Californians should view the upcoming debate over online gambling with no misconceptions: The issue is about private profits, not public policy. Nor is the matter clear cut, as legislators need to settle a series of thorny questions before the state makes any decision. And no one should think that Internet gambling will rescue state finances.
A late push this year to legalize online gambling within California stalled, but the issue is already on the legislative radar for the next session. A coalition of casino tribes and card clubs wants the state to make online poker legal. Sen. Harry Reid, D.-Nev., would legalize online gambling nationally.
But Californians should be under no illusion that the push for online betting serves some public interest. The driving force is the desire by various private players to grab a share of what they see as a potentially lucrative market. California gambling interests want the state to act before the federal government does. California tribes fear a national bill would give Nevada's well-established gambling industry a competitive advantage that would threaten tribal casino profits. Some California tribes are leading the charge to move gambling to the Internet, while other tribes oppose that step. And card clubs and horse racing tracks want a piece of any online business, as well.
Californians should also not overlook the many tough issues the Legislature needs to resolve before anyone can legally wager from a home computer. The state needs to clarify whether federal law even permits the state to take this step. A 2006 federal law banned gambling over the Internet, but may allow states to permit online gambling within their borders — or may not. Simply assuming the state would not violate federal law is risky, at best.
Legislators would also need to determine whether approving online gambling would violate existing tribal compacts, as some tribes contend. Abrogating those compacts would cost the state revenue it now gets from tribal casinos — about $263 million to the state's general fund this fiscal year. Legislators would need to decide what games to allow on the Internet, as some factions want to authorize more than just poker. And then there is the question of who among the many different interests gets the rights to run online games and reap the profits.
Nor is gambling a fix for the state's economic woes. Politicians play up the possibility of new revenue when addressing online gambling, but the reality rarely matches the rhetoric. Lottery proponents sold the state lottery to voters in 1984 as a windfall for education, but the lottery provides only about 1.5 cents of every education dollar. Gov. Arnold Schwarzenegger in 2007 said new tribal gambling compacts he negotiated would bring in an extra $500 million a year to state coffers — but the actual income never reached that level. Any potential revenue is a side benefit, not a justification for authorizing online gambling.
Internet gambling is likely inevitable at some point. But legislators should ensure that the state's approach carefully considers all the consequences, and is not merely a rush to help wealthy special interests reap larger profits.