States May Legalize Gambling To Avoid Losing Revenue to Surrounding States

When a State Legalizes Gambling

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Often when one thinks of a state legalizing gambling, what comes to mind is casino gambling. Forty-seven states, however, have some form of legalized gambling. Only a handful allow any type of casino gambling; twenty-eight states have Indian Reservation casinos. The most popular type of gambling among the states is the lottery. States have their own jackpots or scratch-off tickets or have joined with other states to form the mega-lotteries, where they pay off for the big winner can reach into the hundreds of millions. Other forms of gambling include bingo games, horse and dog racing, and now, a number of states are legalizing slot machines and video poker machines with strict regulations.

Reasons for Legalizing Gambling

The main reason states legalize gambling is to increase revenue, and usually the revenues from gambling go to a very specific fund. In New York, the revenue generated from slot machines goes toward the state’s education budget. In Pennsylvania, lottery ticket advertising states that the lottery supports monies for senior citizens. Tribal gaming agreements require that a certain percentage of their income must be returned to the state, community, and tribe. Wherever the money goes, lawmakers make it clear that the revenue from gambling frees up tax monies for other projects and causes. Another reason states legalize gambling is to bring out-of-state money into the state (or keep residents from spending their money elsewhere).

For example, a state decides that gambling is wrong and wants no part in it. But neighboring states do offer various forms of gambling. Residents are free to visit those neighboring states and gamble, which means the non-gambling state and its businesses are losing revenue. Lawmakers eventually decide it is better to keep the money in the state. States are seeing that casinos have increased tourism revenues, especially in communities that were barely solvent.

What Happens Next

The decision to allow gambling is not an easy one for legislatures. Anti-gambling factions are vocal. Not every state legislature sees the virtue in legalizing gambling. Once it does pass through the legislature and is signed into law by the governor, a gaming commission is put together to draft the regulations. Businesses fill out applications requesting permission to open a casino. The application process can be quite stringent, particularly if the state has restricted the number of venues that may offer gambling. This process can take months or years to complete. Once approved, the casino must follow the regulations set up by the gaming commission or take the chance of losing its gaming license.

Katriona Buchanan

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