Sports betting legalisation: The law of unintended consequences

Sports betting legislation consequences Steve Norton
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Steve Norton, chairman and CEO of Norton Management and a former casino executive holding senior roles at Las Vegas Sands, Gold River Gaming and Argosy Gaming among others, contends that while one of the arguments for legalising sports betting in New Jersey was increasing visitation to Atlantic City’s casinos, in reality just over six percent of the Garden State’s sports bets are placed at AC casino sports books.


As a founding Director of the American Gaming Association, I was very pleased to see our organisation join New Jersey in the successful effort, thru the Supreme Court, to remove PASPA, thus allowing Sports Betting. But I believe States like New Jersey, went too far, by allowing sports betting online and even worse adding online table games and slots. I am a great fan of New Jersey, personally helping to pass the 1976 casino referendum and then assisting Dick Codey’s House Committee, the following year, in drafting the Casino Control Act.

Then as EVP of Resorts International, I helped open the first legal US casino, outside the state of Nevada. And considering that after 2006, over 90 percent of New Jersey residents were closer to a casino or racetrack with slots, in Delaware, Eastern Pennsylvania or New York, something had to be done.

But it could have been allowing slots and/or table games at the Meadowlands, with Atlantic City sharing at least 40 percent of the tax revenue on slot win, and the Meadowlands paying the same tax rate as Pennsylvania.

But the referendum effort did not restrict gaming expansion just to the Meadowlands, and suffered the same fate as the 1974 effort, that would have allowed any County to have casino gaming, subject only to a subsequent local vote.

But there were other ways to provide sports betting to the NJ population, by approving betting parlours, similar to the UK; but not thousands of them, just a few near more densely populated areas of the state.

And these sports parlours would include food and beverage service, and to be more competitive with surrounding state gaming options, possibly include 25 or 50 slot machines; providing a taxable gaming activity, when sporting events were not scheduled.

These parlours should be owned and operated by licensed gaming operators, and would provide a far superior viewing experience, with multiple large video screens, and separate booths, where friends could watch their favourite game with sound; and also watch games that might not be covered by their TV provider.

But the UK has provided a valuable example of betting on sports and casino games, at home, where minors can use a parent credit card or bank info to bet illegally.

It has been recently discovered that 55,000 minors have a gambling problem, and a recent poll confirmed that 30 percent of minors have gambled illegally in the past year. The country has recently cut betting limits on their FOBT machines from £100 pounds to just £2.

And the UK and other European countries are now severely restricting or banning the advertising of online gaming sites. Of particular importance to the US, is the type and amount of gaming options that we provide, far superior to anything in Europe.

According to the AGA, the United States has 460 commercial casinos, and over 500 Tribal casinos. US gaming establishments, last year, employed 1.8 million persons; paid over $41bn in federal, state and local taxes; and had an economic impact of $261bn.

Gaming companies have invested hundreds of billions in constructing America’s gaming facilities. And there are other benefits for communities with casino gaming, including a major increase in hotel occupancy’s and average room rates for existing accommodations; as the presence of gaming, increases the number of tourists and of events booked; and expands the number of exhibitors and attendees, at most conventions and trade shows.

Additionally, local restaurants, retail, night clubs, museums, zoos, sports stadiums and arenas; along with most other forms of commerce, benefit from the millions of new of visitors.

In New Jersey sports betting financially benefits gaming companies, but the original premise, was to increase visits to Atlantic City, where gaming revenues had fallen over 50 percent, from its peak year, of $5.2bn, in 2006.

But in reality just over six percent of sports bets, made in New Jersey, are placed at AC casino sports books. State lotteries, which support so many valuable programs, have the most to loose from online gaming, and especially from online sports betting; if the convenience of gaming at home, reduces lottery spend.

Typical lottery games, keep any where from 25 percent to over 50 percent of the amount bet, where in sports betting the hold on bets made is typically five to 10 percent, so if the sports tax rate is 10 percent, the state tax revenue is likely to be less than one percent.

Illinois is a perfect example of the negative impact, a new form of gaming can have on a state’s established gaming casinos. In 2007. there were nine riverboat casinos, that won $1.983bn, paid taxes of $834m (42 percent), enjoyed annual admissions of 16.5 million visitors, and employed about 8,000 people.

Instead of growing during the next 10 years; after the State introduced Video Gaming Terminals (VGTs), those nine riverboats saw their win decrease by $1bn (down 51 percent), taxes declined by $525m (-63 percent), and employment losses exceeded 3,000 persons (almost 40 percent).

In 2012, Illinois approved VGTs at any business that could acquire a liquor licence. In 2017, 6,359 businesses had 28,771 VGT’s, winning $1.3bn, but with a suspiciously low tax rate of 30 percent, the new gaming only produced $391m in taxes, not even offsetting the nine riverboat casinos’ tax losses.

If the availability of sports betting is such a major issue for state adults, then a more acceptable solution, would be to allow only game outcome bets online, restricting in-game and proposition bets to licensed gaming establishments, and definitely exclude online gaming.

Nevertheless, I would argue in favour of restricting the type of gaming, if any, that is allowed online and is easily accessible by our computerliterate children.

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