The owner of the Kentucky Derby and Preakness winner, I’ll Have Another, named the horse for a saying in the family about grandma’s cookies – a noble sentiment. But these days, it’s the government that can’t keep its hand out of the cookie jar. The Federal government has fallen prey to that mantra for years now – but the dysfunction is spreading from Washington to the capitals of cash-hungry states.
On Christmas Eve last year in a decision with little fan-fare, the Obama administration capitulated to give states their next cash “fix.” Reversing 50 years of precedent, President Obama’s Justice Department gave states the green light to implement new taxes on the poor in the form of Internet gambling. On petition from Illinois and New York, the DOJ reinterpreted the 1951 Wire Act to allow states to move lotteries online.
Beyond that, the DOJ gave states new revenue sources, saying that they could add other forms of gambling online so long as it didn’t include sports betting. Poker, slots, blackjack – all fine.
And, like last weekend’s Preakness, states are off to the races to see who can be first across the finish line. Illinois was the first to move online for lottery sales, and New Jersey’s legislature passed a bill that would create online casinos – though Gov. Christie vetoed it.
Just listen to the way legislators talk:
“We lost a whole year and hundreds of millions of dollars that could have been coming in to our casinos in Atlantic City.” (New Jersey Sen. Raymond Lesniak).
“We estimate that the potential new revenues to the state are in the hundreds of millions of dollars.” (Illinois State Sen. President John Cullerton)
But, the state legislators enthusiasm is nothing compared to the big companies that will make this happen – and reap most of the benefits. The CEO of the leading provider of lottery services in the U.S. said that states need to move quickly – because if they could be beat to the market and “lose the ability to attract younger players.”
Another gaming leader further explained, “Internet gaming […] is strongly tied to mobile gaming. Young people are particularly tied to their mobile devices.”
So, we know – from the horses’ mouths – who their targets are.
And for this reason, the Obama administration’s decision earned the ire of leading family groups, who sent a letter to Speaker Boehner last week urging Congress to re-establish the Wire Act’s meaning, at least as it was interpreted for 50 years. That would force states to make tough decisions and balance budgets by cutting spending or (not ideally) bringing revenues into line. Either way, decisions would be within full view of the electorate.
But, let’s be honest, once the government has their hands in your pocket, it is hard to get them out. Thank you sir, they’ll have another.