of the market (Harrah’s), one of them’s just been given its walking papers (MGM), one of them operates the city’s top casino (Boyd), one’s shown no interest at all in the city (Las Vegas Sands), one’s declared a “death spiral” (Penn National), one can’t build a casino on the land it owns (Pinnacle), and one left the city 25 years ago but might be tempted back (Wynn). So the options there are limited, unless you’re going to go the private equity route or open it up to international companies like Genting.

The changes we’ll see are:

1. Creation of an Atlantic City Tourism District
Following models established in other parts of the State, the Administration should support legislative enactment of an Atlantic City Tourism District (the “ACT District”) with representatives from State, City, County and Industry. The ACT District will assume full and complete control of certain governmental activities and operations within a defined Tourism District covering the casino areas and Boardwalk, as well as jurisdiction over related amenities and infrastructure.

This is the most controversial part of the plan. Basically it means getting the city government out of running much of the city.

2. Public􀍲Private Partnership (the “Partnership”)
The government should establish a structure for a Public􀍲Private Partnership with state and local government, the casino industry, and the greater Atlantic City community all represented. The new ACT District Commission would assume the role of the public component. The Commission recommends that the private component be represented by the Atlantic City Partnership (“ACP”) – a local consortium of businesses modeled after the Johnson and Johnson􀍲led structure that has proven successful in the revitalization of the City of New Brunswick.

This group will develop the master plan and try to get more purveyors from other New Jersey boardwalks in AC. Hey, anything that brings Mack and Manco pizza or Johnson’s popcorn to Atlantic City is fine by me. If they want to re-launch Mr. Peanut, I’m available for consultations. They’re also going to oversee more effective use of Marina facilities, which I hope means reopening the marina at Harrah’s.

3. Coordinating Marketing, Boardwalk Hall and Convention Business Between ACCVA and ACP
Efforts should be made to encourage marketing “Atlantic City” as a brand. Theseefforts should include more joint industry efforts throughout the City, including efforts to increase use of Boardwalk Hall and efforts to capture a larger share of convention business.

Basically, doing what the LVCVA’s been doing in Las Vegas for the past 50 years.

4. Legislative Enactment of Regulatory Reform
Costs of New Jersey regulation are almost ten times those in Nevada and other mature gaming jurisdictions with strong, effective regulation. In 1978, 24/7 inspectors and built in regulatory redundancies made sense, but with the increased sophistication of camera surveillance, information technology, and audit abilities, they are unnecessary now.
Furthermore, these outmoded concepts and a licensing procedure that is unnecessarily adversarial have made the market less attractive to many respected world class operators.

To me, this is the most interesting idea. Is this an olive branch to MGM and Wynn? Maybe. It’s encouraging that they want to realign regulation with the technological realities of 2010.

5. Establishment of a Joint Atlantic City Marketing Fund
Once the ACT has gained traction on the initiatives above, it should work with the ACP to establish a fund dedicated to marketing the City, as compared to current marketing efforts with a limited $4 million spending limit.

Basically, market the city better–no argument there.

6. Transport
To contribute to the goal of making Atlantic City a destination resort, the Atlantic City International Airport needs to be expanded in terms of service – e.g., more airlines and additional intermodal connections – and in terms of its physical plant through capital improvements.

Make it easier to get to the city, and visitation will go up. If I ran a casino marketing department, I might go even further to try to attract Pennsylvania gamblers: show me your toll receipts, and I’ll give you double that in free play. It’s not that much money, but psychologically it makes a big difference, since the casino is now “paying for” your tolls. It should be much easier to get to the casinos from ACY or PHL for the casual visitor.

7. Related Issues
The Commission also considered whether the State should entertain gaming outside of Atlantic City at this point in time. Given the importance of the industry to the State, as well as the need for meaningful reform to foster sustainability and, hopefully, growth, this issue is best considered in the future when either: 1) the transformation of Atlantic City to a more destination􀍲oriented model has meaningful enough traction to compete with in􀍲state rivals; 2) Atlantic City stakeholders support additional outlets; or 3) the new model is deemed to have failed.

In a nutshell, this means: no more subsidy for the racetracks; no slots at racetracks; no interstate Internet gambling; no sports betting.

It’s a major plan that will require several breaks from the past. Even if I knew all of the details, I couldn’t say definitively whether it will or won’t work, since there’s many moving parts here that are impossible to predict. But at least someone’s interested in reviving the city.

Other shoe about to drop in AC?

