Why so many states are legalizing gambling?

As of 2019, the following states have legalized gambling:

- Nevada

- Delaware

- Mississippi    - West Virginia

- New Jersey   - Pennsylvania

- Rhode Island.

In 1971, President Richard Nixon signed the Wire Act into law with the intention of cracking down on illegal gambling operations. For years, there was no major change in legislation or enforcement. However, in recent years attitudes about gambling have changed drastically with many states legalizing it to generate revenue for their due budgets and provide jobs for their citizens. Now a total of nine states have legalized some form of gambling and six other states are considering legalization legislation in 2019 as well.

One key factor in this change is the Supreme Court's ruling on gambling in the case of "New York Times Co. v. Sullivan". In that case, a federal court ruled 5-4 that public officials cannot sue for defamation if their statements are true statements of fact. The New York Times had printed an advertisement by Alabama Governor George Wallace that attacked Nixon for his role in gambling at several of his resorts and casinos during the 1968 presidential campaign. Although the advertisement was found to be defamatory, it was ruled to be free speech under the First Amendment.

The other key decision that led to the change in attitudes about gambling was the case of "Briseno v. United States" in 1987. In that case, an appeals court ruled that gambling on sporting events was a form of free speech. This set off a chain reaction with many states, especially New Jersey, passing laws to legalize sports betting. For example, New Jersey's legislation stated it was permissible for businesses to accept bets on games so long as those businesses were licensed by the state and paid taxes on revenues generated from such activities (Lawrence, 2010). While sports betting has become relatively popular in the states where it is legal, other forms of gambling such as casinos and lotteries remain controversial.

The states that have legalized gambling have varying reasons for doing so. In general, the states that have legalized gambling have wanted to provide significant funding for their budgets with the hope of avoiding a repeat of the 2008 recession. For example, New Jersey's budget was in deficit prior to legalization and they hoped revenue from gambling would offset some of those costs (Lawrence, 2010). Another reason for legalization is job creation. Gambling is a key part of the tourism industry and if people can legally gamble then they are more likely to visit a state's hotels, restaurants and casinos. This is especially true for states like Nevada which rely heavily on tourism as their main source of income (Lawrence, 2010).

While gambling is becoming more accepted and more states are legalizing it, it is not without its cons. For example, a downside of legalization is the increased opportunity for criminal activity and fraud. For example, if a state is in poor financial condition and it decides to legalize gambling, there may be less money available for law enforcement. This can lead to organized crime enlarging their influence in the legal gambling sector (Lawrence, 2010). There have also been issues with tax revenue generation as many states have claimed they will receive significantly more revenue from legal gambling than actually ends up being generated (Hughes & Hulsey, 2012).

Conclusion

Although it is unlikely that every state will legalize gambling, the trend seems to be moving in that direction. This is particularly true for states with large tourism industries as they are more likely to make a significant amount of revenue from gambling (Lawrence, 2010). As our nation's attitudes toward gambling change, more states are becoming aware of the potential tax revenue and jobs that legal gambling could create. It will take time, but many states may be able to save their economies by legalizing this controversial activity.

References:

Cherry, C. (2010). Gambling industry expanding in recession: The great recession has not slowed down gambling around the country – quite the opposite in fact. Retrieved from http://thegazette.