“If you can build a business up big enough, it’s respectable.”
– Will Rogers
America has reached a new milestone. It was an easy mark to miss, as the rumble and roar of “coronavirus!” virtually drowned out everything else. But it was a genuine milestone, nonetheless.
The Trump administration announced stimulus packages for businesses injured by the economic shutdown caused by the spread of COVID-19. It’s nothing new to find American businesses, whole industries in fact, lining up for government aid after a natural disaster injures the country. What was different this time? What changed was who was allowed in that line. This time, gambling businesses could stand with other American businesses, to get financial help dealing with the losses of the coronavirus lockdown. In former times, gambling establishments, those dens of sin and temptation, would have been left to stand or fall by themselves.
At first, there were limits. The Paycheck Protection Program (PPP), was set up to disburse forgivable loans to small businesses if all employees are kept on the payroll and the money is used for payroll, rent, utilities etc. But initially it was not available to small businesses who derive $1 million or one- half of their income from gambling.
That changed when the Small Business Administration, charged with disbursing the loans, realized that the smaller operations, taken together, employ more people than even the big-name resorts. In Nevada, the biggest gambling state, over 200,000 work directly for casinos and gaming establishments. And another 300,000- grocers, doctors, service, and retail workers- depend on gambling workers as their primary customer base. In a state with a population of only 3 million, those are huge numbers.
In Indian country, the impact is even more intense; often a tribal casino is the only game in town, the mainstay of a reservation’s economy. Loss of gambling revenue means economic devastation: no funding for hygiene and nutrition programs, after-school activities, and community clinics, as well as basic paychecks for family after family. So Indian gaming, too, has a place in line behind state-licensed outfits.
Respectability at Last?
America has a long history of ambivalence about gaming in general and gambling in particular. The contribution of the gambling industry was always accepted, in the form of tax proceeds and business generation, but seldom recognized officially. Officially, gambling was a social nuisance and a minor crime (and most certainly a sin). That meant it fell under the 10th Amendment to the U.S. Constitution, which automatically reserves all powers not specifically granted to the federal government, to the states and the people instead.
Gambling enforcement comes under what is known as the “police power”- that is, the first duty of any government is to prevent harm to its residents and their property. Since problem gambling does in fact harm some people, then it falls under the state police power. State power over gambling is plenary- meaning that within fairly broad limits, any state government can do anything it likes with, to, or about gambling. Nevada, for instance, licenses almost every type of gambling and wagering (no state lottery, though) while Utah, next door, permits no gambling at all.
Constitutionally speaking, there is no contradiction here.
And of course, there was always the social utility argument. Gambling does not create wealth, but simply shifts it from one party to another. And in any case, it’s frivolous and a waste of time; undermines the work ethic, and society’s moral fiber. But this is another objection that has given way under the pressure of facts and time – and money.
Today, far from being the preserve of godfathers and gunslingers, gambling is mainstream- not only state licensed, but state approved. For forty-eight of the Fifty States, it forms a permanent part of the income stream. It is even advertised with public money, as in the case of the state lotteries. Far from diverting effort and funds away from useful purposes, gambling has stepped up as a source of employment and tax revenue, even as traditional industries such as steel and autos have faded. So we’re not just talking about Vegas; we’re talking Cleveland. We’re talking Detroit.
A New Future?
But once the pandemic panic is over, we’re not talking about going back to the gambling industry we knew. The digital revolution and the Internet have permanently changed everything already. The coronavirus crash merely accelerated these new trends and fixed them firmly in place
The older games and casinos will still have a place, but not all will revive. Entirely new formats, as with E-gaming, entirely new business models, as with alternative monetization, will be coming up, supplanting the older models, perhaps replacing them completely.
What place will gaming have, overall, in the economic rebuilding that is surely coming? We cannot know. But we can be sure it will be tremendously influential. Far from being a distraction, game theory is now central to the design and testing of innovative ideas in economics, sociology,
military planning, the aerospace industry, and even evolutionary biology. (Oh, and epidemiology. Mustn’t forget epidemiology these days.) New concepts need to be studied beforehand, using controlled simulations. And another name for controlled simulations is “games.”
So, if it’s true we must stay alert for new and unforeseen problems, we should equally be ready to identify, to adopt and exploit new and unforeseen opportunities.
It’s all in the game.
Mr. Owens is a California attorney specializing in the law of Internet and interactive gaming since 1998. Co-author of INTERNET GAMING LAW with Professor Nelson Rose, (Mary Ann Liebert Publishers, 2nd ed 2009); Associate Editor, Gaming Law Review & Economics; Contributing Editor, TSN. Comments/inquiries welcome at [email protected].
