The problem is, with their seat at the online table ensured, state lotteries want to pull the chairs from under all other interested parties. Online poker is a market many seen as having very little crossover to lottery games; however, state lotteries see this as a means to become the Internet casino en masse. They want to use their argument to defeat federal legislation and cut competition from casinos, racetracks, Native Americans, riverboats, bingo parlors, and other private companies for state and multistate level i-gaming opportunities.
This is a political maneuver and a grab for market share at the expense of private enterprises. There are also many reasons it should not happen.
First, there are many serious policy questions about whether lotteries which are operated by the state governments should be in the casino business, particularly online.
Second, there is a role here for the federal government to establish a fair marketplace with a clear set of rules that holds legal operators accountable. Without it, there will be a patchwork of different regulations among states. Imagine a consumer’s confusion needing 15 different iTune accounts to access music from 15 regulated markets. It runs counter to general market principles. In another industry, such a plan would be soundly rejected. The varying regulations will make it more frustrating for companies to operate, much more difficult for them to innovate, and much harder for illegal operators to be caught and punished.
Third — and importantly — when the state government empowers itself as a casino, who is going to regulate the state government/casino?
We should look at how federal legislation on Internet gaming would benefit us all with funding for hard-pressed states, and acknowledge a pure exclusionary maneuver by the state lotteries for what it is. And we must recognize how very brief is the window of time we have to pass this much-needed federal legislation, the Internet Gambling Prohibition, Poker Consumer Protection, and Strengthening UIGEA Act of 2012. States are primed to move and independently set an array of state-specific guidelines that will not be effective across state lines, and illegal online casinos continue to exploit the U.S. consumer in an environment with little regulation or legal risk.
Mark A. Lipparelli is the former chairman of the Nevada State Gaming Control Board, who previously served as a senior executive with technology companies serving the worldwide gaming industry.