According to a WSJ report, MGM Mirage has decided to sell its interest in the Borgata and presumably close the door on any future developments in Atlantic City:

For years, New Jersey regulators have raised concerns about the suitability of casino company MGM Mirage's business partner in China. Now, MGM Mirage has an answer: cash out of Atlantic City.The company plans to divest its 50% stake in the Borgata casino resort, a person with knowledge of the negotiations said last week. Although it has been scouting for buyers it hasn't come to a deal, according to two people with knowledge of the talks.MGM Mirage hopes that its plan to sell its Atlantic City interests will convince New Jersey regulators to agree to curtail their regulatory oversight of the company. Any additional scrutiny has the potential to cause problems with MGM Mirage's business elsewhere.MGM Mirage disclosed last year that New Jersey's Division of Gaming Enforcement had issued a confidential report saying the company should disassociate from Pansy Ho, MGM Mirage's joint venture partner in Macau. It labeled her an “unsuitable” business partner.

via MGM Mirage Prepares to Sell Stake in Borgata – WSJ.com.

Here are some numbers. According to the latest-available financial report, Borgata was on track to show a net income of about $120 million in 2009. MGM Mirage gets half of that. In this economy, adding $60 million to your bottom line is nothing to sneeze at. There are expenses involved–particularly, as we see, regulatory-related expenses. And the threat of drawn-out litigation makes that $60 million a year look less and less attractive.

According to the 2008 MGM Mirage Annual Report, in that year the company spent $24 million on its MGM Grand Atlantic City development before pulling the plug due to the worsening economy. Now that we’ve all seen the city’s revenues fall back to 1997 numbers, it would be hard to argue that this was a bad decision. Unless something dramatic happens (that is, unless casino operators make something dramatic happen), Atlantic City is clearly a declining market.

What about Macau? According to MGM Mirage’s investor relations, the company earned $24 million in revenue from MGM Grand Macau in the third quarter of 2009. That pencils out to roughly $96 million for the year.

Which is greater? $60 million or $96 million? The decision seems obvious.

There is also the fact that Macau is the world’s fastest-growing casino market, and Atlantic City has, as I said before, gone back to 1997 and, with the imminent arrival of Pennsylvania table games, is poised to fall even further.

Even as an Atlantic City native, I’ve got to admit that MGM’s management has few options here. Clearly the most responsible decision for the company’s health is to stay in Macau.

To make a long story short, Atlantic City needs MGM Mirage far more than MGM Mirage needs Atlantic City at this point. Should this make a difference to the integrity of the licensing and enforcement process? Absolutely not. But there’s something to be said for over-zealousness. Past operators chased from Atlantic City by regulatory overkill–Hugh Hefner and Hilton Hotels are the most prominent–continued to do business in other states with not even a whisper of impropriety. Hilton was even invited back.

What does this all mean? New Jersey’s regulators aren’t doing the state any favors by throwing the book at MGM Mirage. The only beneficiaries might be the existing operators, who will have one less rival to face (if MGM decided to go ahead with their AC project), and even that’s debatable, since a project of the scale that MGM had proposed would have probably brought more people to town. This looks like a lose/lose situation.

AC: Moving forward

A few more thoughts about Atlantic City, culled from a few

Advisers to Gov. Chris Christie have called for casino regulatory reform, a public-private Atlantic City marketing initiative and possible state intervention in city government as ways to save New Jersey’s casino industry from competition and its “failed” business model.

On Friday, Christie released 19 transition team reports containing dozens of recommendations for reducing and reforming state government. The detailed proposals include making Atlantic and Pacific avenues in Atlantic City one-way streets, accelerating Atlantic City International Airport expansion and building an Atlantic City Expressway interchange for the airport and a new aviation research facility.

Another idea mentioned, although not endorsed, is to privatize the state lottery and have it work with New Jersey racetracks, which have sought to install video-lottery terminals, which operate like slot machines. The report calls for consolidating New Jersey’s declining racing operations.

In a report critical of Atlantic City government’s handling of finances, transition team members called for an unexplained “state presence” in city government to ensure fiscal efficiency.

via Christie advisers call for casino regulatory reform, marketing of Atlantic City – pressofAtlanticCity.com : Today’s Top Headlines.

I believe that proposals to make Pacific Avenue one-way have been floating around since before World War II. I’ve come across them going back decades. These infrastructure issues don’t address the main problem, which is declining appeal for the city as a whole.

The report boils AC’s decline down to four issues:
1) Increased competition in “Convenience Gaming” in the 5 State mid-Atlantic region.
From 1990 to 2009, Atlantic City has gone from a “monopoly”, to a scattered
competitive marketplace of 26 existing alternatives of VLT/Slots with close to a
doubling of the supply of gaming product in recent years. Atlantic City remains the
only alternative in New Jersey, but has been surrounded by a “picket fence” of
competitive interests in surrounding states; the vast majority of which are
principally stand alone warehouses of slot machines with little non-gaming product
(no hotels and little in the way of night life, retail and food offerings). The newest
generation of increased Atlantic City competition through convenience gaming is
New York’s Aqueduct Racetrack pending 4,500 VLT facility. This needs to be
monitored.
2) Impact of the “Great Recession” on customer’s spending.
3) Partial Smoking Ban has material revenue impact (est. 10% decline).
4) Perception of Atlantic City as unsafe and unclean arising from a failure to invest in
the areas surrounding the casinos, and local government’s inability to manage this
current reality, in spite of unparalleled tax revenue per capita on a statewide peer
basis.

