Kokomo Tribune; Kokomo, Indiana

March 4, 2013

HAYDEN: Online gambling threat to casinos

By Maureen Hayden
Tribune columnist

— Indiana lawmakers have been debating whether to give the state’s casinos more financial incentives to compete with the shiny new gambling palaces popping up in Ohio.

They’re fearful that fickle gamblers will take their dollars – and the millions in tax revenues they generate every year—across the border to one of the four big-city casinos that have opened in the Buckeye State in the last 10 months.

What should worry them more: How easy it is for you to sit at home in your underwear, using your laptop or mobile device to place your bets online. 

Americans gambled away about $4 billion in 2011 using online wagering, according to a recent report by the American Gaming Association. Most of that money was spent through offshore websites, in the nearly 85 countries that have legalized online gambling.

That was the same year the U.S. Department of Justice cracked down on illegal online gambling here in the U.S., with massive criminal and civil charges against the biggest Web-based poker sites.

No matter. The American Gaming Association’s report, issued late last year, said that crackdown barely made a dent, and that gaming industry experts see online gambling as the wave of the future whether it’s legal or not.

Consider this, from an association survey of those experts: Nearly 70 percent of them estimate U.S. bettors will annually spend between $8 billion and $11 billion on Internet gambling five years from now.

Most of the rest think the market will grow more “moderately”— to a size of $6 billion to $7 billion annually over the next five years. And that’s even if Congress doesn’t pass legislation that legalizes and regulates online gaming.

If Congress opts to regulate online gaming, and even if states like Indiana opt not to follow suit, about one-third of those experts predict Americans will be spending between $14 billion and $17 billion annually in online wagering by 2018. 

The bricks-and-mortar casinos may argue that the threat of Internet gambling is overblown; that most bettors will still want what they offer. 

But Americans have abandoned bricks-and-mortar department stores, bookstores and movie theaters in favor of the online alternatives. Why should betting away your hard-earned dollars be any different?

Just more than half of those industry experts surveyed by the American Gaming Association said legalized online gaming in the U.S. could help grow the existing casino industry in states like Indiana. But almost one-quarter of them think that legalized online gambling would cannibalize business from existing casino operations.

Here’s another factor to complicate the odds: Casino patrons are an aging crowd – the American Gaming Association puts the median age at 47.

So consider the threat that social media, favored by a younger demographic, may play now that it’s stepped into the world of gaming. Last summer, Facebook launched a real-money gambling app that offers winners cash prizes. It’s only available in the United Kingdom. For now, that is.

Indiana has become dependent on gaming tax revenues, so the stakes just keep getting higher as our casinos face increased competition. But one of the questions that legislators need to ask, in considering giveaways to the industry: Are we chasing good money after bad?

Maureen Hayden covers the Statehouse for the CNHI newspapers in Indiana. She can be reached at maureen.hayden@indianamediagroup.com