Online gaming called ‘new frontier’ for states hungry for tax revenue

By Michael Rubinkam, Associated Press

Published Tuesday, Oct. 22, 2013 | 11:46 a.m.

Updated Tuesday, Oct. 22, 2013 | 8:45 p.m.

PHILADELPHIA — Pennsylvania lawmakers might want to see how New Jersey and Delaware fare with their new Internet gambling operations before they seriously consider legalizing it here, the chairman of the state gambling board said Tuesday.

Both states, along with Nevada, are the first three in the nation to offer real-money online gambling, with Delaware expected to go live next week and New Jersey targeting the end of November.

Speaking at the opening of a two-day conference on Internet gambling, Pennsylvania Gaming Control Board Chairman Bill Ryan noted that it took state lawmakers more than a quarter-century before they addressed the migration of Pennsylvania residents to Atlantic City, N.J., to gamble at brick-and-mortar casinos. Pennsylvania legalized casino gambling in 2004 and since has become the nation's second-largest casino state, after Nevada.

"It's not easy to do something like this in the state of Pennsylvania," he said, partly because significant pockets of moral and religious opposition to gambling remain. "I don't see any real groundswell right now for Internet gaming."

That could change if lawmakers see that New Jersey and Delaware are making a lot of money.

Ryan and other officials at the conference in Philadelphia said online poker and other casino-style games are the "new frontier" for states hungry for new sources of tax revenue, with some officials predicting relatively rapid expansion nationwide. Legislation to legalize online gambling has been introduced in eight states, Pennsylvania included.

"We do know that Internet gaming is a very big deal," Ryan said.

But there could be significant regulatory, technical and legal hurdles to overcome, especially if states decide they want to strike agreements with each other to allow online gamblers to play games offered by other states. That could provoke a federal response, panelists at the World Regulatory Briefing USA conference said.

States will also need to make sure that online gambling doesn't hurt existing brick-and-mortar casinos, and that strong regulations are put into place to curb fraud, as well as compulsive gambling and underage gambling, the panelists said.

"Internet gaming is going to happen. How it's going to happen is an unknown," said Michael Pollack, managing director of Spectrum Gaming Group.

Spectrum recently projected that by 2019, Internet gambling could generate $8.5 billion per year in the United States. By contrast, America's nontribal casinos took in $37.3 billion last year.