TRENTON – State lawmakers who dream of dollar signs from legalized online gambling might want to pause for a moment to consider Delaware, Nevada and New Jersey, according to a new report from Pew’s Stateline.
Last year, the three states became the first in the country to legalize Internet gaming. But as New Jersey Treasurer Andrew Sidamon-Eristoff told state lawmakers earlier this year: “Clearly, the results so far have not met our expectations.”
While New Jersey officials initially predicted legal online gambling would boost state tax revenues by $180 million in fiscal 2014, those estimates were reduced by $20 million mid-year, and with one month left in the state’s fiscal year, the state had taken in just $9.3 million in revenue from online gambling. State officials have blamed the slow start on technology glitches and payment processing issues.
The Stateline report cites Michael Lawton, a senior research analyst with the Nevada State Gaming Control Board, explaining that Nevada and Delaware, which have much smaller populations than New Jersey, also have collected only modest revenue from online gambling.
In Delaware, state officials had counted on $7.5 million in additional tax revenue in fiscal year 2014. But because of a delayed rollout and one-time startup costs, Internet gaming made no net contributions to the state budget in fiscal 2014, state officials said. The startup costs included software design and data servers to host the gambling.
In Nevada, officials opted not to make revenue projections for the nascent industry — or to count on the money in its budget. The state, which legalized only interactive poker, generated about $700,000 in tax revenue from about $10.2 million in gaming wins from May 2013 through April of this year, according to Lawton.
In March, Morgan Stanley chopped its market projection for the U.S. online gaming industry by 30%, from $5 billion to $3.5 billion by 2017, “to better reflect the insights we have gained following the first few months of operations” in Delaware, Nevada and New Jersey.
In March, U.S. Sen. Lindsey Graham (R-SC) and Rep. Jason Chaffetz (R-UT) introduced a bill that would ban most online gambling, which has gained bipartisan support. The Restoration of America’s Wire Act — S. 2159 in the Senate and H.R. 4301 in the U.S. House of Representatives — seeks to prohibit Internet gambling and the sale of lottery products online.
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