DRAFT TRANSITION REPORT
NEW JERSEY GAMING/SPORTS AND ENTERTAINMENT COMMITTEE

Here’s my take:
1. Competition: It’s not going away, and it was inevitable. National casino expansion really took off circa 1990, so the city’s casinos have had 20 years to prepare. One way to fight it, as this report suggests, is to follow the Las Vegas model and add unique attractions. That’s not going to be perfect–it increases dependence on fly-in and high-spending customers, who are more sensitive to economic fluctuations than moderate-spending day-trippers–but it’s a start. If you doubt that, compare the 20-year trends for Las Vegas and Reno.

2. Recession: Not much you could have done about this.

3. Smoking ban: Even a complete ban would lead to a temporary decline, but Delaware’s history suggests that the numbers will rebound within 3-4 years. If the current anti-smoking trend continues, I wouldn’t be surprised to see most American casinos limiting smoking within ten years.

4. Perception: This is an area where the city’s casinos can make a difference. The city needs a message, and needs to stick with it. I don’t think that people come to Las Vegas because it has a reputation as a particularly clean or safe place; most big cities, in fact, have issues with crime and blight. People come to Las Vegas to have fun. Can you have fun in Atlantic City? I think so, and potential visitors need to find that out.

The best thing for the people trying to restore Atlantic City to do at this point would be to take a long look at what Las Vegas has done right. Once, Las Vegas was primarily a gambling destination, with a heavy reliance on Southern California. In the past ten years, Indian casinos have cut into the Southern California market. But even with the recession, Las Vegas is in a better place now that it was in 2000–which is more than Atlantic City can say at this point. Why?

Las Vegas was able to transition into areas as disparate as business meetings and nightlife: Atlantic City should make investments in these, particularly in the meetings market, since that will boost mid-week occupancy and keep hotels full. A combination of business travelers spending more on f&b, lodging, and entertainment, supplemented by what remains of the day-tripper market, can give a mid-week base for both non-gaming and gaming revenues. Then on the weekend resorts can focus on attracting higher-end destination gamblers and travelers. The convention room rates will provide a base that will let the resorts offer better-class rooms that can make money seven days a week, not just two.

It won’t be easy–there are many negative perceptions to overcome, as well as some serious renovation and construction work–but at least it will give the city a chance.

Sayre says sports betting to grow

Here’s the word from a member of Nevada’s Gaming Control Board: look for competition in legal sports betting. From the LV Sun:

Nevada will face competition for race and sports books, a state gaming regulator predicts.“The most pent-up demand is for sports wagering,” state Gaming Control Board member Randall Sayre told more than 60 lawyers at the 2009 Gaming Law Conference sponsored by the State Bar of Nevada.Sayre made his remarks Nov. 6 at the Rio. The event included a keynote presentation by American Gaming Association President and CEO Frank Fahrenkopf and several panels on legal and regulatory issues in the gaming industry.Sayre said as more states struggle to develop revenue sources, some will look to race and sports books as a solution.“It’s about competition, competition and more competition,” Sayre said in response to a question about which issues will be prominent in the future. “There will be intense revenue pressures, more than we’ve ever seen before. The profound impact of competition on the state is not going to go away.”Nevada, the only state to offer legal wagering on sports, nearly got its first competition this year when Delaware proposed allowing sports bets at racinos. The move was blocked by 3rd U.S. Circuit Court of Appeals when the National Football League, Major League Baseball, National Basketball Association and NCAA filed a motion in opposition.Delaware was one of four states — the others are Oregon, Montana and New Jersey — that were exempt from legislation banning sports wagering in the United States, one of the last bills sponsored by former New Jersey Sen. Bill Bradley, who played professional basketball before getting into politics.The four states had an exemption because they had lottery games tied to professional football results.Sports betting accounts for just 1 percent of the total gaming win in Nevada every year.

via Get ready for sports book competition, regulator says – Las Vegas Sun.

Before I opine, I’d like to point out that under PASPA New Jersey is not allowed to offer sports betting. That’s why NJ state senator Ray Lesniak is working to challenge PASPA.

Also, as the article notes, Delaware is not able to offer straight-up point spread betting on single games, thanks to the 3rd Circuit Court decision.

But where there’s a political will there’s usually a legal way, and the large illegal sports betting market is too tempting a target for state governments to hold off for long. I’d look for continued challenges to PASPA that will eventually succeed.

If Nevadans should learn one thing from the history of gambling, it’s that they shouldn’t be complacent or secure with a legal monopoly on sports betting. Once the casino monopoly seemed even more secure, and that’s long gone.