Thomas Sweetz: Can online gambling pay off for Pennsylvania?

Thomas Sweetz - Contributing Columnist

Gambling is a very questionable endeavor with everything based on chance or the spin of a wheel. The odds are stacked against the players, but some form of gambling is going take place in our country no matter what. In the course of history, people have always taken the risk and gambled with the hope of “hitting it big.” As we look at the issue of gambling, one must also look at how online gambling fits into the picture.

State governments, including our own Keystone State, are having a difficult time finding new sources of revenue to meet demands for services while also balancing their budgets. The increase in tax revenue has been one reason why many lawmakers support online gambling.

New Jersey, for example, passed a bill to allow online gambling in 2011. The Garden State predicted a windfall of some $160 million in additional revenue from online gaming. That forecasted cash cow, though, failed to meet expectations as it generated about 45 percent of expected revenue for state coffers, according to Fitch Ratings Service.

What did we learn from New Jersey’s experience? Online gaming is not a sure bet and brick-and-mortar casinos remain the preference for those wishing to gamble.

The time might be ripe, however, to revisit the issue. With casinos closing in Atlantic City and Mississippi, existing casinos are exploring options to generate additional interest – including online gaming. These casinos must choose whether to expend considerable funds to promote online gambling or add to their existing facilities and the experiences they offer.

An oversaturation of casinos has occurred in the northeastern United States resulting in casino closings, such as the Trump and Revel casinos. Today’s consumers appear to be more diverse and favor more than the staple table games and slot machines. Non-gaming amenities and entertainment have become a big draw for casinos. One could say the trend is to provide more of a family experience to gamblers. The restructuring of these casinos might be looked at as a positive move for the brick-and-mortar casinos in the wake of declining revenues.

This brings us back to the topic of online gambling as an alternative to expending money on existing facilities. There are pros and cons to expanding gaming to the Web. State and local governments would increase their tax base and casinos would benefit from expanding their consumer base. Casinos also would not need as many employees for online gaming, but fewer employees also equates to fewer people paying income taxes. For the consumer, it becomes a matter of convenience as an opportunity to “hit it big’’ is just a click of the mouse away.

There are also cons to this issue. With access to online gambling being so easy, it could become a problem for those who have a gambling addiction. Children and young adults could also be able to enter these sites and not be able to comprehend the dangers that could result. The lack of regulation could also be dangerous, not only for the casino but for the player as well. Providing the necessary regulatory measures also comes with a cost.

For many, the pros outweigh the cons on this issue if for no other reason than to provide needed revenues for governments and casinos. It is very hard, though, to operate both a traditional casino and one based on the World Wide Web. Casinos are caught in a Catch-22 situation, and must decide which of these options benefits them most. While some might provide both types of gambling, others would welcome an alternative to expending their funds on land-based sites.

Thomas Sweetz

Contributing Columnist

Thomas Sweetz is an instructor of business at Misericordia University in Dallas Township.

Thomas Sweetz is an instructor of business at Misericordia University in Dallas Township.

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