Failure to approve sports gambling bill endangers state budgets

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Although there was a change in social perception of sports gambling, and especially online betting, state administrations across the nation are reluctant to act. Either the lack of agility or political desire is keeping both investors and stakeholders at bay, awaiting a better climate to act.

For states like Kentucky, the failure to pass House Bill 137 is projected to cost the state $45M in budget revenue.

The opposition argument against these bills used to focus on the morality of the issue and possible risks for vulnerable categories when it comes to gambling. But, with online gambling, the same risks exist regardless, but there is little state control and no domestic job opportunities in these industries.

With roughly half of the country legalizing sports betting and online gambling since the US Supreme Court removed the federal ban, those states that failed to do so are seeing a reduction in their budget with the business going elsewhere. Legislators in smaller states like Kentucky and Main that fall into this group are having an even harder time to replace their holes with some other type of income.

As neighboring states are reaping the benefits, Kentucky and Maine do not allow for any type of game to be legally organized from inside the state, not even if it’s a Mystery Reel or a similar simple game.

Private Interests

The particular private interests in the field match between the companies, the state legislators, and the consumers. Safe and organized gaming rules ensure legal revenue to the state and diminish the need to police illegal gambling.

New states that have introduced similar bills have seen an increase in domestic offers of bets, wagers, and online gambling opportunities. While the nationwide rise of the online gambling industry allows for a lax competition, states like Illinois and Colorado predict a number of new jobs being created locally.

Additionally, local companies are able to provide a tailored service to customers in both their physical locations and online. This has a domino effect on the hospitality and entertainment industries that see a benefit from an influx of sports gamblers.

Finally, states that miss the opportunity to introduce good legislation on time will see customers taking their business, and their money, to neighboring states.



Public Pressure is not to Be Expected

Judging by the reactions of the public in Kentucky, Maine, and other states that have seen as being behind, there is not much pressure at the moment for legislators to allow on-site and online gambling.

In most cases, the accessibility of online services from other states, and those with global coverage, supply most of the gambling needs of the local market. Those who enjoy physical casinos and gambling have an easy time traveling to another state.

This might spell even more issues for local governments, as they will keep silently losing tax revenue and jobs to other states in the area.

Filling Budget Holes will Be Hard

A visible increase in demand for state services, as well as a tendency for financial gains to concentrate in already wealthy states, has created a problem for smaller and less populated states throughout the nation.

Multiple states, especially in the midwest, have a clear option either to enter into unpopular austerity measures or go forward with the liberalization of different markets. Legalized online and physical gambling, as well as sports betting, is one of the easiest ways to reinforce local and state budgets.

The other popular way to fill out these budget holes has been the legalization of cannabis, either for medical or recreational purposes.

States that have accepted both solutions, such as Michigan, have seen a surge in new business and tax revenue, fixing some of the issues plaguing these states since the economic crisis in 2011.

What Can We Expect?

The slow pace of local administrations will probably dissuade local and national investors from entering the market, at least by the end of 2020. Even with the start of the NFL season in the fall, this might prove to be too little, too late.

Ideally, legislators and representatives will realize what they have been missing by looking at other state’s experiences in the country. This will promote more widespread access to consumers and further evolution of online gambling and sports betting markets in the near future.

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