How Legalizing Online Sports Betting Leads to Online Casinos

February 25, 2021by Christopher Gerlacher0
Betting KnowledgeFeaturedOpinion FeaturesSports Betting KnowledgeState Laws & Legislation

How Legalizing Online Sports Betting Leads to Online Casinos

How Legalizing Online Sports Betting Leads to Online Casinos

A while back, we wrote about gaming laws in different states. We mapped out where sports betting, online casinos, and other forms of gaming were legal. And we noticed a few interesting things. States with strict gambling laws only allow state lotteries and charitable gaming – if that. Others loosen up by allowing retail casinos, but not legalizing sports betting or online casinos.

But something happens when states legalize online sports betting. It’s often the first type of online gambling outside a state lottery that states allow. (Besides online poker, but online poker is a gray area). There’s a progression from online sports betting to online casinos.

Some states are reluctant to allow online casinos. But once they get a taste of online betting, they don’t want to go to a retail location for every bet. Bettors won’t abandon retail gaming (casinos have better bars than any online sportsbook). But it can be hard to stop the progression from online sports betting to online casinos. One state is actually preparing to make that same leap.

Indiana’s Online Casino Bill

At the beginning of 2021, Indiana State Senator Jon Ford introduced a bill allowing casinos to offer online casinos and poker. It has a long way to go before it’s even considered for a vote. But it’s illustrative of the progression from one type of online gaming to another.

Indiana legalized sports betting in 2019. During that time, most sports betting revenue came from mobile and online sports wagers. That’s common in states with mobile and retail sports betting. However, some lawmakers were so enthusiastic about sports betting’s revenue growth that they considered new online gaming options. Two other Republican lawmakers, Chris Garten and Ronald Grooms, cosponsored Senator Ford’s interactive gaming bill.

Ironically, Senator Ford’s opponents feared the leap from online sportsbooks to online casinos when Indiana’s sports betting was first introduced. Republican State Representative Ben Smaltz and his allies raised concerns about online betting’s inevitable expansion. They had misgivings about gambling and the ability of minors to gamble from their phones. (Many elected officials across the country have concerns about underage gambling. For all their worries, they haven’t cited increases – or single instances – in underage gambling).

Two factors made online gaming expansion attractive to lawmakers like State Senator Ford. First, the revenue from online sports betting showed how much bettors preferred online betting options. A competitive sports betting industry needs to mind those preferences. But second, lawmakers saw the revenue boost online gaming created. Those are powerful motivators for lawmakers who want to boost gaming revenue.

The One State With Online Casinos But No Online Sports Betting

Sports betting became legal because the Supreme Court ruled PASPA unconstitutional. The law forbade states from regulating sports betting. (States could pass laws legalizing it, but they couldn’t write rules governing sportsbooks. It was a sneaky legal trick). But four states already had sports betting industries, so they got partial or full exemptions. One of them was Delaware, whose PASPA exemption resulted in the state allowing online casinos before online sportsbooks. It’s the only state with online casinos and no online sportsbooks.

Delaware had a partial exemption from sports betting under PASPA. So, it had retail sportsbooks before PASPA’s repeal. It also had a law allowing sports betting on the books when PASPA was repealed. That law was how Delaware legalized sports betting after PASPA’s repeal.

However, that bill didn’t have online sports betting in it. Delaware’s sports betting industry is lottery-run, so it’s tightly regulated. It’s a small market, so revenue is a secondary concern. Increasing competition in the Northeast will make this small market even smaller over time. These are probably the reasons online sports betting still hasn’t come to Delaware – and may not for a long time.

Delaware legalized online gambling in 2012 to pioneer internet gaming. However, the law only extended to its casinos. Remember, sports betting wouldn’t become legal for six more years. Online sportsbooks seem to be excluded because of holes in Delaware’s gambling law. Delaware may legalize online sportsbooks someday. But there’s nothing on the docket now. But to be fair, the pandemic is a bigger priority than gaming expansion in a gaming-friendly state.

Online Gambling Expansion

When states legalize online sports betting, online casinos tend to follow. Indiana already moved toward legalizing online casinos. Delaware is the odd state out of this trend. But that’s because of some legal quirks throughout the 2010s. Every other state with online casinos has online sportsbooks.

So, if bettors are curious about which states will be legalizing online casinos next, they should look at the states with online sports betting. Specifically:

This isn’t a guarantee that these eleven states will legalize online casinos. They’re just the most likely based on industry patterns. Sports journalists are excited about sports betting’s expansion across the United States. But the steady growth of online gambling may follow it. If you want to read more about gambling legalization across the country, check out our State Laws & Legislation section.

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