Will US states beat Feds to the online gambling finish line?

us-states-feds-online-gamblingTwo US Republican Senators – Texas’ John Cornyn and Arizona’s John McCain – went on the Sunday TV chat shows the day before Independence Day and came perilously close to suggesting something their party considers heresy: raising taxes. Of course, neither man actually used the phrase – McCain came closest by saying he might support “revenue raisers” to deal with the country’s massive deficit, although he declined to get specific on what that might entail. Would regulated online poker fall under that ‘revenue raiser’ classification? Is this the extra nudge Rep. Joe Barton’s federal poker bill needs to get over those extra high legislative hurdles? Or will the states get their ducks in a row before the feds do?

A recent report by the Rockefeller Institute of Government showed that at least 10 states expanded their gambling offerings to generate more revenues since the onset of the Great Recession. Overall, state gambling revenues rose 2% in 2010 over 2009 (which was the first year in three decades to show negative growth) but have yet to recover all the ground they lost since 2008. More worrisome: half of 2010’s growth came from the decision of one state – Pennsylvania – to open up table games at its casinos. Hard to count on that kind of boost occurring every year. Or can you?

The Rockefeller report pointed out a distinctive pattern in a state’s introduction of gambling services. There’s an initial flurry of interest producing a sharp spike in revenues, followed by a gradual leveling off and relatively slow revenue growth thereafter. However, this flat growth can be boosted by the introduction of previously unavailable product offerings (such as Pennsylvania’s table games). Um, you know, uh, we read somewhere that online gambling is currently not being offered by any US states. Ahem.

So who’s likely to win this race? Will the federal parties be able to stop accusing each other of wiping their asses with the Constitution long enough to get an online poker bill passed? Or will one bold state go rogue and render the feds’ bickering moot? For the record, CalvinAyre.com believes it could be years before any legislation is passed and still more years until a system is actually up and running, but our money’s on the states. Happy birthday, America.