Regulated Online Gambling Keeps Money in the Local Economy

A closer look at the Big One cash.

Unregulated online gambling sends a lot of US money overseas

During peak hours traffic at regulated New Jersey online poker rooms can climb above 2,000 players. At the same time there are over 1,000 people playing online poker for real money in the state of Pennsylvania as well.

This may come as a surprise to some of you who thought online poker was illegal in Pennsylvania, but when you think about it, so are illicit drugs, and there were certainly plenty of people using those every evening.

So where are these people playing online poker?

They’re playing at online poker rooms with names like CarbonPoker.ag, Bovada.lv, and AmericasCardroom.eu. These sites, and many others, are still offering online poker games in the United States while they’re headquartered overseas.

And so long as people want to play there will be no shortage of people willing to facilitate their play.

FACT: Pennsylvanians can currently play online poker at any one of a dozen online poker rooms, all of which are run by overseas operators, and unlicensed in the U.S. and Pennsylvania.

This is why legalizing and regulating online poker should be at the top of every state’s to-do list.

It’s not simply a matter of adding a few million dollars to the state’s coffers through taxation and licensing fees, this is about keeping all of the money being wagered, won or lost, in the Pennsylvania economy, and protecting these players from shady overseas operators.

In the past I’ve touched on the actual amount of revenue regulated online poker is bringing into New Jersey beyond the taxes collected by the state – licensing fees, jobs, and marketing – but one thing I haven’t touched upon is how regulated online poker will keep this money in the Pennsylvania economy, where it will be recycled over and over again.

Here is a look at the impact legalization and regulation would have in Pennsylvania on this front.

Keeping the money in the local economy

When a current online poker player in Pennsylvania loses money the winner of that money could reside in virtually any corner of the globe. So, when the winner withdraws that money and heads down to the local Best Buy to buy a new laptop it could be the London Best Buy, or the Sao Paulo Best Buy, or the Denver Colorado Best Buy that gets the business.

Essentially, the player in Pennsylvania is sending their disposable income out of state, and in some cases out of country.

On the other hand, with regulated intrastate online gaming the winners would almost certainly be a resident of Pennsylvania (or a visitor to the state) and that new laptop would be bought at the Best Buy in Philadelphia or Pittsburgh.

So Pennsylvania benefits in 4 ways:

  1. The state collects seven-figures worth of licensing fees;
  2. The state taxes online gaming operators (the current proposed rate is 14%);
  3. The state can tax the winnings of winners;
  4. The money spent by these winners is introduced into the local Pennsylvania economy.

That last part is very important, and for the most part overlooked: The money won on online gaming sites would stay in-state.

For instance, in the current unregulated global market the winner of a $10,000 online poker tournament prize could be from anywhere in the world, so there is a high likelihood of PA residents contributing money into this poker economy, and the state reaping zero benefits. Whereas if Pennsylvania regulated online poker they would not only receive tax revenue and licensing fees, but the winners of these tournaments would have to pay taxes on their winnings (which are reported in regulated markets), and with a truckload of what amounts to found money, would be from Pennsylvania and likely use that money locally.

The same holds true for big online casino wins, as Cathy Ruella (who hit a $1.3 million progressive slots jackpot), and the anonymous player who won $1.5 million playing Let it Ride at BetfairCasino.com in New Jersey discovered. This money would now find its way back into the Pennsylvania economy, so not only would the state benefit from the tax revenue from the iGaming operator (as well as the winner) but if that money is used to buy a house, or a car, or other items, local businesses also get a boost, and that money continues to get recycled into the Pennsylvania economy.

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