Online gambling on the Boardwalk and the Strip

For the second time in as many years, Governor Chris Christie of New Jersey has vetoed an online gambling bill.   On Thursday, February 7th, Christie exercised his right to reject legislation approved by the state legislature and said no to online gambling in the state.  The initial reaction of the supporters of online gambling in Atlantic City was one of dismay, gnashing of teeth and wringing of hands.  “Woe are we, this will be the end of Atlantic City”; the bill had been touted as the last hope for the weak and struggling gaming industry in Atlantic City.

However, by the end of the next day the supporters and investors were buoyed with enthusiasm and optimism; gaming stocks with a connection to AC jumped – Caesars went up 13 percent in one day.  Why the sudden change in sentiment?  Christie had clarified his position; Christie is not against legalizing online gambling for the Boardwalk Boys, he just wants a couple of conditions imposed.

“Now is the time for our state to move forward, again leading the way for the nation, by becoming one of the first states to permit Internet gaming,” Christie wrote. “While Atlantic City’s reputation and stature as one of the premier resort destinations on the East Coast are well-chronicled, it is no secret that revenue from the region’s most important industries, gaming and tourism, has been in decline. “Since the beginning of my administration, I have stressed the importance of reversing the trend of economic contraction in Atlantic City and have made the revitalization of the region’s gaming and tourism industries a key priority,” Christie said.

 Gov. Chris Christie will allow the state to legalize Internet gambling, but only if lawmakers agree to limit online wagering to a 10-year test period and impose higher taxes on casino revenue, he said Thursday. “With these goals in mind, I have concluded that now is the time for our State to move forward, again leading the way for the nation, by becoming one of the first States to permit Internet gaming. ” Press of Atlantic City, 2-8-13

At the same time, Nevada governor Brian Sandoval is pushing for additional online gambling legislation in his state; Sandoval hopes to have a bill ready to sign in 30 days.  Governor Sandoval wants the ability to negotiate compacts – treaties – with other states so that their citizens can make online bets with Nevada licensees.   Both governors envision that gamblers who normally, or at least formerly, come to gamble in their state will be making wagers with the same casinos they used to visit in person from home.  A win win for everyone, right?  The casinos still get the gamblers, the gamblers don’t have to spend any money traveling and everyone is as happy as a clam – that is before the clam digger arrives.

This is where I get off the train to protest, not that protesting will do any good.  Online gambling is coming – it is being driven, not by Chris Christie, Brian Sandoval, Caesars and the American Gaming Association – it is being driven by the logic of the technology.  It is no more possible to stop its progress than it is to stop computers and cell phones.  As the technology advances so does the commercial application of the technology – and consumer demand advances in lockstep with it.  Whether it happens this year, next year or five years from now, one thing is certain – online gambling is coming. It is coming to a house near you, if not to your house.

It is coming, but it will not be the boon to the bricks and mortar casinos that some think it will be; there is only so much disposable income in the world.  Casinos do create new money, they redirect it.  The money, billions and billions of dollars, spent in casinos in the United States is not new money.  It is money that 20 or 30 years ago was spent on other things, other forms of entertainment.   Casinos are entertainment centers; people go to casinos to be entertained.  The primary entertainment in a casino is gambling – if you make it possible to gamble in the gambler’s home it will change his/her behavior and the casino industry.  A dollar spent gambling online is a dollar that will not be spent in a casino.

People will not stop going to a casino completely any more than they stopped going to retail stores because they can and do shop online.  Casinos have other forms of entertainment; there are restaurants, shops, entertainers and most importantly the companionship of other people.  But they will go less often and have less money to spend – and therein lies the real question; just how much will be spent online and how much will be left over for the bricks and mortar casinos?  I haven’t any idea – but I would pose this question:  would you spend several billion dollars to build a building when the majority of your prospective customers would be staying home to enjoy your services?  I don’t think so.

And what are the other impacts of online gambling? Won’t it be like online shopping, watching movies or listening to music in its impact?  How many employees does an online casino have?  Not as many as bricks and mortar ones would be my guess.  How much of Nevada’s economy is dependent on the casino workers and the money they spend buying food, clothes, cars, houses and, lest we forget, gambling in a casino?  Who builds online casinos and who builds the houses for the casino workers?  Next to gaming, the casino industry in Nevada has been the second most important industry – important in the number of people it employs, the amount of taxes it pays and for all associated spending by the contractors and their workers.

So casino companies may be better off with online gambling;  Amazon has certainly fared well with online shopping.  But the casinos which profit most may not be the ones that dominate the industry now.  As I said, it is not going to happen tomorrow, but the industry is standing on the edge of a major paradigm shift.  In the past, those shifts have been self-directed and not controllable, not by well-meaning governors or tried and true casino operators, not by anyone.

Here, I must add one caveat – I am old and the change will upset my world-view, so it is not surprising that I want to hold on to the old ways as long as possible – those casinos after all have been my career for the last 40 years.  Woe is me!



4 Responses to “Online gambling on the Boardwalk and the Strip”

  1. 1 rexdstock1 February 10, 2013 at 4:53 pm

    You best be getting off your butt and get to writing a great piece of classic Nevada literature that is fiction, but (I won’t tell!) really is your own story with Lyle or some tragic figure to cycle through the industry.  Last stop has Lyle at Cactus Pete’s on the Idaho border… Do all the great stuff:  military dark past, small-town NV birthplace (gots to have a scene at the graveyard), and all the other strange shit in your being that you try so desperately to hide.  Make it dark, dark, dark.  And real.


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