The idea of online gambling has been of particular interest to the state of Mississippi recently due to gaming revenue decline and casino closings. With the substantial influence of this trend on the Mississippi economy, online gambling has become a topic of public policy debate. So much so, the 2014 session of the Mississippi legislature is again seriously considering the possibility of legalizing it.
Long known for its gulf seafood, welcoming hospitality, and southern charm, Mississippi is also home to many gambling riverboats and Vegas style casino resorts. Millions of tourists and locals alike flock each year to visit its casinos with the dream of winning big. Yet, with many consumers struggling with money, many are visiting but are not gambling.
The Mississippi Gaming Commission recent statistics show that in 22 of the last 24 months, the casinos have been won less money from gamblers compared to the same month of the previous year. For instance, in May 2014, the Mississippi casinos took in $20 million less than they did in May 2013. That is a 10.4 percent drop in revenue statewide with the riverboats being the hardest hit.
Although the Mississippi Gulf Coast gaming market remains somewhat strong, the slow economy, recent disasters, and competition from neighboring states has had its impact. At the end of July 2014, Margaritaville, the coast’s newest casino, announced it will be closing on or before September 19, 2014. This is the first casino to close on the Gulf Coast since Hurricane Katrina and the second Mississippi casino to close this year. In June, Harrah’s in Tunica closed suggesting this is a statewide problem.
For many years, the U.S. government has considered online gambling illegal, yet a 2011 Department of Justice letter stated that the Federal Wire Act of 1961 only applies to sports betting. The letter opened the door for states to sell lottery tickets online. It also allows for the online playing of poker, roulette, blackjack and several other casino games as long as it does not relate to sports betting and takes place within the respective state’s border.
Many states are stressed financially with increased retirement and healthcare costs so the DOJ letter prompted many to seriously consider online gambling as an additional source of revenue. Since the implementation of online gaming, Nevada has received $700,000 in additional revenue while in New Jersey, gross revenue is a whopping $9.3 million. This has many states asking themselves, “Why are we passing up potentially millions of dollars of tax revenue every year?”
In fact, the State of Mississippi has taken notice. With declining tax revenues and casino closings having a measurable impact on the state’s economy, the Mississippi Gaming Committee Chairman Richard Bennett put together a task force to study how online gaming has worked in other states that have made it legal. Following on the heels of other states such as New Jersey, Mississippi has proposed similar legislature to allow online gaming.
The most recent bill introduced would regulate, license and tax online gaming. It makes internet gaming lawful and authorizes the Mississippi Gaming Commission to grant internet waging permits to existing gaming licensees. Additionally, gross gaming revenue would be taxed at 5 percent.
The Mississippi economy have yet to fully recover from the devastating effects of Hurricane Katrina and the BP Oil Spill. Yet, if the proposed legislation were to pass, the struggling Mississippi casinos would stand to gain tremendously. It would allow Mississippi casinos to increase their customer base by marketing to local residents and not having to rely almost entirely on tourist business. The state would increase revenue as it would be able to tax the casinos as other competing states do.
More and more states are getting friendly with idea of online gaming. In addition to Mississippi, states like California, New York, Louisiana and Pennsylvania have also recently introduced legislation to allow it in their jurisdiction. If Mississippi waits too long, it’s out-of-state competitors may get a big head start and could lose out on millions of potential dollars for the state coffer. At this time, the prospects of passing legislature that will legalize online gaming is unclear but Mississippi’s movement toward this issue should be of interest to everyone, especially those who enjoy online gambling.