How to Prepare for Emerging Gaming Today – Vegas Seven

In this week’s Green Felt Journal, I expand a little on my testimony in front of the Gaming Policy Committee:

During a meeting convened by Governor Brian Sandoval earlier this month, the task before the Gaming Policy Committee was clear: Figure out how Nevada can adapt to emerging gaming—a sprawling, shifting area that, right now, comprises three main groups: daily fantasy sports (DFS), skill gaming and e-sports—without compromising its reputation as the “gold standard” of gaming regulation. The stakes are high: Failure to adjust quickly may mean that the state’s gaming industry goes the way of faro table manufacturers.

More: How to Prepare for Emerging Gaming Today – Vegas Seven

I could have written a few thousand more words on this. Gaming is (I think) in the not-so-early stages of a historic shift. Just look at how the bigger category of games has changed in the past 20 years. I’m interested in seeing how board game sales, for example, have fared, and how home “gaming” (in the broadest sense) has changed since the introduction first of consoles, then PC, then mobile games.

How a Few Regulators Saved the Nevada Gaming Industry | Vegas Seven

In this week’s Green Felt Journal, I consider how strict regulation with room for discretion helped save Nevada gaming in the 1960s:

Sawyer’s “hang tough” policy emerged at a crucial time: Bobby Kennedy’s Justice Department would ratchet up pressure on Nevada casinos starting in 1961, and without the good-faith efforts of Sawyer’s appointees to clean house, more sweeping federal action seemed inevitable.

via How a Few Regulators Saved the Nevada Gaming Industry | Vegas Seven.

Olsen’s role is particularly important. If you ever at UNLV Special Collections, I strongly suggest reading his oral history.

Online gambling, taxes, and regulation

Some federal debate on legalizing and taxes online gambling, from the LVRJ:

Democrat Shelley Berkley said she backs legalizing Internet gambling, but said it is too early to think about taxing it.

“Because the industry is not even established yet, I can’t imagine how we can know with any degree of certainty how the special tax would affect operators or customers,” she said.

“Let’s legalize Internet gaming, regulate it, and watch the industry develop and grow in the United States,” she said. “This is not the place to find (revenue) nor the method to get at it. I strongly believe that our economy, our consumers, and the future U.S. internet gaming industry will be better served by legalization and regulation — not by taxation.”

ONLINE GAMBLING: Promise of big money fails to lure support for online gaming – Business – ReviewJournal.com.

I think that Berkley is right on here. There are some great arguments for legalizing online gambling; filling budget gaps isn’t one of them. From a philosophical point of view, I’d say the most compelling argument for legalization is that, like gambling at casinos, this is something that Americans want to do, and that most people can do without causing harm to themselves or others. If you’re looking at it as a form of entertainment, it’s no different than spending the money on buying digital downloads of media content; if you’re looking at it as gambling, it’s no different from buying lottery tickets, which many people can do at convenience stores in their own neighborhoods. Is there really a moral distinction between buying lottery tickets and playing $0.10/$0.20 Hold’Em online? If anything, online poker’s the better choice, because at least it can help people develop their math skills.

What about the money? Would legalizing online gambling bring state budgets back into the black? I don’t see how that’s possible. A little while ago, I took on this issue in a post called The Virtue of Vice. In the next fiscal year, states are facing a combined $89 billion budget shortfall. If you accept the $72 billion-over-ten-years figure for online gaming revenues, it should be clear that even if you took ten years worth of all of the revenues for online gambling and turned it over to the states, it wouldn’t get them out of the red, even for a single budget.

If we had total state tax revenues of $3 billion from online gambling this year, it would cover a little more than 3% of the current combined budget shortfall.

Crunching McDermott’s few numbers (states and tribes will keep $30 billion out of $72 billion) shows that he’s projecting a tax rate of nearly 42%. That’s pretty high (well above Nevada’s 6.75% rate), and I’m not sure that a fledgling industry can support that kind of tax burden. Maybe it can, but as Berkley suggests, it’s impossible to say until we actually know what the industry’s going to be like.