STARKVILLE – With Mississippi’s gaming revenues declining – particularly in the Tunica/Mississippi River markets – the potential national impact of online gaming is a particularly relevant topic of public policy debate.
In June, the Mississippi Gaming Commission reported numbers showing that in 22 of the last 24 months, casinos have won less money from gamblers compared to the same month of the previous year. In figures showing May 2014 compared with May 2013, casinos took in some $20 million less statewide or 10.6 percent less in 2014.
The June closure of Harrah’s in the Tunica market underscores the loss of both gaming revenue and jobs as increased competition from two Arkansas racetracks have been blamed for straining the market. But Mississippi isn’t alone in seeing gaming revenues dip. Louisiana gaming revenues have flat.
The Mississippi Gulf Coast gaming market has been stronger than the river market, but competition from Alabama Native American gaming outlets have had an impact, analysts suggest.
But one aspect of gaming in which there is less known about competitive impact in Mississippi is online gaming. Mississippi, as of the 2014 session of the Mississippi Legislature, is now officially studying online gaming.
Mississippi House Gaming Committee Chairman Richard Bennett commissioned the task force, which will look at how online gaming is working in the small number of states that have made it legal. Bennett tapped Mississippi Gaming Commission executive director Allen Godfrey as chairman of the eight-member task force.
The task force idea came after state Rep. Bobby Moak, D-Bogue Chitto, introduced online gaming legislation each year for the past three years. Moak’s legislation – virtually the same legislation – died in committee all three years.
The bills proposed to regulate, license and tax online gaming at 5 percent of gross revenues. The bills would have restricted online gaming licenses to those companies already holding land licenses to operate in the state.
Moak wrote the legislation in reaction to a 2011 U.S. Justice Department ruling which clarified that the ban on interstate betting in the Wire Act of 1961 applied only to a “sporting event or contest” and that all other gambling operations are outside the purview of the act.
According to the National Conference of State Legislatures, the DOJ decision opened the door to any form of online gaming over the provided it isn’t the so-called “sports book.”
Under the ruling, states can sell lottery tickets online and authorize online poker, roulette, blackjack and other casino games, as long as the actual betting takes place within a respective state’s boundaries, even if out-of-state credit cards are used to finance the gambling.
Moak argued that the legislation was necessary to allow Mississippi’s existing gaming industry to have more control of its own destiny and to allow the state to regulate what will already be taking place online and to tax it as other competing states are doing.
Delaware, Nevada and New Jersey became the first three states to legalize online gaming – an action that came with the promise of millions in new tax revenue for those states.
In New Jersey, initial estimates of the revenue “take” from online gaming was $180 million, which was downgraded to $160 million by the time the law was actually implemented. But the reality in New Jersey has been revenue of only $9.3 million. In Delaware, online gaming has made $0 in net revenue gain to the state, while Nevada produced only $700,000 in online gaming revenue.
The Pew Center reported this week that as a result of the experience in those three states, Morgan Stanley has “chopped its market projection for the U.S. online gaming industry by 30 percent, from $5 billion to $3.5 billion by 2017, ‘to better reflect the insights we have gained following the first few months of operations’ in Delaware, Nevada and New Jersey.
Despite the initial revenue disappointments in those three states, a Mississippi gaming industry already struggling with competition in the border states can ill afford to give other out-of-state competitors too big a head start in at least putting a regulatory system in place for online gaming.
Sid Salter is a syndicated columnist. Contact him at email@example.com.