There were TWO recent events that prompted these
comments. The first, obviously, is the
recent Daily Fantasy Sports clusterfuck (tossed from Nevada, being investigated
in NY and FL, and other shenanigans).
The other was a random post on a poker website where the postee made the
standard complaint about the lack of online action, “We don’t need no government
to let us play poker!”
Well, actually, we do, and just as much as they need
us. Hear me out.
Government needs gambling now more than ever. It started a long time ago – 1963 to be exact
– when New Hampshire decided to finally try a lottery as a way to increase
funding for education (the idea had been debated for a decade). Taxes is a four-letter word there, as they
have property taxes but no sales or income tax.
Anyway, the lottery was a hit, New York got one in 1967, and, as the
saying goes, TIDAL WAVE! Today almost
every state in the union has SOME form of legalized gambling, be it lottery,
horse racing, casinos, etc.
The things that ALL of these forms of gambling have in
common?
- Authorization
- Regulation, and most important for the state,
- Part of the action (percent of the amount wagered, or fees from operators, or sometimes both).
As you have read in your history books, the online poker
boom of the last decade didn’t have any of these things. You know what happened soon enough. And apparently, the folks running FanDuel,
DraftKings, and all the other DFS sites missed that lesson. It’s painfully obvious that in the very near
future the DFS industry will undergo an evolution of sorts. How fast and in what capacity that evolution
occurs is up in the air right now.
There are many options – outright ban (as in Nevada), regulation
(as in Massachusetts), or…something
else? It’s clear to me that whatever the
outcome, it will be up to the states, not the Feds (unless another version of
UIGEA or RAWA or some other Sheldon Adelson-funded-prohibition bill finds its
way through Washington’s sewers).
Remember, (state) government needs gambling. Legislators are loath to raise taxes, and
the money has to come from somewhere.
Gambling revenues are here to stay.
And gambling needs government. It’s a business after all. Name a business that doesn’t operate without
SOME form of government oversight. Even
Mom & Pop stores have to have business licenses, and if they have employees
there are taxes and payroll forms and perhaps more.
In my own industry (food) we have business licensing,
restaurant licensing, health inspections, plus the above. In addition, we’re an S Corporation, so that
another level of licensing. All of this
regulation is important – it provides structure and it ensures that we provide
a safe and healthy environment in which to serve the public.
There are many in our industry who grumble about “excess
regulation.” The problem, as I see it,
is “uneven regulation.” Businesses cheat
because they need to (make a profit) or want to (make a profit). The problem is that no one operates in a
vacuum, and if Bob’s Ice Cream Store finds a way to get around regulations and
save some bucks in the process (the usual M.O.), that puts Bob’s competitors
(like me) at a disadvantage. Bob can use
the money he saves by skirting the rules to advertise more, or to sell his ice
cream at a lower price, or maybe Bob pockets the excess. Either way, it’s advantage = Bob,
disadvantage = me.
In some cases, ironically, it’s because of less government involvement. In our county we only have 1.5 food
inspectors to cover the entire county.
Restaurants are supposed to be inspected twice a year, and I can tell you
that the inspectors here are wayyyyy behind – our last inspection was in 2013.
There are several places in our county I refuse to eat at because I know
they’re not keeping a clean kitchen (and I’ve known of cases where it seemed
customers suffered mild food poisoning from eating there). Lack of inspections (caused by shortage of
staff) allows some to cut corners and we all suffer. Some (barf) more than others.
The need for regulation is important. Don’t think so? Would you really want to eat unregulated meat
or dairy products? Gambling (or gaming)
is already one of the most heavily regulated industries in the world (I.
Nelson Rose says so). And given the
potential for “problems” in the gaming industry (we’re looking at YOU,
UltimateBet), regulation is essential for players and the industry.
In the case of online poker and online gambling, it’s the
ONLY way it’s gonna happen. Suck it up
and push for safe, legal, and regulated online gambling.
And DFS? Well, watch
and learn.
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